The rise of global brands over the past few decades is well documented.
Numerous factors have driven this trend: the need for cost efficiency; a desire for consistency across markets as more of us become regular global travellers; the need to produce fewer but better creative solutions; the desire to put brands on the balance sheet; the fact that technology has facilitated global brand management.
The response of the advertising and media industries has been to build global brands of their own to align with their global clients. This process began as long ago as the 30s and 40s with businesses such as Coca-Cola, BP, Unilever and Procter & Gamble.
Then, in the 80s and 90s, a wave of consolidation occurred in media.
Global media independents consolidated rapidly, driven by notions of volume, buying efficiencies and global planning tools.
As the relentless march of globalisation continued, the major holding companies and network brands built strong, deep and complex relationships with multinational clients.
Meanwhile, an interesting phenomenon occurred at a local level. Often, as a quid pro quo for establishing single, global advertising and media relationships, local market country managers retained the budget and responsibility for below-the-line activities.
This allowed global managers to hold local managers accountable for domestic performance. Interestingly, as budgets have continued to drift to more accountable below-the-line activity, these global brands often work with scores of different marketing service agencies at a local level.
This trend is rapidly coming to the attention of two groups of people.
First, the global marketers who are beginning to wonder whether they need greater consistency, quality control and cohesion in their direct and data strategies. Second, the global procurement departments who have noticed a duplication of resources across markets - and we know duplication is something they get excited about.
So is a third wave of consolidation to come? Not just single global advertising and media networks, but the third leg of the strategic stool - global direct marketing and digital networks? Some examples already exist, but will they become commonplace?
In order to answer this question, we must first ask where the customer fits in. For many people, "global" means anything but good. We ignore at our peril the consumer voices and movements that oppose global forces.
They call for "no logo", "authenticity" and advocate a return to what is local, original and "real". Who would have predicted the popularity of "slow food" a decade ago? People are also demonstrating their feelings at the ballot box - consider the French and Dutch rejection of the European Union constitution, and the rise of centre-right parties in many European countries on the back of nationalist policies.
All this fuels the argument that DM should be kept local. Consumer attitudes and behaviour differ between countries and cultures. Direct marketers are closer to consumers, better observers of individual behaviour and, increasingly, more experienced at integrating a broader range of media.
We are well placed to achieve the best results at a local level.
However, these arguments ignore the powerful forces of consolidation (marketing), cost efficiency (procurement) and the increasing sophistication of the DM networks.
Direct marketers have traditionally argued that data is king and our ability to mine and use this information gives us significant advantages, especially in a climate where clients demand greater measurability and accountability.
This is still true and increasingly we are investing in planning tools that allow us to do this across markets. However, a couple of issues complicate this argument. First, as consumers use multiple brands, switch regularly and refuse to complete lifestyle questionnaires, most clients are getting narrower and more fragmented pictures of their customers. Second, 99 per cent of the data used is transactional, not behavioural. It tells us what someone does, but not why they do it.
If DM agencies really want to build a case for global consolidation, they need to augment their data skills with the ability to understand what drives customer behaviour. How is it shaped by beliefs stemming from family, environment and personal experience?
What is the real impact of the different media that surround us? How much does it reflect what is said through the personal networks that play a central role in most people's lives today?
Coming to terms with this complexity is about far more than being good, or even great, with data. It's about incorporating new skills and disciplines.
Behavioural sciences such as anthropology, ethnography, psychology and linguistics can help us unlock key emotional triggers; scientific observational techniques can improve our understanding of how people interact with different media; mathematical modelling may help us assess how brands connect with customers across their personal networks. A couple of focus groups won't cut it any more.
If there is to be a third wave of global consolidation, this is where the DM networks will need to make a difference - by enhancing traditional data skills with behavioural techniques that have a global application and a local relevance.
This is where agency networks can make the difference. They can combine central strategic management and planning resources with flexible, local implementation to deliver the best of both worlds for global clients and their customers. They also have the resource to build and maintain the skills required to help brands connect with customers who have too little time, too much choice and have grown resistant to the traditional forms of communication - not just the advertising ones but the DM ones as well.
Succeed in this and the case for consolidation - for the marketer, procurement officer and DM networks - will be compelling.
- Chris Thomas is the chief executive of Proximity London and a director of Proximity Worldwide.
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