Vittorio Bonori, Zenith’s Global Brand President, spoke with Russia’s leading advertising magazine Adindex about the need for brands to innovate and invest in business transformation in order to drive growth.
A = Adindex
V = Vittorio Bonori
A: In May, Zenith announced a rebranding with moniker ROI+. What has changed in your operations since then?
V: At the beginning of 2017, we had a global conference where we officially launched the new vision, the new identity and the new proposition. We embraced the position of ROI agency 15 years ago and the promise is very high: you promise to measure everything and to deliver return on investment. Within this new digitalized world, of course it’s easier because we can measure more, so we put in technology and data at the core. The proposition is very simple: we want to be a growth partner for our clients. So we set up a strategic platform called ROI+. It’s divided in three areas: upstream strategy, owning the consumer journey, downstream automation.
Upstream strategy is the first step of conversation with client. We start auditing the capabilities, we have 10 different areas where we start sharing with clients the assets that are available on the client’s side, on data, on technology, on content. And we try to help fill in the gaps, because if you don’t have the right capabilities in place, you don’t have permission to play. So for example if you want to deliver automated solution or to automate your communication, your creativity, you need to have the right tech in place, the right strategy in place.
Then we move to what we call the journey planning. And we decided to put a journey planning approach at the core of the proposition. So we normally design our solution to clients through a journey model which is a proprietary one. It’s called CX Loop. We start by exploring the customer journey from a brand awareness perspective to understand where potential and new opportunities lies, where you maybe have barriers that need to be removed. When a global client or local client is embracing this model, you are delivering growth, you are in sales uplift. We started one year ago, being more disciplined, embracing this ROI+ and it’s delivering growth. On nearly 20 markets we embrace ROI+. And we measure the impact and we are monitoring growth in terms of sale, ranging from 7 to 30% according to different markets.
And finally, we’ve got downstream automation. This is quite unique. We are embracing automated solution in the implementation phase. We’ve been the 1st agency to embrace and to apply a completely fully automated machine learning algorithm to run a digital campaign. So basically the algorithm was allocating budget of different digital channels automatically and learning from performances and reallocating the budget in real time. And we did it 2 years ago on an insurance client called Aviva, it was a first beta test and we announced scaling this on many different clients.
Of course that’s why I believe Russian market is going to be key in our future growth because of the fantastic capabilities you have in place here. Your educational system, the mathematical and statistical capabilities, data scientists you have in the market, in our organization. I think it’s unique and we are already doing some interesting solutions for client. And I think Russia could play a fantastic role. I’m really fascinated by what I’m seeing here.
A: Press releases and publications said that the creation of upstream strategy is meant to deliver growth through business transformation. Does that mean that you’re suggesting clients or consulting them on stuff beyond media and advertising?
V: You’re absolutely right, this is our ambition for the future and for a very simple reason. We see that there is a convergence between commerce and communication. That’s why we try to have a complete picture of a journey, of a consumer journey and user experience. Of course we used to do media before or communication and now there’s no interruption between creating awareness and moving to conversions. You need to have a global overview of that.
So the ambition is to be a more transformational growth partner which means being more consultative. I’m not saying we want to become McKinsey or Boston Consulting but definitely our ambition is to play a more important role in the dialogue we have with clients. Because we understand more about the business model there are. If you focus on commerce for example, you have more data to populate your decision along the journey, you become a business partner, basically. So we are elevating our position in the marketplace, this is our future direction, future ambition and I’ll give you some example.
This year, at the beginning of the year, we started changing the conversation with the global clients. And when we say being a transformational partner it means simply helping clients to design transformational stories.
So you may have noticed that in most of the categories because of the role of data and technology, consumers are [more empowered]. So in most of the categories you see transition from selling products to selling personalized solution. On the pharma business, from selling pills or drugs into selling personalized health programmes for people. Because of the data signals you have, because people wear wearable technology, because we understand more about individual elements or characteristics.
