Why fight an outdated battle?


The debate between full service and specialist, when it comes to communication consulting and activation, is not as simple as some people make it out to be. Keeping the politics of ‘who is the bigger partner’ aside, we need to explore the practical relevance of the nature of client-agency engagement in today’s context.

By necessity, that exploration will take us back to the age when the whole disintegration’ or ‘specialisation’ process started.

There are two truths we have to keep in mind.

One, agency business models have changed only in response to client demand. Way back in the ‘80s and ‘90s, as clients expanded their brand portfolio and appointed multiple agencies to handle different brands, they demanded consolidation of buying with one agency, so that they could enjoy the benefit of scale. That is how, most advertising agencies separated their buying departments, branded them and launched them as media buying companies. With the passing of time, clients saw the futility of separating media planning from buying and therefore integrated the two with the media agency.

Two, the separation of media from creative happened, when classical media such as TV and Print were the only media strategic to the client’s marketing efforts. The creative agency produced the message and the media agency found the most cost effective way of exposing it to the audience. Life was simple. It helped that classical media itself were neither as fractured nor cluttered as they are today.
Today we live in a world that can be called the Experience Economy. As consumers pay less and less attention to brand messages, Exposure based models, which old advertising agencies have followed forever, are failing to deliver. The 30 second TVC may never be dead, but it is getting consistently weaker in its effectiveness. For at least a small, but influential segment of customers, video means youtube and not television; that means the restriction on copy duration is over. At the same time, as the television is getting smarter as a box, ‘watching’ will soon be replaced by ‘using’, which again threatens the relevance of the 30 sec TVC, they way we know it.
Every brand worth its baseline is running to deliver a more powerful and enduring experience to its customers. Highly evolved brands going a step further: they are attempting to do what we at Starcom MediaVest Group call ‘branding the experience’.

Marketers today know that they have to truly respect the media neutrality of their customers and use a fine mix of mainstream media as well as direct marketing, experiential marketing, PR, word of mouth, digital marketing, point of sale, digital OOH, sports, cause enabled marketing, shopper marketing, trade marketing, relationship marketing, and many other disciplines to be able to build their customer assets. Which one agency has understanding of all these disciplines?
What then, is the relevance of the so called full service agency? What would you like as a marketer – a simplistic model of a full service agency, which constantly glorifies the 30 second TVC, and ‘also’ gives you suggestions of other contacts or would you integrate a powerful combination of specialists who understand your brand and its customer challenges?

Between simplicity and effectiveness, what will you choose?

The battle for supremacy between different types of agency models is over. Either we get it now, or we will write a book someday about the decline of our business.

[Published in IMPACT 5th Anniversary Issue, September 2009]

Is there a loyalty 20 rupees off can’t buy?

Customer Loyalty is a complex subject in the best of times. Every marketer wants its own customers to stay loyal and buy repeatedly from it, while at the same time it wants to encourage experimentative behaviour in its rivals’ customers. This means a brand wants to stimulate fundamentally conflicting behaviour in people.

What is loyalty anyway?

The fact is, since brands live in a competitive world, loyalty is a relative and fluid term and its incidence can change from one category, customer segment and market to another. Except when people have little choice within a category [phone connections a few years ago or power supply at present, for example], some customers want to experiment with new brands and new variants, while others prefer to stay with a brand. Often, loyalty, which can be loosely defined as a customer’s willingness to choose a brand more often over a period than its rivals, is dependent on the price of the product, the level of involvement, the level of competitive marketing activity (including but not limited to advertising), and the number of brands available with similar perception of value delivery.

Often, as in the case of low choice categories, there may be natural barriers to brand switching, even where competition is stiff. In mobile telephony, for example, many post paid customers tolerate unsatisfactory service for fear of having to lose touch with people, if they were to switch their operator. This may give brands a false sense of loyalty, on classical metrics. Similarly, in packaged goods, given our retailing structure led by kirana stores and small, owner-operated super markets, customers are often loyal to the store, instead of to a brand. They move quite easily between brands within their basket, based on retailer push and often promotional offers. Modern format retailing encourages experimentative behaviour anyway and poses further threat to loyal behaviour.

What happens when times are tough?

As customers juggle to fulfil competing needs within limited resources during stressful times, their value consciousness scales new peaks. In fact, the definition of value shifts during challenging times. People prefer simple price offs over cross promotions, which they decode as attempts to get them to buy what they either don’t need or could easily buy at a later date. We found this and more fascinating behavioural changes when we conducted twin consumer researches earlier this year called SENTIMETER and SPENDRIFT, in partnership with specialist consumer diagnostic company - the key. Our ongoing research IntenTrack also gives us INTENT scores for brands within a category as a robust surrogate for loyalty.

It begins simply.

People talk more to each other and to ‘experts’ during stressful times. This means some people buy more of brands which they have got strong relationship with and actually recommend them to friends. Recommending a brand makes these customers appear to be ‘experts’. At the same time, deal seeking behaviour increases dramatically, and many actively look for promotional offers and ‘help friends’ by telling them about ‘the best deal in town’. ‘Deal seeker’ and ‘bargain hunter’ gain legitimacy as desirable labels and become badges to wear. Even well-to-do people compare prices vigorously. This results in faster movement within brand basket than usual and classical loyalty metrics suffer, as overall shopping activity drops. Result: brands which stand for value, both physical as well as emotional, enjoy strong loyalty and advocacy.

Strong company brands gain

In categories where the company is the brand [appliances, cars, services] or where the customer’s self perception of ‘native expertise’ is low, trust and therefore loyalty converges around the company. With a lower intensity, big and established packaged goods brand too hold their repeat purchase level. It may appear counter intuitive, but even small specialist brands see loyal behaviour, since their advocacy levels are usually high and a small group of people make an implicit decision ‘not to let my brand die’. In general, trust in the Government, PSUs, and big corporate groups rises and these see a loyalty shift towards them.

Net net, there is no one pattern loyalty flows during slowdown and resource crunch. It’s the same with brands as with human behaviour. Some think tough times are the best to cement relationships, while others think adversity is the license you need to flirt.

[Published in Financial Express BrandWagon Sep 1/2009]

Original article