The Euro Spring

A number of factors look set to converge and stimulate growth across the European advertising market, Nikki Mendonça writes.

The Euro Spring

Despite a series of European headwinds, the regional advertising market is showing promising signs of growth. Against a negative backdrop of anti­-austerity fever in Greece and Spain, Russian sanctions and a question mark on the euro currency, the European ad industry is actually looking quite bright.

1 Growth is back on the agenda. There has been a shift in the mindset of chief marketing officers recently; their focus is now on the top line versus the bottom line. This has increased advertiser focus on creativity and innovation as they search for improved brand differentiation in an increasingly cluttered world. This focus will fuel stronger, more sustainable brand strategies that will be underpinned by better, more accountable marketing solutions. In this world, the marketing budget is rightfully seen as an investment rather than a cost.

2 The feel-good factor is returning. The European Central Bank’s quantitative easing plan to pump more than €1 trillion into European bonds over the next 18 months, together with oil prices hovering around $50 a barrel and record-low inflation, has effectively given consumers a boost to their disposable income. This is driving an upturn in consumer confidence across many markets, a stock rally and positive GDP growth for the first time in a long time, and is great news for a number of advertisers.

3 Europe is an attractive trading bloc. As the world shrinks and globalisation gathers pace, the European Union represents a very attractive market of more than 500 million consumers who are increasingly displaying similar lifestyle rhythms, purchasing habits and ways of accessing services. Burgeoning airline travel and mobile penetration have contributed to this homogenisation. This is creating an easier landscape for regional CMOs to navigate as building powerful regional strategies with relevant local activation has become a more tangible, effective and efficient way to go to market.

4 The UK’s relationship with the EU is accelerating growth. The UK has emerged as a dynamic member of the club and benefits significantly from its £12 billion investment into EU coffers. Europe is the UK’s biggest trading partner with more than 50 per cent of all exported goods and services being consumed by the region, supporting in excess of three million domestic jobs. As English rapidly becomes the default language of business, the UK has an amazing opportunity to export its "service economy" expertise and reputation for quality and innovation across numerous industries. As the world gets smaller, the commercial importance of the unity and entrepreneurial spirit of our European trading bloc will only grow as we find ourselves competing for goods and services with India and China.

5 2015 is an inflection-point year in the digital revolution. All legacy structures and processes in advertising are being blown apart and new definitions and ways of working are being created before our eyes. The most fundamental of these changes is an overhaul of the role of the CMO: a newly empowered member of the C-suite who now presides over the entire customer journey. This is accelerating companies towards a renewed focus on the power of marketing to profitably grow their business. As smart data and bespoke stack technology will be at the heart of this conversation, we will see the chief technology officer and CMO become new bedfellows in running their agency relationships. This will increase brand focus on the accuracy of all channel attribution, fuelling a new level of marketing accountability and a sudden democratisation of media opportunities where each one will be judged and rewarded on its ability to perform: a new level playing field.

6 The game has changed. All agencies are feeling the advertiser transformation from a focus on creating "campaigns" to "marketing in the moment". Ideas, learnings and budgets all need to move more freely and quickly across the region to optimise resource and investments and take advantage of a 60-minute window of opportunity. The growth in the development of agency newsrooms and "fast content" designers and producers are a testament to this change in approach. This is a world where the multimarket dashboard feeds become the new cockpits guiding global marketing performance.

7 Brands can be tomorrow’s leaders. With traditional government and religious institutions losing favour with millennials, brands now have the opportunity to play a new, more purposeful role in their young lives. We are seeing a substantial rise in the number of clients requesting our help in building a more authentic, socially responsible brand image to increase their relevance to a generation who have grown very cynical with a "profit without purpose" brand agenda. Brands now have a huge opportunity to integrate themselves into the fabric of people’s lives to enjoy a more long-term sustainable relationship that represents more value to both stakeholders. This will mean an end to token socially responsible activity to one where giving back and contributing to building a better and happier life will be a greater part of a brand’s DNA.

8 Network effects drive results. Greater collabo­ration and integration is proving to be a powerful source of competitive advantage. We live in a world where cultural, political and social diversity around the table always creates a hotbed of innovation and ideas. At OMD, we have more than 5,000 people creating market-leading campaigns for clients across 60 EMEA markets. It’s this melting pot of dynamic energy and ambition that will keep us fit for the opportunity ahead.

Nikki Mendonça is the EMEA president of OMD