Digital Essays: Roundtable Discussion - Don't waste a good recession
By Stuart Derrick, campaignlive.co.uk, Friday, 26 June 2009 12:00AM
The economic downturn is a chance for digital to capitalise on changing consumer and agency behaviours and ensure it is part of a new world order.
No area of marketing is immune from the vicissitudes of the economy, but digital advertising has fared better than most in the past year. A recent report by Aarkstore Enterprise noted that online adspend was close to the point of overtaking TV advertising globally and a survey by the European Interactive Advertising Association claimed that seven out of ten European advertisers had increased their online spend in 2009.
On the other side of the coin, the IPA's latest Bellwether survey saw a record fall in internet advertising, albeit less than for total marketing investment. Nevertheless, it now accounts for 10 per cent of marketing spend, according to the quarterly report.
So much for statistics. How do the digital players see the sector? Ready to inherit the mantle of marketing strategy as clients push further in their online efforts, or pathetically grateful for crumbs from the top table?
Campaign's roundtable debate began with the editor, Claire Beale, asking if digital is having a good recession. Given that this was the first marketing downturn for many in digital, there's an overwhelming feeling that it is an opportunity, rather than an obstacle. Mark Howe, the country director of Google UK, says it's imperative that digital should not waste its recession. "There are a lot of changes happening, both among consumers and advertisers, and those behaviours will become habit-forming. It's an opportunity for agencies to change their habits of expenditure, strategy and thinking and emerge much stronger."
The downturn is also an opportunity to make traditional marketers feel more comfortable with digital so that they will integrate it more effectively, particularly at a time when delivering sales is the highest priority in many organisations, he added. "Clients have spent years building brands and maybe the next few years offer them an opportunity to re-architect more toward sales and drive them through the value attribution that exists in the digital world. Digital should be an integrated part."
Digital agencies are not immune from downsizing, but the harsh economy could help to rein in spiralling costs. "I've spent £450 a day on project managers that were rubbish, so a bit of bloodletting is no bad thing," Gareth Phillips, the managing director of Syzygy, says. "This is the first time the digital economy has gone into recession and it will be good for the sector."
Alex Marks, the head of business marketing international at eBay, agrees that such recalibration will clear out a lot of the dross. "Growth rates of 30 to 40 per cent are not sustainable, and there's been a lot of rubbish out there. Now the product will improve as agencies consolidate or go to the wall."
Mark Sng, the planning director of Saint, the digital arm of Rainey Kelly Campbell Roalfe/Y&R, says that because the recession has accelerated the erosion of consumers' trust in brands, there's a chance for digital agencies to help brands converse with consumers in new ways. "Front and centre of our conversations with brands at the moment is how we get that trust back again," he says.
Old-style marketing was something brands did to consumers. John Owen, the planning partner of Dare, says that traditional media was broadcasting and "shouty" in tone. By contrast, digital is about doing, and it's perhaps more useful to think of it as a mindset, rather than a set of channels.
However, in order for digital to offer this new approach, it has to mature and develop strategic thinking, Aaron Martin, the executive creative director of Syzygy, says. "Digital can tell you what you should do, but it isn't good at telling you why you should do it. We have to learn to put the consumer at the heart of what we do."
If digital is a mindset to Owen, it is certainly a label with baggage for others in the field. As much as agencies want to present themselves as creative first and foremost, they find that intermediaries such as the AAR insist on "digital" as a pigeonhole for agencies.
Adam Graham, the head of operations at Saint, says he hopes digital can move away from being seen purely as a direct response tool, as that neglects the emotional brand benefits it can deliver and which could, in turn, lead to bigger budgets.
Part of the problem is that the term digital is rather limiting. Andy Rogers, the managing director of etv online, says that businesses such as his, which have a broad range of offerings, were neither fish nor fowl. "We are pushing outside that digital box. We can do TV programmes, digital strategy, produce digital TV or devise branded content. It's a difficult sell," he admits.
Katie Streten, the head of digital strategy at Imagination, says part of the problem is digital's newness and that there is an education role for digital players. "You quickly discover that most people you meet have never Twittered or used Facebook. You must go back to what it was like before you discovered these tools," she says.
Although Howe claims that his Google business card gets him into organisations at a more senior level than many digital operators, he notes that a silo mentality still exists. "The danger is that many agencies are not speaking to clients at a senior enough level. Are you talking to the internet manager, the marketing director or the chief executive?"
Digital agencies largely deal with those clients who do not have the board level clout to change the behaviour of very traditional organisations, he says.
Clients are also at different places on the digital learning curve, according to Annette King, the chief executive of OgilvyOne London. "With some of our brands, it's very rare that you have one person you can go and talk to," she says. There is also the issue of how marketing teams are structured. Compared with the way media consumption habits have changed in the past five years, there has been remarkably little change in marketing departments, Phillips says.
Some clients have moved with the times more comfortably than others. Graham points to Lloyds TSB, which has restructured its digital team into owned, earned and bought media to recognise the changing face of the online world. "It's now entrenched in the philosophy of the organisation."
For Owen, the issue of lack of clout for digital is symptomatic of a more widespread problem for marketing. "Marketing is no longer in the boardroom, because marketing communications have become complex and specialist," he says.
