Ad sector must rebrand if the fizz is to return
Advertising does work -- it is just that during this deep recession agencies need to be more creative when selling their wares to the boardroom, writes Orlaith Blaney of McCann Erickson
THERE is a reason Coca-Cola has been No 1 in Checkout magazine's Top 100 brands for the past five consecutive years.
Coca-Cola is ruthlessly focused on world-class innovative marketing. From the continuous investment in the brand, to the company's development of its diet drinks portfolio -- coupled with waters and fruit juice drinks -- it is totally committed to refreshing the world, whatever its particular consumers' needs.
Coca-Cola also produces advertising that the world loves. I know it's a little early for this, but "holidays are coming" and "polar bears" remain some of the most memorable Christmas television advertisements, closely followed by Budweiser's infamous Clydesdales and the beautiful Guinness St James's Gate Christmas adverts.
We know, based on consecutive case studies in the bi-annual Institute of Advertising Practitioners of Ireland (IAPI) Advertising Effectiveness Awards (AdFx), that advertising absolutely works -- but don't take my word for it.
In 2010, the last AdFx awards, Bord Gais demonstrated the power of advertising when it won 300,000 new customers from the Bord Gais electricity offer. Or, ask L'Oreal, or Nestle, or 3 Mobile, if advertising retains existing customers, attracts new ones and delivers growth and, yes, even in a difficult recessionary market.
So why, given the proven track record of advertising success, are so many brands reducing and cutting their advertising expenditure?
There is no doubt the ad industry is under phenomenal pressure in Ireland right now. We know that advertising spend is being pared back and it is hitting our industry hard. RTE, TV3, national and local radio stations, local and national newspapers, the outdoor poster industry and the cinema advertising business are all experiencing very challenging times. The Nielsen figures reveal that advertising expenditure fell by 37 per cent between 2007 and 2011 -- but what this figure doesn't show us is how much advertising copy is being imported by the remaining advertising spenders.
We don't know that number, but my guess is it is pretty significant. By that, I mean brands that are bringing their advertising copy in directly from markets such as Britain, the United States and France, rather than using Irish creative agencies to produce their advertising.
There are five key factors driving an overall reduction in advertising spend:
First, reduced spending power, with consumers saving more than they are spending. Continued job and economic uncertainty means that the decision to buy things we want is being put off and any disposable income is being saved for the rainy day.
The numbers prove it. In 2007, we were saving €3.6bn, and in 2011 we saved €10.4bn (according to the ESRI and Amarach Research estimates of June 2012). This means consumers are buying less, and advertisers -- feeling the pressure of reduced demand -- are switching their ad spend to their bottom line. Our only way back is to improve consumer confidence -- and the ESRI hasn't got a lot of good news to report on that front.
Second, the continuous and aggressive price war in grocery retail means that big brands are switching some of their brand advertising investment into trade marketing and activity in-store to satisfy both the retailers' hunger for increased profit margin and the consumer demand for cheaper grocery products.
We are being bombarded by the 'BOGOF' (Buy One, Get One Free) and the €1 price point across supermarkets. The consumer is directly benefiting from cheaper prices -- but this activity means there is less money for spending on brand advertising.
Third, there has been huge retail advertising expenditure, encouraging people to buy SuperValu, Aldi and Lidl "own-brand" products, and this has the effect of telling consumers that switching from brands is okay.
The advertising industry is benefiting from the price war, but this concentration of the power of retail brands means brands are suffering.
Fourth, some big-brand advertisers are shifting their creative work out of the Irish marketplace and the economies of scale mean that you can produce effective television advertising in Britain that can run on RTE or TV3, rather than producing separate adverts for the Irish and British markets.
We have just 4.5 million people to sell to in the Republic, so for many multinationals this just makes common P&L sense.
It will be some time before the real effect of these decisions is known, and we are seeing some research evidence that this approach isn't working. I continue to applaud international firms such as 3 Mobile (Hutchison Whampoa) and Heineken Ireland, which produce creative work specifically for the Irish market. The market share for both companies is growing in Ireland. International brands that take an active interest in their Irish customers are seeing the benefit.
Fifth, the Government was one of the advertising industry's biggest spenders, but the economic reality -- and our level of indebtedness -- means this is no longer the case.
So, as the Government and the eurozone tries to dig its way out of the recession, what can the advertising industry focus on, to ensure that it returns to growth?
• This is a bit radical, but perhaps we should drop the word 'advertising' and rebrand what we do.
Our job is to transform clients' brands and businesses, and that's why we are in business. We are here to drive and create demand. I often think the word 'advertising' switches some people at board level off. In some companies, chief executives and finance directors often belittle the 'marketing function', so a rebranding could at least help us to be taken more seriously in the boardroom.
• We could also sell the effectiveness of a strong marketing lead strategy and champion the results. There is no arguing with strong data -- and our industry simply doesn't have enough of it -- and providing evidence that what we do drives demand and success.
The new CEO of the IAPI, Tania Banotti -- along with the industry itself -- will be key to promoting the power of what we do via the forthcoming AdFx awards.
• Agencies should turn down business where, deep down, they know that even if advertising were used, company X would not be able to truly drive demand for its product or service.
Advertising can sell a poor product or service -- but it can only do it once. We must help companies to find powerful reasons why consumers might buy from them, and ensure that the work we do could help and that they would not be wasting money.
• We must get brilliant clients and companies to champion the power of their advertising directly. Its power -- and the results it is capable of creating -- is even more credible when it comes from a client with a successs story, informing us what has worked for it.
• Reviewing export opportunities is essential. This is not the first time you've heard of this idea -- but there are some Irish agencies exporting their ideas to other markets and, as our domestic economy struggles, this is a real and valid route to growth. Agencies such as CKSK, Rothco and Cybercom are succeeding in finding external opportunities.
• We must learn so as to encourage creativity, bravery and, even some risk-taking.
Radio and television stations, hungry for revenue, are producing creative work for clients directly, but they do not have the creative skills to do world-class work and, consequently, the quality is suffering. (Ask Today FM's Peter McPartlin why he, too, endorses the power of brilliant creativity to help sell and engage people in the power of radio advertising?) Truly creative ideas are far more successful at selling than bland, repetitive ads with dull, boring voiceovers and cast.
• Lastly, we all have to wait patiently for a little economic recovery. It is coming -- I just don't know when exactly.
Orlaith Blaney is CEO of McCann Erickson Dublin, and is on the board of IAPI and WXN's advisory board
Sunday Indo Business