Answering your question, embracing a transformational story for clients and understanding what the business challenges are gonna be was really helping delivering growth. And we’ve been delivering growth to our global clients this year, it’s working, it’s the right direction and we’re really proud about that.
A: Do you think every client needs a transformational story?
V: Of course we don’t want to disrupt the model if it’s not required. But we see pressure on the business model in most categories. The arrival, the rise of a new platform can be a potential threat to all categories.
So when I told you about the algorithm, I think it was a brilliant solution because we can design algorithm that can override even Google algorithm. The client is owning the model, but we can share codes with different platforms for collaboration. But the client can retain the secret of [conversion]. I think this is an interesting direction because at the same time clients need to collaborate with big players like Google or Facebook or even your big giant here, in Russia. But at the same time they need to find their own way in order to survive the future and not to lose competitive advantage so this is what we try to achieve.
A: Can you name any other key ways of innovating for clients?
V: First of all, I think innovation can come from many different directions. You can innovate in the way you design your journey model, you can innovate in the uses of content for example. Content is a fast-growing new economy and of course as you go into a more personalized solution, communication, you need to play with content in a different way. You need to use the data to understand more: what is performing, what is not, and then you can really ask your creative partner or content producer to use ideas and creativity to deliver. So it’s really an alchemy between creativity, smart ideas and technical solution.
Sometimes innovation can come in the way you implement a strategy. So for example, the car industry, we develop smart innovative solution for retailers, for the dealers which is normally quite a difficult and tricky area for car manufacturer because it’s difficult to control what they do. Sometimes they’re responsible for the brand equity so they need a degree of flexibility but you still need to respect the guidelines for the brand. They are responsible for the local budget and sometimes they’re wasting money, they don’t get the right asset in place. For those cases, we designed an automated platform for content distribution on the dealer side for cars, for a big car manufacturer. It’s not revolutionary, but it’s really changing the way brand can compete in the market.
A: If you follow what is happening in the Russian media market, you might notice we have a consolidated TV scene. Is this unique to Russia or does it happen in the rest of the world?
V: I don’t think it’s unique. It’s a peculiar characteristic of Russia. All the markets where we see a lot of concentration in some of the media. Sometimes it’s TV, sometimes digital. If you take Spain for example, there’s sort of duopoly, similar in Italy. Every market is different.
I think the potential we see here [in Russia], is of course the digital evolution. The share of digital in this market is evolving fast which is a very positive signal. Probably, in 2018 we’re gonna see digital overcome. Which is quite advanced, we still have markets where digital’s penetration is lower.
A: We notice digital and TV being the major markets. But there are other media like OOH, print and radio. Which of these media do you see as being underrated in the industry?
V: I think that we see global trends affecting every single market, more or less. Every digital media is growing. You mentioned out-of-home, digital out-of-home is gonna grow and provide more opportunities. We see the rise of programmatic solutions, automated media activity is growing so TV is now getting into programmatic space, radio is programmatic, digital OOH would become programmatic, digital version of print is gonna be included in the programmatic space. Another major trend is mobile, we estimate that in the next 3 years 70-75% of adspend growth is gonna come from mobile.
I think that clients are really experienced, they know what they do, they know where they invest after many years [that the media industry exists]. This is not a new industry, it’s quite consolidated. So I think that we are getting more and more to the proper balance.
There is a big global debate now about how much money clients are investing in digital. [Several] years ago we’ve seen big clients saying ‘We should be faster moving, at least spend 30-40% of the money into digital’. We see now they’re moving in the opposite direction because the digital space is complex, measuring digital is easy and difficult at the same time. So now because they don’t have always the full understanding of all the digital KPIs and ROI of each single digital channel, they now [feel] the need to come back a little bit to paid media. Maybe it’s a matter of balance. Because when you design a customer journey, you need paid media to drive awareness, then you need to convert your awareness into consideration and performance.
A: When we look at you Confidence Index, we see that media and entertainment are being the most confident, next to them is pharma. So I guess, they’re being the most vibrant in embracing technology and data?
