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* * External events The Future of Advertising and Agencies – A 10 year perspective Tomorrow’s consumers will be increasingly hard to reach over the next ten years so agencies will need to re-invent themselves to adapt. This is according to a new IPA report that has just been published ‘The Future of Advertising and Agencies: A 10 Year Perspective’ which has looked at the future shape of the advertising industry. The IPA has worked with the Future Foundation, a global strategic consultancy and think tank, on this report.
This is the first time that a fully comprehensive overview of the total commercial advertising marketplace has taken place. The Future Foundation economics and modelling team, with the IPA was able to cross-correlate Advertising Association Data with published information from the Bellwether Report, the Direct Marketing Association, the Institute of Sales Promotion and the Interactive Advertising Bureau. The report prescribes that as non-traditional areas of marketing communications activity grow it is incumbent upon agencies to either invade this space or face a shrinking business future.
The majority of the IPA’s members are optimistic about their ability to grapple with the future. However the overriding message of the report is that of a wake-up call to agencies who need to get to grips with emerging trends or else see commercial advertising begin to decline. Says Andrew Walmsley, Founder and Chairman of I-Level: “In the last few years we’ve seen quite staggering amounts of change, change in the way that consumers can see the media, can see the product, and changes in the way that the economics of markets operate. These are really quite fundamental shifts, and they’re not going to go backwards.
If anything they are accelerating. ” To create a more meaningful picture of the industry going forward the IPA and the Future Foundation have attempted to reclassify all marketing communications to better reflect the present dimensions of advertising. Proposing a move away from historic definitions such as ‘above the line’ and ‘direct’ to newer broader definitions. These include ‘named’ (for example DM) versus ‘not-named’ (for example TV), ‘screen’ (for example TV, mobile) versus ‘non-screen’, (press, radio etc) ‘two-way’ (interactive) versus one-way (passive). The new world order
In the future agencies must recognize that traditional advertiser/agency/consumer relationships will be challenged with new models of engagement coming to the fore. As traditional advertising continues to decline, by 2016, the hypothesis is that media owners of all kinds, including online search, all networks, gaming environments and interactive digital TV, will be integrating brands directly into content and editorial. Moreover, savvy consumers will be taking increasing control of content and the directional flow of interactions. Agencies will not just be competing with other agencies.
Allies may become competitors, consumers may become channels, advertisers may become suppliers and agencies may become media owners. Already, consumers are creating their own forms of advertising, free of commercial imperative in the form of social networking sites. Already, media owners are already bypassing agencies to develop advertiser funded content through their own creative departments. The report has proposed three scenarios for the advertising model of the future, which were the result of a number of workshops with senior agency management that took place earlier this year.
Who will be in the driving seat? Agencies, media owners or consumers? Whoever it is will have a tremendous impact on the growth or decline of commercial advertising. By 2016 if agencies continue to be in charge then commercial advertising will grow by an average 4. 6% per annum, if its media owners it will only grow by 2. 3%. The worst scenario for agencies will be if advertising becomes consumer led whereby commercial advertising will only grow by 1. 2% per annum. This last scenario suggests agencies have no room to be complacent and must start to capitalise on emergent new opportunities.
Bangladesh’s Advertising: Gazing into the Crystal Ball This article appeared on the supplement commemorating Bangladesh Brand Forum’s Commaward (Communication Effectiveness Award) August 2009 I unfortunately do not own the Back to the Future’s DMC DeLoren that allows me to time travel. Neither do I have a crystal ball. But that has never stopped anyone from trying to predict the future. Especially me. ! The global advertising industry itself is at crossroads today. It is taking a hard look inwards, re-evaluating itself in the post recession world.
As usual, global clients like Unilever, Coca-Cola and P;G are leading the charge in forcing the change onto the agency fraternity. What is expected from advertising agencies, the compensation models, and even what constitutes the very definition of an agency is being challenged. The automotive and financial sector clients who used to be the bedrock of the developed world’s advertising markets are re-looking at their relationship not only with the consumers but also with the agencies themselves. No longer is it adequate only to rely on the usual suspect of TV spots or massive campaign role outs.
Clients like GM have learnt that the massive money spent on advertising has not insulated them from global fall out of the credit crunch. Some of their once formidable brands like Pontiac and Saturn have seen consumer’s disappear. And the brand custodians in their advertising agencies are being questioned on the efficacy of the “business-as-usual” communication they created. This, coupled with the fragmentation of media vehicles and emergence of social network sites, means that only brands that take up the challenge of connecting with consumers on a daily basis will survive, and if lucky, come out stronger.
