Media agencies answer call of new age clients, reinvent themselves to keep pace with winds of change
By ALIEFYA VAHANVATY
e-commerce is rewriting the old rules of advertising and it seems that the first new rule is that there are no rules when dealing with e-commerce entrepreneurs. Consider this: e-commerce has already clocked $ 1.7 billion in investments in the first quarter of 2015. And, if media agency reports are to be believed, with major spenders tightening their purse strings across categories, it’s e-commerce that is essentially keeping the AdEx afloat, with ad spends estimated at over Rs 3,500 crore this year. Therefore, agencies that so far serviced traditional brands are now vying to rope in these new age clients.
While Sam Balsara of Madison, with large traditional clients like Godrej and P&G on his roster, snapped up the media mandate of Snapdeal earlier this year, GroupM announced a specialized e-commerce unit headed by Tushar Vyas to service e-commerce clients across its five agencies.
So what is different about media planning for e-commerce clients? New age clients have new age demands. Whereas a traditional brief would take a week to ideate and three to five weeks to execute, e-commerce briefs are thought out on the move (a day is the maximum time) and executed within a couple of weeks. And ROI is calculated not at the end of the month, but in real time.
Agencies have had to undergo a radical shift in culture to cope with the speed and nuances of e-commerce clients. It’s still about brand-building, but also about call to action (CTA). Agencies now need to be equal partners in the ads they make or sell. If it doesn’t seem to work in a week or two, there has to be a Plan B or Plan C. Waiting for the six-week campaign to end is old school.
‘We have systems in place to modify media plans on the go’
‘Our new vertical is to give e-commerce clients the specific attention they deserve’
NEED FOR CHANGE
Traditional media agencies until recently were in a comfortable business rhythm where creative and media were separated and operated independently. The benefit of that for the advertiser was better value for their media dollars. Media agencies also continued to make margins because of the purchasing power that they obtained by collaborating with different advertiser partners and pooling that money to create buying clout. It was advertising at its comfortable best.
But all that has undergone a dramatic shift in the last couple of years. Agencies have felt significant pressure from procurement to keep costs down, and also from vendors and other partners coming into the space that they traditionally occupied. So there are auditing firms like Deloitte and PwC looking into this space as advisors. There are technology firms like IBM and Oracle coming into this space with their tech capabilities. There are platform vendors providing programmatic capabilities in the move towards Digital, effectively taking people out of the equation. And this is fundamentally changing the business model of old-school advertising that depended on billable hours and full-time equivalents (FTEs) to make the account sheets look good.
Another aspect that has altered the face of the industry today is the mobile device. The mobile is not just a data collection device but is, at the same time, also producing a lot of data for advertisers and marketers. Location-based services and data collection are becoming incredibly incisive at predictive behaviour. So all this has dramatically changed the way advertising is done as well as the way that media is bought and sold.
Agencies today are being forced to become more dependent on data, more driven to doing things faster, cheaper and more replicable. That requires automation and data science; which, in turn, requires skills and capabilities they are not traditionally inherent in media agencies.
So the crux of the challenge lies in the fact that agencies are operating in this old business model cocoon while the ecosystem is in effect moving on ahead of them. What media agencies do is still incredibly important, but it is imperative that they bring in changes to keep themselves relevant to their clients and to an industry that is leaping ahead.
E-COMMERCE: A GAME-CHANGER
In the first quarter of FY15-16, e-commerce as a category spent Rs 450 crore on TV advertisements. Estimates from television broadcasters, e-commerce advertisers and media agencies reveal that this could go up to about Rs 2,000-4,000 crore by the end of the year.
According to the business paper Mint, since January 2014, more than $6 billion of investment has gone into e-commerce firms. Just as there were the soap wars of the 1980s, cola wars of the 1900s, telecom wars of the 2000s, the latest battle dominating screens today is between e-commerce giants Flipkart, Snapdeal and Amazon India. Fortified with venture capital funds, most e-commerce companies are on a war footing to build market-share at any cost, offering steep discounts and advertising heavily. Media executives definitely aren’t complaining.
THE SHIFTING LANDSCAPE
The most significant change that e-commerce as a category has brought about within agencies is nudging creative closer to the media buying function of an agency, thanks to the proliferation of mobile devices and the digital economy. “In general, the e-commerce environment has necessitated a shift in mindset and that’s true not only for media agencies but for creative agencies as well. The big shift in my mind is that, so far everybody has been approaching Digital, in general, as another medium just like Outdoor or Cinema. But Digital is not just a medium…it is ‘the’ way of reaching the consumer, conversing with the consumer and finishing the entire sales transaction with the consumer. So the mindset change has to happen on the agency’s side,” explains Ashish Bhasin, Chairman and CEO South Asia Dentsu Aegis Network, Chairman Posterscope and psLive - Asia Pacific.
