Sri Lanka is transitioning into a middle income country. What does this mean for the advertising industry? What do you anticipate will be the major challenges for the industry of this transformation?
Sri Lanka has joined this group of 86 countries termed ‘middle income’ but even in this group there is a wide variation between per capita GNPs of the countries ranked above and those at the bottom with whom Sri Lanka belongs. Though it’s termed middle income, there’s one-third of the world’s poor still in these countries. The question is whether this automatically means we will have a growing ‘middle class’ that will be able to afford consumer goods that they didn’t have before and whether there is an opportunity then for marketers and advertisers to push along and grow these markets.
Despite rising food and utility costs the middle class will have more people who could be persuaded to become consumers for new things they didn’t have before. Also, there are a lot more young people at work who will form a new group of consumers with new needs and wants. But I am increasingly taking a consumer’s point of view and saying, and even sort of questioning, whether we as marketers and communicators want to promote a consumerist society based on the old model, or whether today we have an obligation and opportunity to create goods and services that are good for the consumer and good for the planet.
If you take food and drink alone, the consumerist, fast foods economies like the USA have created problems for consumers in terms of obesity and diseases such as diabetes. Suddenly, there is a backlash against those kinds of unhealthy foods and sugared drinks.
Do you see this as a responsibility of the marcom industry, promoting healthy lifestyles?
It’s an opportunity. Marketers, who have promoted consumerism, will now have to think of products that will do good and look after the health of consumers, and come to grips with sustainability and pollution issues and make sure that they don’t harm the planet. Those kinds of concerns are coming that weren’t really there in the last century. Because consumers are also getting sensitive to that. Marketers have widely ignored the problem of waste and pollution caused by the packaging they create. Packaging is an important communicator, enticer and value-add in marketing, but the issues of packaging and product disposal and littering as well as waste disposal and green practices are things marketers need to address.
You have demographic change, income inequality and an emerging social conscience you are talking about. Relate this to your industry, how do you capitalize on these trends?
I think we have to work closely with the marketers to deal with these issues of sustainability, the importance of planning. We ourselves as communicators can make people more aware of the social side of things. Brands, which are bigger than the products they represent, can stand for something and endear themselves to consumers through addressing these needs. Brands can promote good social values and environmental practices. I think we as communicators need to promote those social values. I would like to see a brand that genuinely champions integration and tolerance of diversity in Sri Lanka. This is the challenge for the brand strategists and ad industry.
What about media spend: how has it been over the last few years and what are the anticipated trends?
The number of media options has grown. Traditional media expenditure has been going up. Now the question is whether this traditional media still works.
I can identify two clear directions in which creativity and advertising as we know it must change as the world changes. One is to realize the shortcomings of the broadcast advertising model and the reality of people today spending time and seeking information and entertainment on-line. Can we put our marketing spend to better use than spend most of it on those intrusive 30 second TV commercials that hammer away repetitively with our messages which get ignored after a while? If today’s consumer is watching less TV and spending more time on-line, those are trends we need to recognize and see how our brands could show up on-line, entertain them, and get talked about positively. The effectiveness and the ROI of broadcast media have declined for various reasons. There are more channels, the audiences are fragmented, it is sort of interruptive, viewing habits have changed – instead of families now individuals are viewing their thing.
The second direction is to consider whether sending more and more ‘buy-messages’ about our brands is what we should be doing. A lot of brands are already well known. The real challenge is to get consumers to love them and continue to buy them. Today’s citizens, whom we marketers have tagged as consumers, have many interests and concerns about the society they live in. They are more concerned and passionate about these issues – social, health, justice, environment – than about brands. If brands want to be loved and bought, they need to genuinely embrace and champion these issues. Leaving aside brands, creative people in the advertising community should use their skills of communication, opinion leadership and influence, to promote good societal values and fight injustice and intolerance.
What percentage of advertising spend goes to new media?
And do you anticipate that to change?
You have to push it. There is a huge spend on TV – TV is the biggest media and then print and radio. New media will develop as marketers embrace them, which hasn’t happened yet.
In recent years, a new useful classification has come into play in looking at media – that of Paid (traditional media where you buy TV spots or whatever), Owned and Earned Media. Anybody can start a blog and you are now a publisher and you own the media and so brands can do that. Brands can be there 24/7 with websites, rather than on traditional media for 30 seconds and they can create the content and entertain and engage the consumers in the way they want with the help of agencies who are operating on this field, as we have been doing. This will help them provide helpful information that consumers are seeking, and become brands that consumers will have affinity for. This is far more effective that trying to out-shout your competitor on broadcast media.
So is this an opportunity for your industry or a threat?
No, not at all, I think it is an opportunity for us, a new revenue stream, a new arena to work in. It is already shifting globally and in the Asia Pacific. In the Asia-Pacific region, expenditures in Earned and Owned Media have together approached that of Paid Media, which is today 54% of total expenditure, and by 2015 owned and earned media together will be bigger than paid media, going up to 57%.
Apart from their distinctive and complementary benefits, it has been measured that more and more of the consumer’s brand experience is through these forms. So this is good proof of the new consumer habits that provide further justification for getting into these forms of marketing communication.
It may be useful at this point to clarify – paid media is clear, you explained what owned media is, what is earned media?
Earned media is where you work to get good word-of-mouth and where you earn recommendations for your brands. Research has shown that WOM is the most influential form of communication for brand adoption. Through a TV commercial you can create imagery, we can give awareness. But when you want to buy something, it is what you might ask your friend and what your friend or family or somebody recommends that’s going to carry a lot of weight in what you select. So to generate these positive conversations and recommendations, if we can get consumers and opinion leaders to talk well of our brands and recommend them – that’s what earned media is about.
You talked about only about half the spending in Asia Pacific being accounted for by paid media, which means the rest is owned or earned. Here it must be like 95% paid media, perhaps even much higher. Why are we so far behind?
I think we need to make a little adjustment there. Owned media is not only online, you can own, for example, an experience centre or even your store can provide an experience centre. So that’s an own facility that gives consumers this exposure. Some of that money would be coming under owned media, so I think to that extent there is expenditure in that area even here. The actual online sort of component is still kicking in. But the reality is that a lot of our marketers are still very diffident about getting into this area. They really haven’t understood the value and different benefits that these provided vis-à-vis traditional broadcast media, or how to justify expenditure in this new media to their bosses.As we know, computers are now there in 26% of homes, and in addition people access internet through cybercafés, their offices, and at friends and relatives’ homes. As smartphones become accessible with lower and lower prices, more people will begin to access internet through these mobile devices. Over 1.5 million Sri Lankans are on Facebook. According to Nielsen, one million people get on the internet daily and another million at least once a week. You can look at it and say ‘oh that’s only 1/10 of the total population’. But, if you look at it, hey, there are two million people, 70% of them are under 30. So if you are trying to reach a youth market or life style market that may be a good portion of your market. One of the ways in which you provide value in the online media is through apps. On-line, apps rather than ads score – to provide value, entertain and engage. You can create a wonderful app that provides some kind of benefit to the consumer and if the consumer is using that, begins to like that and it gives value to him, he is engaging with your brand all the time. So we are saying online ‘think apps, not ads’.
So tell me about Bates its crossing a milestone isn’t it?
Twenty years ago, we were one of the first agencies to get into PR, when nobody was really talking about it and none of the other agencies had PR. We went to the media and talked to them and media was very cooperative. So yes, we been evangelists for PR and we’ve grown that and we’ve gone and tried to understand the PR discipline and used it well beyond what we call media relations.
PR which was once seen as a corporate practice alone, is today used successfully to drive marketing of consumer brands.