Bob Lutz, the new Chairman of GM has said the two areas that he will spend most of his time and resource behind are advertising and the actual product itself. And he is not alone, CEOs in the boardrooms across the world are increasingly adopting similar stand. This will have a huge bearing on where we are headed in Bangladesh. We are not reinventing the wheel here. Change is happening across the world and it will happen to us. We need to be ready for it and proactively prepare for this. Resting on what has worked in the past will not mean it will work in the future.
Writing on the wall is clear. To borrow from Jack Trout – differentiate or die! I will add here that brands can no longer find product differentiations. They need to find emotional differentiations. They need to find, what Kevin Roberts, CEO of Saatchi and Saatchi calls “Lovemarks”. Here are few predictions I’ll bet my reputation on. Global Brands vs. Local Brands The largest battle over the next decade will be between Global Goliaths against Local Davids. Don’t for a second think that the result of that slugfest is a forgone conclusion.
We will see a match up between vast knowledge base of brand building honed to near perfection and huge war chests that global marketing giants have at their disposal; versus the agility and local consumer understanding that local brands have. These “wars” for the consumers wallet have already started, points being won by both sides. Lux and Close-Up winning early battles against Aromatics and Fresh Gel. On the other side Mojo and Ispahani scoring over the Pepsi, Coke, Tetley and Lipton. As an advertising agency head, I fight the battle everyday from both sides of the divide.
In my mind the edge is currently with the local boys. Not burdened by global roll-out, heritage and need to confirm with regional dictates, local brands are finding indigenous insights. Some of the most interesting and compelling works done over the last few years have come out of Grey, Mediacom, Cogito, Bitopi and my agency Adcomm for our local clients. I can’t see a Protom Alo Bodlay Dao, Ruchi Chanachur, or Mojo being replicated by any foreign brands. But that doesn’t mean that MNCs are sitting back idle. A superb counter-attack example is from Marico.
They have taken the lessons of their duels with Unilever in India and are putting behind the local Camellia and Aromatic brands that they have bought. Throughout my 15 years in advertising I’ve seen one thing, that this march towards regionalisation of advertising is a cyclical one. Every few years the trend inverts itself. We move towards regional harmonised communication and then kaboom – localisation of regional insights. Unilever is a master in this field. As our economy moves ahead, we will see them bringing in learnings from South-East Asia, South America, Eastern Europe and India to the battlefields at home.
Emergence of New Media More has been written about this than any other topic in advertising in recent years. Currently what is termed as “New Media” – Internet and Mobile, is in its infancy. Though because of grameenphone the access to internet is vast (their estimate puts it over 20 million), only a small fraction of the consumers actually log-on on a daily basis. That I reckon is because there isn’t a distinct “reason why”. An internet surfer in, say Bhola, has very limited use of the world wide web. Literacy, especially English proficiency is a barrier to usage.
But still the numbers are not to be laughed at. One study puts Bangladesh at number 8 on traffic on Facebook. The figures will only grow. With drop in bandwidth cost and the introduction of WiMax this figure will grow exponentially. Brands need to be ready for this. Today if you log onto FB you will see Citycell Zoom, Mentor and Cellbazaar ads. But these are still predominantly banners. Brands need to evolve much beyond this. They need to get onboard Bangladeshi oriented sites like hottdhaka. com, pipilika. com, 2funmail. com, amadergaan. com, bdjobs. com to give example of only a few.
The relationship needs to go beyond just visibility on site to building co-branded offerings. grameenphone has done a lot in promoting Cellbazaar. This is unfortunately the exception rather than the rule. Larger brands like the telcos and the FMCG giants need to start spending substantial development money in this field. It is still relatively cheaper to get into this medium, and experiment now before it becomes expensive both in terms of money and in terms of potential mistakes. Somewherein. com, published in Bangla, offers unparalleled opportunity for brands to start their own blog and start interacting with consumers.
Similarly brands in, say the financial sector, can use this tool very effectively to differentiate themselves in a cluttered competitive market. I’ve not even gotten into the power that mobile phones give advertisers. With phones getting smarter and cheaper it’s a matter of time that we can start pushing advertising down to consumers. Even to those who are “technologically challenged”. Think of it Sharbet-e-AP sending Ramzan alerts to those who subscribe. Or say Peninsula Hotel sending discount vouchers to everyone who has booked a ticket on that day’s United Airlines flight to Chittagong.
I am not even getting into location-based advertising. It is a matter of time before say all dJuice subscribers near Roll Express during lunch time get a free drinks voucher sent to their mobiles. The technology already exists for things like this to happen. We just need more tech savvy marketers! Rebranding of Old Media Don’t count out Old Media as yet. There will be growth in this area as well. The easier example is FM Radio. It will be a matter of months before coverage for FM moves beyond Dhaka, Chittagong and Sylhet. With focused localised advertising, this media will entice till now advertising shy or smaller brands into spending.
