Zheng Jingmin, CBNweekly, talks to Vittorio Bonori, Zenith Global Brand President about an increasingly digital world, and how traditional advertisers should respond to new trends and the rise of new start-ups.
In Q2 this year, P&G’s digital marketing expenditure fell by $100 million USD. In the next 5 years, the company plans to reduce its marketing costs by another $2 billion USD, after spending $7.1 billion USD on adverts. Other advertisers that are following this trend include Unilever, Danone and Nestle – all major players – whose revenues have taken a hit as a result of these decisions.
Vittorio Bonori, Zenith Global Brand President, is not overly concerned. As internet companies increase in influence, the focus of traditional advertising companies has shifted. In 2016, Google and Facebook combined to comprise 72% of new digital advertisement expenditure in the US. Technology has revolutionised the advertising industry, forcing major advertisers to face a series of new challenges. However, established brands continue to hold an edge in content, technology and global vision, even in the face of a rapidly evolving market and a myriad of new competitors.
Zenith, part of Publicis Media, entered the Chinese market in 1996, and was one of the first agencies to advocate for media return-on-investment (ROI).
C = CBNweekly
V = Vittorio Bonori
C: What marketing trends have you seen in the global market in the past 5 years?
V: First, the combination of business and dialogue. The rise of new technology has brought consumers and points-of-purchase closer together, allowing consumers to make purchases with just one click. This means that companies have to be even more attentive to the consumer and achieve their objectives by meeting consumers’ needs in a point-to-point, end-to-end manner. Secondly, mobile advertising expenditure increased by roughly 70% last year. Another significant trend is the introduction of platforms, with platforms such as Google, Facebook and BAT in China establishing ecosystems for ad spend.
C: What changes are we seeing in major advertisers’ budgets, and how do agencies respond to cuts?
V: There is a shift from traditional ad spend to digital. We see that the major advertisers are experiencing a steady decline in traditional media, but overall marketing budgets have increased rather than decrease. Advertisers are expanding the reach of their marketing budget into different fields. In the past five years, the 15 largest listed companies in tech have increased their marketing budget tenfold and doubled their advertising expenditure. In addition, major companies today have to take a lot of aspects into consideration in their marketing, such as content, precision marketing and integrated marketing services. They are also paying more attention to data and distributing their marketing budget more widely.
C: Digital channels have also opened the door for concern about brand safety. How do you view ad fraud issues in the digital ecosystem?
V: As advertisers increase their digital spend, the methods to monitor or analyse advertising effect have become necessary. Many Chinese brands are deeply invested in performance. They pay the media and go to great lengths to try to increase its related performance. I think this is a big mistake. The secret to advertising success is balance. The trend of digital marketing is obvious and irreversible. Technology, know-how and investment are all necessary components of digitalisation, including automation and AI. At Publicis Media, we have zero tolerance for advertising fraud, including lack of transparency in marketing. We have systems and departments dedicated to tracking advertising effectiveness, and we work with publishers and suppliers to monitor it. Advertising fraud is something that the global market takes very seriously as well, and there is a movement towards increased transparency in advertisement.
C: The market has seen a rise of local start-up agencies in recent years. How do you view such agencies, and what are their effects on the advertising industry?
V: The rise of start-up agencies has become increasingly apparent in the past 4-5 years. They have grown rapidly, and they have great capacity for innovation. This is good for the industry.
As a global advertising company, Publicis Media faces competition across the globe, whether from large agencies or small start-ups. Smaller agencies may gravitate towards targeting the local market and providing services for entrepreneurship. They may be able to provide faster, commercialised services on a more short-term basis. From the perspective of an advertising group, however, we hope to establish long-term partnerships with our customers. Large companies enjoy advantages in digitalised technology and capital that small companies cannot hope to match. Of course, small companies may hold a professional edge in a particular field, such as social media or business networking