“The Winter Of Discontent” – Sandeep Joseph - The Coverage
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“The Winter Of Discontent” – Sandeep Joseph

As we rush about our 24×7 lives, let me ask you to pause for a thought experiment.

Remember the last ad you remember?

Let me give you a moment.

Nothing?

Take another moment…

You probably will remember some recent banners which targeted you incessantly and possibly irritated you or maybe a stray Raya web film.

But hardly anything worth sharing or talking to others about.

If you work in or are associated with advertising, this is the scary truth.

 

According to the latest information from Global Web Index, right here in ‘Bolehland’, we are consuming media for over 8 hours per day, on screens (TV, laptop, mobile) alone. And yet it’s so hard to recall an ad that we thought was memorable. Furthermore, it’s even harder to recall an ad that moved us to action.

Paradoxically, there are more agencies than ever before, albeit under different names. In fact, only the outdated ones, or the old-fashioned ones call themselves ad agencies today. The rest are media specialists, experientialists, consultancies, boutiques and so on. And every agency claims it can do everything, or at least has developed the skills to outsource what it can’t do.

Just in Malaysia alone, by my guesstimate, every year there are over 250 ad industry awards and prizes (creative and media combined) given out to the aforementioned honourable agencies. There are orgies of industry self-congratulation and patting each other on the back or, more importantly, on Facebook and Whatsapp. Clients also want to win, with their appraisals and bonuses increasingly getting linked towards KPIs.

So much angst, blood, energy, sweat, laughter and tears go into this highly competitive, cut-throat profession, and for little or no ad recall?

What’s going wrong? When was the last time the communication industry created something as powerful as Digi’s Yellow Man or Astro’s Stadium Arena?

Why is our industry busy navel-gazing, while the consumer moves closer to ad blockers, ad-free channels, cutting cable cords and more pertinently, sheer indifference?

Is it any wonder then, that Chief Marketing Officers are losing ground to the data geeks, the speakers of digital mumbo-jumbo, and the techies?

Is it surprising at all, then, that CFOs and CEOs are asking about accountability and responsibility, and advertising budgets are continuously under pressure or review or being slashed?

 

Here are 3 reasons why we have reached this sorry state.

 

1. The rise of digital and the corresponding lack of digital understanding

Today, amongst the top 100 advertisers in Malaysia, my estimates of digital advertising spends would range from 10-25% of a client’s budget, allowing for adjustments via industry and category. Digital is definitely the fastest growing, most talked about and potentially disrupting medium.

And yet, the number of people who understand it and can wield its power to build brands is shockingly low. In a typical media agency, less than 20% of its staff are digitally savvy. By that I mean the rest cannot sustain a conversation with a client about how to measure the business impact of their work, what is the best mix of multiple digital platforms to use or how to create memorable messaging online in an environment that devours content at all hours of the day, and where novelty wears off faster than you can say “viral video”.

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Media agencies claim to have “hybridised”, which means their personnel can recommend and manage both traditional and digital media. However, this is a fig-leaf, as the reality is that hybridization has created discontent, divisions and people who think they are experts but actually are not. These are victims of the Dunning-Kruger effect: overestimating their own abilities and expertise, and leading clients down narrow paths to dead ends. Buzzwords like “viewability”, “above the fold” and “attribution modelling” float around without any correlation with client needs and business requirements.

It isn’t much better in a typical creative agency. Agencies would need to re-tool: built for TV-centric and print-centric communication models, they now need to put digital at the heart. Old school creative veterans who grew up in an analogue world are still grappling with the seismic changes, and, apart from a couple of honourable exceptions, are unable to translate their ideas into digital magic dust. If it weren’t so, why would agencies need a “Digital Creative Director” in addition to a Creative Director?

Don’t believe me? Think about the social experiment, and you’d know that hardly any campaign has broken through to capture the consumer’s imagination.

 

2. Budgeting woes

A fallacy many clients believe is that digital is a cheap medium to operate in, and they can save money versus traditional channels like TV. The truth is that while the cost of entry in digital is low, the investment needed to be visible, noticed and to cut through is definitely not as low as many marketers and their financial counterparts believe.

Today a story-telling web film costs the same as a mid-range TVC. And the budget required to reach their audiences is not dramatically different. What we see every day is some good ideas unfortunately not backed by appropriate budgets, and clients expecting miracles and “viral” videos every time they sign a cost estimate.With margins under pressure, agencies cannot attract young talent.