Say the Garden Bistro Restaurant at Nazimgarh Resorts can offer listeners in Sylhet a value meal on a slow day. And only at a cost in the region of a few thousand takas to the company The bigger challenge will be in the TV medium. Currently they are besieged by what I call a “photocopy syndrome”. Channels do not differentiate between each other as such. The station id on top right of the screen is so easily changeable. Evolution in this sector will be in two areas. Firstly viewers will become program loyal as opposed to channel loyal. I know this sounds so obvious.
But the channel owners somehow have forgotten that there exists a thing called a remote control. Why else will they be subjecting viewers to mind numbing programming and never ending ad breaks. Lowe does a regular study across the globe called “Ad Avoidance”. The result is predictable. Given shorter adbreaks, viewers are less likely to channel surf. Advertisers who pay premium to be on short breaks benefit in the long run. TV channels’ adsellers and brands’ media buyers will soon have to realise that instead of getting 10 ads for Tk 100 each, it is better for all concerned to get 2 ads for Tk 500 each.
The more interesting will be when TV channel owners realise that they too own brands. And principles of brand marketing apply to them as well. They need to differentiate themselves from the rest of the crowd. Just look at the station ids of Zee Cafe and Star World. Both the channels show more or less similar programming but they have a very distinctive look feel. While I still watch programs as opposed to channels, one has a bigger appeal to me than the other and when I don’t have a specific program to watch I am on that channel. Similarly between BBC News, CNN and Al-Jazzera.
And by successfully branding day parts. For example Comedy Mondays, a channel allows me to remember to switch on that day. I try not to miss Jumbo Movie Sundays on History Channel. If Digonto TV was selling shares, I would buy. They might not have the biggest viewer shares, but they have a larger mindshare of a niche group. Advertisers who follow Sirius’s rating data will eventually put their money hoping to win the loyalties of this group of consumers. Niche will not only be in Islamic programming but also in music, movie, sports, news, youth segments. And this list is in no way exhaustive. Rural Activation
Despite urbanisation and growth of media exposure levels, a large part of the country is media dark. And there lives C. K. Prahalad’s “Bottom of the Pyramid”. And its a huge market! If 80% of the populations live in non urban space then we are talking about a potential market of 128 million people. Say we can get 50% of this market to spend Tk 2 every month on a Pepsodent mini pack, then annually Unilever takes in approximately Tk 150 crores more! I am lead to believe that Unilever made more money last year from reaching out to those living beyond their distribution reach than Square Toiletries made on their total sales volume.
Which National Sales Manager will not be awed by figures like this? And which Brand Manager can ignore this market? This is where the big money of tomorrow will be spent. Likes of Unilever already spend more money on what used to be termed as BTL (below the line) than they do ATL (above the line). Other companies regardless of market segment will follow suit. This is where the lines between agencies, distributors, implementers, and clients will begin to blur. Already implementers act as agencies; Agencies like distributors and distributors like implementers.
Those outfits who can offer the client the perfect strategy and immaculate execution coupled with the best value will be the Titans of advertising in the years to come. My agency, Adcomm for one is betting big on this. In the recent months we he have started not one but two separate ventures to address this market. And we are not the first ones. Interspeed and Market Access are already big and serious players in the field. And as we speak, boardrooms across advertising agencies in Bangladesh are planning and strategising their own foray. How much longer before regional and global giants like O&M, Lowe and Grey enter?
Content My favourite area. The place where the most excitement and glamour will be – content creation. I am not the first to tell you that the 30-second ad is dead. But what will replace it? The 30-minute ad. Yes, instead of taking 30 seconds to get your message across advertisers will create branded content like Close-Up 1 and talk to a targeted audience over a longer period of time. Already TV channels have a bevy of shows like this. From Horlicks Future Force to Meril Prothom Alo Puroskar to Shah Cement Nirmanay Taroka brands are rushing to get their names on the top bill.
But this isn’t anything new. Where the difference between success and failure will lie is how tightly the brand experience be built. Just having the brand name in bright lights is not enough. Consumers will need to be immersed in the totality of the event. Brand essence will need to permeate through. Brand like Farm Fresh Milk cannot leave advertising at a 30 second spot calling the young to “Agiya Jao” (Stride Ahead) but will need to get into programs like the Maths Olympiad or having TV program where they teach fun science. An interesting development here will be on the content owners end.
