Tuesday, November 3, 2009
In the Eye of the Storm
By Jean-Claude Saade
The impact of the economic crisis continues to affect our markets in many visible and invisible ways. Advertising agencies had their share of trouble so far but the world does not end in 2009. The road to recovery will pass by serious efforts of reinvention and adaptation to the new dynamics of a business that has always been in continuous change.
While most countries and companies are still trying to deal with the deep impact of the world economic crisis, it is important to start doing some real thinking on how to put our economy back on the recovery road while trying not to miss possible “positive” results of the slowdown.
The crisis, however, has done a clear work of segregation between the winners and losers, the high impacted markets and the less affected, the companies which have assumed responsibilities and started taking the necessary measure and those who just wants to be saved with the money of others and at any price. This will provide a great deal of material for reflection, analysis and learning when reshaping the future.
On the brand level, the crisis has revealed a lot about the different types of brand cultures, values, attitudes, personalities and school of thoughts. Studying where the strengths and weaknesses are after the impact of the crisis can provide us with clues about the right way to follow and how the post-crisis world will look like.
Advertising and the Crisis
Advertising and communication services have taken a serious hit from the crisis and for all the economic and psychological reasons. Some Arab markets, like the UAE, were more visibly affected from the second half of 2008 till now. Some agencies were also affected more than others because of the nature of their client portfolios, policies and levels of preparations. In certain cases, problems were bound to happen even without a full scale global crisis.
The crisis is not over yet, and our markets are still open to more waves of repercussions. For instance, some shockwaves are currently affecting the media organizations in Lebanon. However, if we look at the activity slowdown in relative terms taking into consideration the size and dynamics of the different regional advertising markets, we can feel the impact of the crisis across the region.
The crisis might accelerate change in the advertising industry, however, the role of advertising in building and nurturing lasting relationships between companies and their customers will preserve its importance for now and for the future. So let us keep this key role in mind when reconsidering the situation and re-tooling for the post-crisis and beyond.
How advertising is supposed to sell products and services during these times when people don't want to buy? – What advertising agencies are supposed to do when clients are out of business or budgets have vanished for the known reasons?
Agencies had always to deal with a classic contradiction. When times are good and the market is flourishing, clients will put more money in advertising. But when the times of crisis arrive, clients tend to spend less or just stop spending. This has been the usual logic for decades and not just for now; a “logic” that simply goes in the reverse order as good marketing activities lead to good sales and not other way around.
The recession is shaking things up; and in some ways it will reward real strengths and expose weaknesses, create new opportunities and kill old habits, destroy old business models and accelerate the evolution of certain sectors including advertising.
After a historic crisis like the one we are experiencing right now, we cannot initiate the recovery and create a better economic situation with the same old tools and the pre-crisis practices, attitudes and services that, in some cases, have contributed to the current situation.
The UAE has one of the most dynamic and important advertising sectors in the region and it was one of the most affected. Now it is of prime importance to think of ways to take this industry out of the crisis to a stronger position that will enable advertising to play its key role in the economic development of the UAE and the region.
In the global markets, an “Ethical Renewal” is now expected from corporation and businesses. Advertising agencies will not be an exception. Moreover, the crisis might be the right time for a movement of re-invention that comes from the inside rather than wait for new regulations and norms that will be imposed from the outside.
Creativity in all its manifestations will be the most sought after offering from the advertising industry in the future. At the same time, certain inherited practices from different times and different market situations will probably need to left outside the post-crisis advertising business.
The thought times will eventually reward brands with solid foundations and clear added-value and expose the fake and empty ones. We have few ideas and suggestions that might be useful during the recovery phase especially for those who believe that change is necessary for evolution. Advertising agencies that have always encouraged their clients to change and try new ways and ideas have to start eating their own cooking.
Going into a “smart innovation mode” will eventually lead to a renewal of the industry with new Services, new Structures and a new Spirit.
Advertising is part of real life, and it is on the forefront of social issues and trends. Therefore, Advertising services have to be most adapted to specific needs and to the current market situation. Messages have to reflect the realities around us and campaign cannot be created with total denial of the crisis and people’s real concerns. Advertising has to admit the problems we are facing and address people realities and mindset. Humor is always good, but pompous and silly advertising will be less appropriate.
Beyond the adaptation of the content, new advertising and marketing communication services and new creative approaches to mix these services will be most needed to help clients protect their brands and businesses and keep their positive image throughout these difficult times.
By nature of their role, advertising agencies are supposed to be the most agile and responsive structures. In the past few years certain agency networks have grown in size and structure to become even more complex and heavy than most of their clients.
The recovery phase will favor more creative agency models. It is important for agencies to keep a “manageable size” that is not too small to offer a perfect service and not too big to limit the human factor, creativity and fresh ideas.
Group structures, alliances and collective industry initiatives can provide even more support and credibility, bearing in mind that some of these most needed initiatives, like measurement, are still on hold since ever.
A realistic understanding of the role of advertising in the business chain and consequently its real value and contribution is needed. Also, some degree of humility will be useful in going out of the crisis.
The real importance of advertising comes from the positive results that it can provide to clients’ brands and businesses and consequently to the economy and society in general. In the absence of these contributions, nobody really cares about advertising. Making sure that real value is delivered with every idea, every meeting with client and every campaign will build a lasting reputation for advertising.
It is important to have great services and a well known name in the world of advertising, but passion, enthusiasm, and a strong sense of purpose beyond the actual products and services will set the new breed of agencies apart.
Customers are eager to discover the real face of brands in the way they are acting and behaving during the crisis and not according to their communication slogans and campaigns. This time of crisis will present great opportunities for the solid brands and good companies that are pursuing the right strategies. They will be facing real problems and slowdown because of the general economic context but their relationship with their customers and their image will come out of the crisis intact and even much stronger.
Change has been the constant in advertising and it is going to happen with or without crisis. Advertising agencies that really believe in the power of ideas in transforming their business and the business of their clients will come out of the crisis not without some lasting scars but these will the proof of a re-invented industry that can bounce back with more maturity, better services and stronger will to continue building a better world that is much needed in these days.