Developed markers are stagnant but emerging and developing ones are driving global growth. Global corporations have a common aspiration to propel growth through presence in the market with a headroom for growth.
Hence emerging markets and developing economies receive attention more than ever before by global players in all manufacturing and service sectors.
This was the focus of the paper presented by Noah’s Ark Advertising Group Managing Director, Lanre Adisa, at the 42nd annual general meeting of the Association of Advertising Agencies of Nigeria (AAAN) in Lagos.
To him, clients’ product portfolio will continue to be inspired by the imperative to grow revenue and boost the bottom line by attracting high value consumers.
Adisa said as the Eurozone faces challenges, and competition for foreign direct investment is heightened among emerging and developing markets, Nigeria’s loss will benefit Asia’s rising stars, and emerging markets will continue to drive growth.
Middle class bulge
Research by Forbes shows that the middle class is fueling demand for consumer goods and services. Other factors include increase in the population of the middle class with income upwards $10,000 and the dynamic lifestyle choices of this audience.
Clients have recognised the speed at which consumers are evolving, according to an online survey carried out on 200 chief marketing officers (CMOs) on 10 most important qualities sought in their advertising and marketing agencies.
Agencies must keep pace and stay ahead, while monitoring increasing customer sophistication, explosive growth in data and information, which empowers global consumers to move from the physical market place to a virtual one.
And market space will be redefined beyond the urban middle class, Adisa alerted.
Position of CMOs
Advertisers Association of Nigeria (ADVAN) President, Kola Oyeyemi, said at the recent annual general meeting of the Experiential Marketers Association of Nigeria (EXMAN) in Abeokuta that margins are dropping and clients are getting even more demanding because they want to augment their bottom line like never before.
“Clients are finding more reasons not to engage an agency because it has gone beyond service. Everyone is crying and this is so because no one is offering solution to a problem.
“We all offer service but the market has left service behind,” he explained.
More insight from CMOs showed that clients will engage an agency with at least 90 per cent quality of creative idea and strategy, 74 per cent understanding of client’s business, 56 per cent integration and coordination, and 48 per cent execution and follow through.
Harsh business environment
Service businesses are facing a tough business environment in emerging and developing markets despite numerous opportunities. Volume and margins are on the downward trend.
Forbes stressed that challenging business environment is driving client’s decision making and defining relationships with its partners.
Adisa disclosed that pressure to deliver short term financial results and impact on long term brand building has become a key factor in picking an agency.
Agencies are consistently under pressure. There is no room for complacency. Clients do not allow agencies to respond at their own rate.
AAAN President, Kelechi Nwosu, said businesses are managed on a week-on-week basis, rather than waiting for the end of the quarter, which is too late to respond to a fast changing market and competition.
There is much pressure on operating income and clients are outpacing agency partners in the use of sophisticated analytics to understand market dynamics.
“Agencies are falling short and not doing a good job,” Adisa said, adding that there is inconsistency, and there is need to improve the ability to execute.
For agencies to compete and succeed, some industry stakeholders argued, they need to integrate all the brand communications of their partners.
“Accountability is an area where agencies need to improve most,” Adisa added.
He urged chief executive officers and the boards of agencies to imbibe accountability because most CEOs are owners’ managers rather than business managers.
Where the shoe pinches
Do agencies fully appreciate where the shoe hurts? Adisa asked.
Clients have to deliver more with less and are seeking a “Better, Faster, Cheaper” attitude from agencies.
There is tension in clients operating in the current tough environment, with the sense that agencies are not pulling their weight.
CMOs have to account for returns on advertising investment. Clients have developed sophisticated ways of measuring value, and agencies struggle to prove their value.
Agencies of the future
Agencies within PR, advertising, experiential marketing, media buying, out of home, and media, are in a tough season.
Clients’ marketing budgets are shrinking, volume nose-diving, and margins are dropping geometrically. Clients do not require service agencies but solution agencies.
Factors listed by experts that define an agency of the future include
Greater knowledge of digital space
Over 30 per cent of marketers surveyed said they are not confident that their current agency is well-positioned to take their brand through the unchartered waters of online digital marketing and interactive advertising.
Agencies need a greater knowledge of digital space in order to thrive.
Up to 45 per cent of respondents have switched agencies (or plan to do so in the next 12 months) for one with a greater digital knowledge to handle interactive campaigns.
More use of ‘pull interactions’
Ninety per cent of respondents agreed that it is becoming increasingly important that their agency uses ‘pull interactions’ such as social media and online communities rather than traditional ‘push’ campaigns.
Consumer focused agencies
Seventy six per cent of respondents voted strongly for agencies that understand various consumer touch points and how to develop well-integrated solutions to exploit each channel to maximum effect.
Demonstrate strategic thinking
Seventy six per cent of marketers surveyed ranked strategy/brain trust capabilities at the top of their agency wish list.
Creativity in conventional and digital marketing
Adisa said agencies must get their creative teams comfortable with digital.
How do creative directors get away with “I don’t really understand online, so I have our junior art director do that stuff?” he wondered.
Ability to measure success
Sixty five per cent ranked analytics at the top of their agency wish list. Marketers want an agency that can report on where campaigns succeeded, fell short, and where they should be fine-tuned.
Agencies need to invest in conventional market research methods to track campaign resonance and effectiveness.
The reason digital marketing will thrive even when advertising budgets are cut is its targeting and tracking capability.
A senior practitioner disclosed that agency business model is structured to suit agencies, not clients. The current “economic” model is unsustainable, he warned.
Agencies need to redefine their value proposition to focus on commercially driven business building ideas, supported by well-tailored organisational structure.