Earlier content was created by TV channels or by clients. But now third party production houses will take the development work and finances on their shoulders. While they will still create brand specific events and programs, because they still own the content they will get a more comfortable margin. Say today the “owner” of the Citycell Channel i Music Awards can drop the title sponsor and go to the next highest bidder, for example SonyEricsson. Advertising Agency The haziest part of the future is predicting what the future Advertising Agency will be like.
One thing it will not be is the Advertising Agency of today. Already agencies have to a great degree lost a lot of their media buying function. On the other side the citadels of creativity is being attacked by boutique creative shops. The top ten players in the market at one time ruled over 90% of the market. These days it’s a different picture. In almost all the major pitches of last three years, small (and often new) agencies have been invited with the big boys. Also, media now going directly to the clients have made profitability margins for advertising agencies disappear.
New compensation models other than the usual 15% media commission is being experimented with. From retainers, to fee based work, to rate cards, nothing is beyond acceptance. This year Adcomm celebrates its 35 years. Starting from a small outfit in a sub-let premise, today we are amongst larger advertising agencies in the country. But the debate within is for how long can we sustain the revenue model of our business. The consensus seems that for not too long. We are evolving. We are moving away from being an “agency” to being a brand consultant.
We aim to provide the thinking and strategy behind the brand. Not necessarily its implementation, nor even, shall I dare say, the creative output! Yes, even creativity is not sacrosanct. In the future it maybe outsourced. In this case the part the advertising consultant will play is to see that a brand’s personality and messaging is not schizophrenic. Just as brand owners are outsourcing their manufacturing, sales and distribution services, so too will they with communication. Dynamics of brand relationship is going to change beyond recognition.
As will Adcomm (and other agency groups) offerings to their client. No one in the advertising world in Bangladesh missed Asiatic 360’s ad recently. It showed how they have grown beyond mere advertising to, as the name suggests, an all round resource. Clients can either call upon them to provide a complete solution or cherry pick those interventions that suit the brand the best. Adcomm Group is now more than just advertising. We have over the years formed a “best-of-breed” offering between associated companies. You can either come to Adcomm or brand solution and strategy and the full package.
Or go to any of our other associates who specialize in their respective areas, namely, Adcomm Media in media solutions, Signage indigital print solution), Screaming Girl Productions in TVC and content production), AktiVision inevents and advertising, AktiSales in direct consumer contact and distribution, AktiGram in rural activation, Northbrook Consultants in PR, Art of Noise in music and radio program production and a soon to be launched design shop. This does not even take into account close associates with whom while we don’t have equity relationship, we have seamless working relationship.
Another area that I believe will grow is outsourcing of advertising and graphic design services (GDS) for the global advertising market. Basically GDS is another name for Desk Top Publishing or Pre-Press work that used to be dominated by the graphic bureaus in Purana Paltan. In 2005 Adcomm formed a joint venture with a Danish advertising group AdPeople to take this to a different level altogether. The baby of that marriage, GraphicPeople has fast matured into a world-class studio for GDS that services global advertising requirements for Dell.
The success of this company can be validated by the fact that they are experiencing almost a doubling of business every year, and by the fact that one of world’s largest advertising holding companies WPP has recently brought out our Danish partner and merged GraphicPeople with Y&R Brands. Interestingly WPP is very bullish on Bangladesh and GDS. Their O&M has recently started its GDS studio called RedWorks. Do you think the other advertising holding companies haven’t got their eyes on this development?
I feel that representative of global holding companies will be in Dhaka over the next 18 to 24 months to forge out partnerships with local entrepreneurs. And these companies, along with existing players like Trade Excel, Graphic Associates, Click House and others, have the potential of turning GDS into the next garments industry for Bangladesh. Advertising agency of today has the option of abandoning the local market altogether and concentrating on the more lucrative overseas market. These are fascinating times we live in. Advertising is more exciting now than ever. Next three years will shape the future of our world!
Advertising agencies, practitioners and marketers need to be ready to ride the storm with the agility of a Bondi beach surfer or becompletely wiped out by the next big wave! * It takes planning. Advertising works best and costs least when planned and prepared in advance. For example, you’ll pay less per ad in newspapers and magazines by agreeing to run several ads over time rather than deciding issue by issue. Likewise, you can save money by preparing a number of ads at once. * It takes time and persistence. The effectiveness of your advertising improves gradually over time, because customers don’t see every one of your ads. You must repeatedly remind prospects and customers about the benefits of doing business with you. The long-term effort triggers recognition and helps special offers or direct marketing pay off. * Advertising costs money. Advertising is only one tool in your sales and marketing arsenal and its cost-effectiveness has to be compared to other business building tactics. Is it better to hire a new sales rep or place an advertisement in the local newspaper? You should always consider your ROI and your opportunity costs before you start an advertising campaign.