Debraj Tripathy, Managing Director, MediaCom India, agrees with Bhasin that a change in mindset is the key to staying relevant. “Even earlier, agencies had an FMCG expert or an Outdoor expert, but ultimately teams were aligned by clients and that continues. What has changed, however, is the way e-commerce clients approach media and advertising, which is very, very different from the way a large FMCG or auto client would approach digital advertising. The difference is, let’s say, for example, FMCG or auto brands all look at a basic horizon, which is three years. They know that they will have to invest in the brand and once the brand is built, it will ultimately start showing results. In case of e-commerce companies, the new-age or newly funded clients, it is exactly the opposite. These entrepreneurs have to first show results because their very survival depends on the funding and basic support of their investors. And the funding will only come in depending on how fast they’re able to grow at the initial stage. Hence, rather than track brand parameters which some of the old and large clients would do, they would track metrics only in terms of how much is advertising immediately impacting their business. That is the shift in attitude, the shift in the way we have started to look at e-commerce clients,” Tripathy says.
Putting together a media plan for an e-commerce client is also vastly different from doing one for say, an FMCG or consumer electronics company, warn experts. e-commerce is the front door to a brand, and it’s all about having a differentiated user experience. Because of availability of data, customization and personalization of experiences has become the new frontier in business and especially e-commerce or new-age businesses which are all about brand experience. “Today, it is all about tapping into a more complex consumer journey where transactions happen quite parallel to awareness and evaluation. However, eventually in each category, there emerge a handful of key players. And when everything else turns out to be similar from pricing to user experience to variety to service, etc., the role of brand top-of-mind recall and stickiness comes into play,” says Anupriya Acharya, Group CEO, ZenithOptimedia Group, India, who has OLX as a client. “And that’s the space media companies and media agencies are now hungry to claim as their own. In no category or vertical can they own the space more dominantly than in e-commerce.”
And so, slowly but steadily, media agencies have built in the capabilities to understand the digital platforms, programmatic ecosystem and more importantly to understand the digital consumers, the millennials. Media agencies have also always been better at story-telling than anybody else, especially compared to the tech firms. On the client side too, e-commerce firms have realized the advantage that while an ad-tech platform might be able to help them create transactions quickly and might be better at programmatic, they are not necessarily able to make that engagement or connection with the consumer. The exposure that a media company has to consumer insights as well as changing media consumption patterns is what makes them so endemic as a partner to brands; e-commerce clients also rely on agencies to provide brand insight, given their vast experience in the field. This is the space that agencies are clamouring to occupy. But they can only effectively do so if they reinvent and redefine themselves and the space as well.
E-COMMERCE CLIENTS’ WISHLIST
One attribute that e-commerce clients look for above all else in a media agency is its understanding of their category, be it in terms of customer insight, response times, adaptability and resources, not just technology but also of dedicated teams with the right skillsets. “When we were looking at an agency for our media needs, apart from the usual aspects in terms of pricing, scale and reputation, what we additionally looked for is how strong was their understanding of both online and offline, what was their experience of working with clients in the e-commerce space and if they were equipped in terms of technology and resources to handle our timelines which are extremely tight. We have very, very fast turnaround time. What we were looking for is dedicated team members... that’s important for us,” reveals Sudarshan Gangrade, Vice President - Marketing, Analytics, Partnerships at Ola Cabs.
Being able to use data and adapt it to the campaign on-the-go is a skill that e-commerce players are increasingly adding to the checklist of media agency deliverables. “The challenge here is that, for example, if you talk to the media agency and figure out a media plan for tentatively a month, are they able to change it on-the-go? If an agency has real-time data available, what are the ways in which it can convince people on the other side (creatives, publishers, broadcasters) that this is not working for the client? Can the agency make changes? That I think is the challenge. Beyond the tools and the mechanisms, along with the data and even the insights that are there, is an agency able to implement them in real-time is the challenge that needs to be sorted out,” says Manu Prasad, Director-Brand Marketing, Urban Ladder.