"Even ad agencies at the top table simply deliver ads. They do not have discussions about product development or customer service in a meaningful way. They don't engage with anybody who matters about the commercial realities of the business. It's a massive problem."
The upside for digital, he says, is that because of the way it can interact with people and change behaviour, it presents an opportunity to start talking beyond communications.
"For brands, it's a fundamental truth that what you say is becoming less important than what you do," he says. "In the digital world, if you can't substantiate your words, you will be very quickly found out. Hollow myth-making does not work."
Digital's place in the pecking order is a factor of its importance to the business, Marks says. "For a business like Sky, a sales channel, digital has place at the top table. But the finance director at Coke is going to be less interested because he doesn't see it directly."
But even that is changing as brands find themselves challenged online in new ways. The rise of social media, such as Facebook, YouTube and MySpace, presents a new marketing landscape that brands are struggling to deal with.
"A lot of our clients are interested in conversations that are going on about them, so we're having to find a way to look at that," Damian Ferrar, the director of digital at Imagination, says.
It's no wonder, especially when bad news can spread like wildfire and there has been a sea change in how brands look at social media, Howe says. "Coke completely changed its attitude because of the whole Diet Coke and Mentos thing. First, it wanted to sue everybody, and then it realised it couldn't, so embraced it and tried to add value at every point. Perhaps you need a bad experience to really get it."
The rise of social media prompts the question of who "owns it". Marks says brands have to tread very carefully with such earned media. "It's like a youth club. You will piss people off if you go blazing in when they are chatting to their mates. You have to ask to come in first," he says. "Some brands just won't add anything and they should leave it alone."
But social media is a real chance for others. Sng points out that these channels can touch the most hard to reach audiences. "Research in the US shows that even top executives are spending 15 minutes a day on forums because they feel they need to," he says.
It is also a great chance to make a difference to perception as Dell discovered with IdeaStorm. The company was experiencing a lot of negativity on IT forums and came up with its own social network to engage with users who can post ideas for products that peers can vote on. "It shows how you can turn things around," Graham says. "Dell was being slaughtered and now it is the case study in social media."
If social media is one area that is exciting marketers, another is branded content. With £3 billion a year spent on content, digital wants some of the pie. The great strength of digital content, Streten says, is that whereas advertising allows you to be around content, digital can produce a platform that is much more immersive.
"In a recession, people spend more on entertainment, which puts brands in a stronger position because they can be part of that entertainment," she says.
There are lessons to be learned from TV in how to engage an audience, and from ad agencies on delivering a concise, entertaining message. Owen says brands have to think creatively about content, pointing to Crispin Porter & Bogusky's "Whopper virgins", which took Burger King's taste test idea to places where people had never eaten hamburgers before to show that its product was better tasting than McDonald's. "It's an entertainment idea and an advertising idea that was cut as a 20-minute documentary and put online."
Beale points out that many traditional agencies are looking to do more of this type of digital work, and have the heft to skill up to do so. How will digital agencies differentiate themselves when everybody can claim such credentials?
Martin says the fundamental problem is that ad agencies treat digital channels as an extension of above the line and don't fully appreciate its intrinsic strengths. "Just like TV used to be talked of as 'like radio with pictures', so they see the internet as like TV with interactivity."
Howe says differentiation comes through the ability to affect a client's business and not just produce a nice story. "There is a weakness in not taking that story through to conversion. How many people find time to work on the conversion pages of websites? It's a shocker that 48 per cent of baskets are abandoned at checkout stage. If that happened at Tesco, you'd be sacked."
Here, the issue of the marketing pecking order comes up again. Although digital agencies are willing to work collaboratively, above-the-line agencies are more protective of their ideas and less open to the "let's kick some ideas around" ethos, says Graham says. "God forbid that anybody might want to contribute an idea. There's still a mystique around TV."
He calls for a simple measure of respect for digital agencies. "If a TV director says that a campaign will cost £300,000 and will take 12 weeks, then nobody bats an eyelid. If we go in and say the same thing, we're told we've got £150,000 and to do it in six."
Respect has to be earned though, and by offering something genuinely different, digital techniques are becoming indispensable to marketers, Howe says. "The data that we have and the insight that gives us on the consumer has to be part of our sales pitch. And we should be working more closely with media agencies' econometric teams than perhaps traditional agencies do. That's where we can steal a march."
Whether they can do so is a moot point. It is accepted that digital marketing is the future for most brands. The unresolved question seems to be: who will do it?
Alex Marks head of business marketing international, eBay
Katie Streten head of digital strategy, Imagination
Damian Ferrar director of digital, Imagination
Gareth Phillips managing director, Syzygy
Aaron Martin executive creative director, Syzygy
Mark Sng planning director, Saint
Ade Adefala senior sales executive, Campaign
Sarah Paez account manager, Campaign
Hadassah Nymark editorial assistant/junior reporter, Campaign
Adam Graham head of operations, Saint
Andy Rogers managing director, etv online
Annette King chief executive, OgilvyOne London
Stuart Derrick journalist, Campaign
Mark Howe country director, Google UK
John Owen planning partner, Dare
Suzanne Bidlake associate editor, Campaign
Claire Beale editor, Campaign
This article was first published on campaignlive.co.uk
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