V: The reason for pharma or automotive or media and telecom for more positive attitude for the future is because they’re being forced to go through massive transformation before other categories. So pharma is full transformation. Automotive is in full transformation, you see what’s happening with electricity and hybrid, complete reinvention of the industry. And telecom transforming into digicom, digital has really changed that business. I can say that every single client, every industry is going to face this transformation.
A: Which industries are being slower in that process? Which industries are less excited about data?
V: In some cases, probably FMCG. If you are a dairy company, a company selling basic ingredients or food, they’ve been probably more reluctant at the beginning. They couldn’t see a proper model for their business at the beginning. Now they’re accelerating a lot, big clients like Nestle. They’ve been accelerating a lot because of commerce. When you have e-retailers or platform like Amazon starting delivering food in 1 hour in the big cities you understand that you need acceleration and they see the value, they see the opportunity to create more personalized solution to customers.
And of course because FMCG needs penetration and they’re talking to big audiences, they’ve been more reluctant at the beginning to move into 1-to-1 communication. So what we are trying to do now is to design personalized 1-1 communication at scale.
A: You mentioned issues with measurements. My colleague has discussed at length with Marina Alexandrovskaya that there are problems with forecasting internet because of the estimation methods differing with AKAR. Are there issues like these globally? Is it hard to measure digital?
V: It’s a common problem. Because we were used to monitor adspend through Nielsen data and in a more traditional environment years ago, the measurement was not perfect, we knew, we were missing different piece of information but overall maybe for 80% of total amount, it was quite reliable. With the complete digitalization of the industry, digital is really badly measured, there are many areas that Nielsen is not able to track. So now what we see in a specific category, when you try to get a picture of the competitive situation, the picture is really incomplete. Especially when you have highly digitalized sectors or companies, you miss the major part of the picture.
Trying to provide agency or group solution to that is difficult because digital is such a large space to measure. We have tools, but they do not cover the digital 100%, of course. Because no one is able to do it, it’s a really big challenge. For example, we develop solution like Touchpoints ROI Tracker which is a research with very big samples, there are more than 1000 studies, probably the largest consumer database in the world exploring the relationship between consumers, media and brands. Touchpoints can give you a better idea on the way brands are building experience through the uses of media. This is an experience metric, it’s a good proxy to market share. It’s not so granular but you can detect a strategy of the new entrant in the market. Especially with the use of optimal digital channels, you can get a good proxy.
On top of that, there’s another problem. I think the traditional way that traditional media and marketing measurement models are missing part of the picture. They’re trying to estimate the impact of different touch points to sales in a very linear way. Unfortunately, we’re not planning media in a linear way anymore. We orchestrate media, we create media ecosystems. That’s why for example we have launched new techniques. It’s what we call ‘predictive analytics’, still algorithms. very sophisticated model that are telling you what is the direct or indirect role of touch points to sales.
I’ll give an example. On a category, same market, same category, you can have a brand where you can see a 30% direct effect of TV to sales. Different brand, same category, same market where TV impacted direct effect is only 5%. So if you are in marketing decision-making for the second brand, you go ’Oh, you should probably cut TV and move more money into different channels’. Wrong answer. Through convergence analytics or predictive analytics, we can see that in that case the direct contribution was only 5% but the indirect effect of TV was massive. Because it was driving people to the website, to watch online video, it was pushing for e-commerce. If you miss this picture, you can make so many mistakes. And my feeling is that companies are making mistakes because they don’t have the right measurement framework in place.
A: Where do you see media market going in 5-7 years?
V: Very hard predict the future. I can summarize my vision in a simple expression. I see the future of marketing and communications in the place where companies will compete through knowledge. So that’s why data is the new currency. An organization like ours has always brought value to our client through the scale. When you have scale you could bring much stronger negotiation power, more value, research, R&D. I think scale is now driving better data, better understanding of your brand and categories. And that’s why I see future where brands and clients and companies will compete through algorithm. Where if you have a better algorithm, you’re gonna beat your competitor because you are gonna have better knowledge of your marketplace or your customers. That’s my view, I can be wrong, I don’t know but we embraced this vision.