Nimbleness, adaptability and speed also come up high on the checklist that e-commerce clients demand from media agencies. “One characteristic that Caratlane looked for specifically was nimbleness. The ability to adapt and modify because being an online platform and being digital natives, our business requires changes in real time, quick and fast. We have so much real time data and access to so much analytics, which can tell us which spot has done what for you… there’s no limit to the detailing that is possible with data today. For us, it’s important that we have a partner who is able to react quickly and move fast in terms of making modifications or adaptations, so that the efficiency of the plans are at the highest,” says Calvin John, Vice President - Offline Marketing at CaratLane.com.
Bringing their understanding of digital and data to the table is also a big draw for an e-commerce player like Firstcry. Explains Anuj Jain, SVP, Marketing (E-commerce), Firstcry. com, “Today, though it might not be pure science, to a much larger degree, you’re coming closer to be able to create a correlation between airing a spot on a particular channel to the impact online. This digitization of traditional media or tracking of offline media is the big shift that is happening. Agencies that understand this and are able to use it to bring in media efficiency have become a primary draw for a company like ours, which is primarily digital.”
e-commerce companies further emphasize that with traditional mediums like Print, TV and even OOH, there are certain leap times associated, but for e-commerce clients, it is necessary to build speed even into those mediums, in terms of execution. Gone are the days of the quarterly campaign and even the traditional 30-second spot has a limited runway now, agree digital experts.
ARE MEDIA AGENCIES DELIVERING?
Agencies are realizing that it is an ultracompetitive, cluttered, fast moving space… and that they run the risk of being history sooner than later – unless they can reinvent. Also, most of the e-commerce offerings did not exist until recently and so agencies can’t rely on past data or experience on how the consumer will respond. Hence, adaptive planning and execution that builds in learning ‘on the go’ is most critical, say industry experts.
“At Havas, we have internally developed expertise on e-commerce, and have a large dedicated team working on it. This is not to say that we’ve formed a unit or anything like that – officially, we haven’t. But this approach is working very well for us. For us, agility and nimbleness are very important. It might not be important for larger groups because their share of volume, both in terms of business and resources, is large. In our case, we don’t have that much volume and we have to maximize the resources. So it is a big challenge and we are working on that. But with e-commerce now, all agencies have seen the kind of monies there are and so even agencies that are large are changing themselves internally to adapt to the e-commerce culture,” says Anita Nayyar, CEO India and South Asia at Havas Media.
Bhasin of Dentsu, on the other hand, feels that the one P&L model has worked well for his agency. “The basic principles of servicing the client are unchanged but the specialist skills you now need to service clients have undergone a change. Today, what an e-commerce client is looking for is specialization – the benefits of specialization without the hassles of dealing with separate agencies and companies. Our P&L delivers specialization under one umbrella but that’s not the case with any of our competitors. So, that gives me the advantage to marshal the right resources, the right specialists that a client might need without bothering which group it falls under. These are changes happening due to the new generation of clientservicing,” says Bhasin.
Media agencies have also invested in bringing on board teams with the right attitude to willingly embrace the chaos that comes with e-commerce. According to T Gangadhar, Managing Director, MEC, “We are seeing a different breed of people coming into media agencies. I’m a big fan of hiring for attitude and training for skill. We are also making sure that we speak the same language as our clients. The worst thing is to drop a lot of jargon and confuse people. Media is not rocket science. And these entrepreneurs are basically very, very smart. Additionally, while we have the right skillsets and the advanced technology, one of the learnings from e-commerce that we have taken to heart is to build processes. How to ensure that given the chaos, we are not compromising with accuracy, effectiveness and efficacy for speed? There is no point in being spectacularly fast but wrong. You can’t afford to take shortcuts in this space, and so we have been finding smarter ways of being fast. Agencies have dealt with change earlier, and they are once again pulling up their socks and meeting the challenge head on.”
Technology is a given to survive in the digital ecosystem that e-commerce is grounded in. “We believe in real-time media planning. We have what is called a Loop Room that offers real-time solutions to all stakeholders, primarily rooted in data. The insights and inferences which come from this data, allows us to better the campaign on a real-time basis. And this is what we have been doing for our clients as part of our adaptive and provocative thinking philosophy. We are increasingly seeing more and more clients coming to us for this specific capability we have,” shares Prasanth Kumar, CEO, South Asia, Mindshare.
As the industry evolves, media agencies are undergoing a remarkable transformation at their core. They are not agents anymore, buying and selling media. They are participants. They are assemblers. They are processors and synthesizers for their clients and it’s imperative that they embrace each of these challenges and opportunities in order to continue remaining relevant to their clients.
Feedback: aliefya@exchange4media.com
