Highland race

This month’s first anniversary of the historic vote to elect the first Scottish Parliament is a reminder of the country’s centuries-old ambition. And the new regional government has helped to reinforce a Scottish identity. But aside from the powers which have been devolved to Parliament, what impact has limited self-determination had on media owners and advertisers?

Graham Milne, chief executive of CIA Medianetwork Scotland, says: “I would have expected and hoped the effect to have been progressive, creating a greater recognition of Scotland as a country in its own right. One thing it has produced is a greater sense of national identity, which is feeding through to marketing.”

In one respect, the infrastructure has long been in place to support such a shift in national identity. Scotland has two major media groups, which together account for the most significant advertising channels. Both have continued to expand and consolidate, suggesting that, beyond their powerful domestic presence, they may be able to operate on a UK-wide – or even European – level.

The Scottish Media Group (SMG) has spread its reach the widest, holding both ITV franchises for the region: STV and Grampian. While this makes it a Scottish media powerhouse, SMG has become a prime target for takeover by other ITV groups. Granada holds an 18.6 per cent stake, but both it and SMG say the group will remain independent – for now.

The company also owns key Scottish newspapers The Herald, Sunday Herald, Evening Times and Caledonian. Last year also saw SMG acquire the cinema advertising sales organisation Pearl & Dean, national six-sheet poster contractor Primesight and Scottish outdoor contractor Bailey. The company plans to expand beyond Scotland to become a major UK media company based in Glasgow.

In pure media terms, the Scottish Parliament has been good news for media owners. Scottish Radio Holdings (SRH) chief executive Richard Findlay says: “At an operational level, we have had to increase our staff and strike up another set of relationships. Individual papers and radio stations had relationships with local authorities, MPs and MEPs – now they have to know their MSPs.”

Although the parliament has no responsibility for media issues – this power still rests with Westminster – it creates content. “People want news – that gets an audience for us, and audiences attract revenue,” says Findlay. With devolved power, local news outlets have become closer to their listeners and readers.

As a result, Findlay argues that the way forward is not to become more nationalistic in approach, but to increase local relevance. “We haven’t got together and networked across our radio stations. Doing that to cut programme costs would lose us audiences. I have always taken the opposite view towards investing,” he says. He believes the hierarchy of news has to be local, Scottish, UK, then international, to keep listeners tuning in. “That approach will bring in revenue. It is investing the other way round,” says Findlay.

SRH dominates commercial radio in Scotland with 13 of the 30 radio licences. The company’s approach highlights a curious aspect of Scottish media. Despite its strong national identity and power, there is no single, national commercial media outlet.

In radio, certain stations come close to playing this role. Clyde 1 and 2 – both owned by SRH – have a weekly reach of 1.1 million listeners, giving them 43.6 per cent of the audience “When it comes to radio, we’re the national media platform. We had the Prime Minister in twice. He didn’t go to BBC Scotland, he went to Radio Clyde,” says Findlay.

&£116m hostile bid

Despite its local focus, SRH has also been pursuing bigger regional and national ambitions. At the time of writing, it had just launched a &£116m hostile bid for Border TV, in a move designed to close the gap on SMG. SRH owns 33 local newspapers, which operate as Score Press, and has been investing heavily in outdoor, acquiring a number of regional contractors under the Score Outdoor banner.

“When we went into outdoor, we decided to be strong in certain regions. We are not large enough to do a JC Decaux and buy across the UK. We wanted to be strong in Scotland, then look at other areas where we could build our strength, such as the North-west and South-west,” says Findlay.

While helping to deliver additional national and regional UK ad revenue to the company, this is not where SRH believes the strongest growth will come from. “One of the things which outdoor has not done is grow local revenues. It has always relied on national revenues out of London, whereas in radio half of our revenue is local. There is an opportunity to increase that in outdoor,” he says.

Despite the new Parliament providing a clear national rallying point, within the media buying world, Scotland is not viewed as another country. Its press and radio channels are bought by regional specialists, not as part of national buys. Media owners have to strive constantly to promote the importance of the region to advertisers.

Milne points out that Scottish consumers have a much higher level of media consumption which planners need to take into account. “They watch more TV, listen to more commercial radio, read more newspapers. Ten per cent of the UK population is in Scotland, but they account for 15 per cent of sales,” he says. Many buyers downweight the region, but this fails to recognise that the sales-to-advertising ratio is 50 per cent more efficient.

Cultural differences also need to be taken into consideration. “If you plan the UK as a whole, you may make a mistake in Scotland. It has a separate education system, so the holiday timings are different. I have seen advertisers run national campaigns for limescale removal products, for example – people in Scotland don’t know what that is,” says Milne.

In the absence of a single national newspaper, it is notable that UK national tabloids have been making steady inroads. Sales of The Scottish Sun have been steadily increasing, reaching about 400,000 copies. This has not been at the expense of local titles – a Sunday circulation war has been raging between Scotland on Sunday, published by Scotsman Publications, and The Sunday Herald out of SMG.

Cross-selling a way forward

Media owners looking to gain a larger share of national UK ad revenue can increasingly cross-sell a range of titles and media. Both SMG and SRH look well-placed to do this, although neither has taken advantage of their holdings to strike significant multimedia ad deals.

Milne believes there are obstacles to this happening. He says: “One person’s increased discount is another’s conditional sell. If I was buying a TV campaign and got a better price because I was also using outdoor, can somebody else complain?” The takeovers which built SMG newspaper holdings were supposed to help national ad revenue through cross-selling, says Milne, but this has not happened.

The alternative for advertisers seeking to plan campaigns across Scotland more effectively is to look at national media, which might offer opportunities for upweighting. Radio Times advertising director Andrew Mercer believes the demand for regionalisation of campaigns is there.

“I feel the Scottish market is going to be decreasingly interested in British copy, so we have got to look at that. I have looked into this for British Gas. I can see potential demand from advertisers,” he says. Despite publishing a Scottish edition of the magazine, however, advertisers cannot isolate the region.

“Media buyers have said, ‘You do it for editorial, why not for advertising?’ I have been looking into the ability to provide separate ad regions, but the cost of changing ads is not a viable economic proposition,” says Mercer. Each ad change would cost about &£7,000, he reports.

Other media sales points are not convinced of the scale of the demand. Scotland-based Media Link acts as a sales house in the region for the Daily Mail, Mail on Sunday, Independent, Independent on Sunday, Metro, Virgin Radio, Radio Times, Newsweek International and Carlton Screen Advertising. According to managing director Tim Reid, “the impact of the Parliament has been marginal”.

Aside from increased spending on public campaigns by the Central Office of Information and Scottish Office, he believes that “it doesn’t make much difference. The Parliament itself is pretty dull. Apart from Section 28 and a couple of other issues, there has not been a lot of national coverage. We have not seen any extra revenue.”

Reid confesses to having voted no in the referendum. And this is a point which should not be overlooked – while not as marginal as the vote for the Welsh Assembly, the Scottish Parliament was not created with a full-throated national yes vote, more of a politely whispered OK. As a result, there has not been the type of gear-change which full devolution would have produced.

If Reid’s view, that “we are the same people but with a new, expensive layer of bureaucracy,” is a common one, then this only serves to emphasis the correctness of the SRH strategy. Concentrating on the local market, rather than trying to become a national UK player, may pay greater dividends in the long term. Findlay believes this does not conflict with taking a European, rather than UK perspective: “I don’t think globalisation is in conflict, but centralisation might be.” For now, the road from Scotland to London’s media buying shops looks like a lonely one.