With margins under pressure, agencies cannot attract young talent. The Mad Men days of advertising have long vanished, and the best and brightest young minds want to start their own ventures or walk their own paths. As a result, agencies are bleeding, struggling to acquire talent and feeling frustrated. It’s a people business, and as a result, our industry producing forgettable work that doesn’t gain wide audiences, which further reduces client’s confidence in them and the medium. This vicious cycle rinses ambitions, dries hopes and repeats.

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3. Outdated business models

Advertising agencies were traditionally built to function on economies of scale. The idea is simple: A lot of talent in one place, operating across a bunch of industries buying media at scale and producing creatives ideas at scale. Some agencies are premised on managing complexity and tedium on behalf of clients while extracting ideas from creative folk and production houses.

However, the rise of digital, low-cost production and the changing nature of film and video technology has eliminated economies of scale and the perception of “expertise needed”. Larger does not equal better, faster, cleverer or more creative. Small can deliver on all that. There are also very limited economies of scale in digital creative or media: you cannot buy media cheaper if you buy more of it, for instance.

If there is innovation to be found, it’s possibly in the garages and smaller spaces occupied by independents. However, while these independents of late have been winning business away from the global majors, both in media and creative spaces, they face their own challenges. They often win business based on pricing and are then unable to grow their businesses as there is little margin or surplus.

Moreover, these newcomers are hampered by not being given big budgets that would help create more traction for their campaigns. Thus the bigger players command greater margins, but have higher costs, while the smaller players have lower costs but lower margins.

 

The litany of woes is long: what’s the solution?

Quite clearly there is a need for new business models if the industry is to survive for the next 20-30 years.

So what should clients, agencies and ad people do?

 

CLIENTS

Clients like Unilever and P&G are already bypassing agencies and going directly to content producers and independents, whom they can access digitally on platforms like Design Crowd, Movidiam and more. Some Malaysian GLCs are also going directly to production houses, cutting away ad agencies. While this saves money and can bring fresh ideas, it does put the brand in jeopardy. There is no proof that this approach leads to cut-through work or better ad recall. Clients need to take a longer-term view of their brands and steward them through this disruptive era.

While production costs can come down, the cost of brand guardians, storytelling and strategy must be borne, to protect the most important asset: trust. Clients need to devise new ways of paying for the wisdom, experience and brand-driven work of agencies while taking advantage of lower execution costs. They must also think integrated, and avoid getting swept away by digital mania: being purely digital in creative or media has not created growth for many brands.

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In fact, the evidence repeatedly shows that a mix of mediums, channels and creative messages is needed, and provides better brand recall. Clients also need to find business metrics to link to advertising, in order to justify bigger budgets and provide better accountability to CEOs and CFOs. Econometrics, data mining and predictive modelling all have a key role to play, and it’s shocking how few Malaysian clients are aware of or use these techniques.

 

AGENCIES

Agencies face the toughest challenge: it’s like a car that needs to re-design and re-construct itself, while still speeding on the highway. Agencies will need to find the areas of value: strategy, thinking, creative freshness, experience and build around those talents and skill sets that take longer to become irrelevant. They will also need to reduce layers, manage expectations and focus on profitable relationships while warding off the independent “barbarians at the gates”. It’s not easy, but agencies like Naga DDB Tribal, Droga5, Mother,  St Luke’s and others have built reputations by defying conventions. In fact, it is more likely to be achieved by big semi-autonomous agencies compared to global network agencies who don’t have decision-making autonomy or the ability to change course quickly in local markets.

 

AD PEOPLE

The industry cannot blame technology alone: many people above a certain age are guilty of not adopting a continuous learning or growth mindset.

Over 30 years ago, some American researchers noticed that some students rebounded quickly after bad results while other students seemed devastated by even the smallest setbacks. After studying the behaviour of thousands of children, Dr. Carol Dweck coined the terms fixed mindset and growth mindset to describe the underlying beliefs that people have about learning and intelligence. When students believe they can get smarter, they understand that effort makes them stronger. Therefore they put in extra time and effort, and that leads to higher achievement.

Ad people need to believe, learn and reinvent themselves to thrive in this age. If they can make the effort, they will find themselves in a sweet spot: combining valuable experience and insights with technology, digital and cohesive strategies.

The future isn’t necessarily bright, but there is a future for the industry if the players can ride out the storm. In the past few months, some big name ad agencies of the past, local giants, have downsized and some are shutting shop.  It’s an ominous sign for the rest of us. Winter isn’t coming: it’s at the door, and the wolves are howling…

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