 "The agency of the future will be just a consultancy: Michael Karg & Vincent Digonnet")
An advertising agency will have to understand the intersection point of technology, media and consumer behaviour to deliver the right creative, Karg and Digonnet tell Rohit Nautiyal
Mobile ad revenue of social media platform Facebook has already surpassed that from the PC. With mobile becoming the centre of advertiser's attention, how ready are today's digital agencies to harness this change?
Karg: Facebook's recent acquisition of WhatsApp could mean the end of advertising. Today almost every branded mobile application comes with messaging, the future of commerce. In the history of commerce, advertising has always been considered as a disruption detested by consumers. Social media has established that when it comes to making a purchase decision the consumer rates the word of her family and friends the highest. Social media platforms of the future will focus on brand utility and service and leverage the power of recommendations. We have reduced our focus on advertising elements as it constitutes a small portion of our revenues now.
Digonnet: When it comes to social media, China is 10 years ahead of the US. The popular social media platform Sina Weibo in China worked like a version of Twitter on steroid. Just scratch the surface and you will love the Chinese mobility solution formula for its simplicity. They take an application made in the US, add 10 functionalities and launch the new version. Sina Weibo tanked when it started incorporating too many advertising interruptions on its platform. Around 2011, Tencent invested in mobile chat service WeChat. Today with more than 500 million subscribers in three years, WeChat has grown to become the biggest threat to social media platforms, especially Facebook, whose acquisition of WhatsApp is part of its counter strategy to gain equal footing with Tencent. WeChat has completed the journey from instant messaging to entertainment and lifestyle platform and incorporated banking eventually.
What will be the impact of the disintegration of traditional media on the job market?
Digonnet: It will not be very negative. In fact, the digital industry will create more jobs simultaneously while agencies get rid of people with traditional media profiles. As platform agnostic content gains importance, more skilled people will be required to fill senior positions.
How different are India and China in terms of their digital capabilities?
Digonnet: There's a huge difference in the digital attitude of India and China. During one of our recent conversations Michael told me that India is emulating the West at a time when it should focus on the East (read China). None of the Silicon Valley start-ups would exist without the Indian talent. Sadly, the young generation of Indian entrepreneurs has not invested its resources in building platforms for the future.
China did not accept what Google and Facebook had to offer. Based on its interactions and challenges, China built its own social media networks. As a result, it leapfrogged and left other social media platforms behind. This is why e-commerce platforms in China are way ahead of any platform in the US.
Karg: Earlier, while working in India some global networks used to complain about the lack of infrastructure. This has changed now. The world knows that today India has the right talent base and technology. It will not be a surprise to see the maximum number of digital innovations coming from India.
As technology leaders Google, Apple and Microsoft are scrambling to create a seamless multi-platform user experience, customers are moving towards ad-free platforms. What will this do to the business of advertising?
Karg : The agency of the future will be just a consultancy. Any creative hotshop or a well-established network will have to understand the intersection point of technology, media and consumer behaviour to deliver the right creative. So companies will look at the new consultancies for advice on how to be prepared for this change and reorganise themselves. Interestingly, when this happens media planning will have a whole new meaning. Imagine the possibilities when millions of ad dollars will be saved and pumped in creating new user experiences and content. For instance, look at the brand journey of Red Bull. The company, which hardly advertises, has focused on owning properties through sponsorships (like F1 teams and various football clubs).
Digonnet: How can advertising sustain when mass media is crumbling? Access to information has become instantaneous and all advertising does is give more relevant and irrelevant information. There are only a handful of examples of brands that are talking about what matters to the consumers. For example, Nike is no longer about selling shoes and T-shirts. It sells 'performance' in products like NikeFuel or Nike+. We have reached a point where companies who do not spend 90 per cent of the marketing budget on content and only 10 per cent on media will lose consumers' attention.
While globally social media has done well in generating leads for small businesses and MNCs, there are still challenges in the area of payments. What can we learn from China's booming social e-commerce?
Digonnet: Everything starts from data. Before the internet, mass media advertising was a surrogate for getting the right data because there was no other way to understand consumer behaviour. In the digital age, you can monitor what consumers are doing online and harness this data to come up with insights. The social media platform of the future will not allow any advertising. China is the best example of social e-commerce today. For example, Nike uses Weixin (or WeChat) in China to build its brand profile. We have recently developed a native application (app within an app) that allows people present on the instant messaging app to access Nike content. The interesting feature is that as an open platform Weixin is doing away with the need of downloading a new app every time to access content.
Chinese consumers value peer-to-peer recommendations disproportionately. So if my friend on Weixin shares a picture of a new mobile phone, I can choose to purchase the same instantly without leaving the platform. This is because Weixin allows its users to link their bank accounts to their instant messaging application accounts. It is all about simplifying the consumer's life and getting rid of the browser environment.
Today clients are making choices between networks and boutique agencies. What will be the future of digital services once consolidation reaches a saturation point?
Karg: Agencies will look very different five years from now. At Razorfish, we have set up command centres with social media listening tools. Social media makes it possible for brands to test campaigns and incorporate consumer feedback. This will be possible when companies, agencies and big data experts collaborate and work together. This will also strengthen the bond between companies and their agencies because a lot of time wasted in calling project pitches can be used in creating better content. Having said that, networks that still get 50 per cent of revenue from media buying will reorganise themselves soon.
Digonnet: A lot of agencies that started off as advertising agencies also provided solutions for the internet. Soon social media platform development outgrew that model. As a result, the entry point is 'platform' and not 'media'. Technology will continue to be the core of our business. As mentioned in the Weixin example earlier, we are shifting our focus to platform integration and management.
Mobile ad revenue of social media platform Facebook has already surpassed that from the PC. With mobile becoming the centre of advertiser's attention, how ready are today's digital agencies to harness this change?
Karg: Facebook's recent acquisition of WhatsApp could mean the end of advertising. Today almost every branded mobile application comes with messaging, the future of commerce. In the history of commerce, advertising has always been considered as a disruption detested by consumers. Social media has established that when it comes to making a purchase decision the consumer rates the word of her family and friends the highest. Social media platforms of the future will focus on brand utility and service and leverage the power of recommendations. We have reduced our focus on advertising elements as it constitutes a small portion of our revenues now.
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What will be the impact of the disintegration of traditional media on the job market?
Digonnet: It will not be very negative. In fact, the digital industry will create more jobs simultaneously while agencies get rid of people with traditional media profiles. As platform agnostic content gains importance, more skilled people will be required to fill senior positions.
How different are India and China in terms of their digital capabilities?
Digonnet: There's a huge difference in the digital attitude of India and China. During one of our recent conversations Michael told me that India is emulating the West at a time when it should focus on the East (read China). None of the Silicon Valley start-ups would exist without the Indian talent. Sadly, the young generation of Indian entrepreneurs has not invested its resources in building platforms for the future.
China did not accept what Google and Facebook had to offer. Based on its interactions and challenges, China built its own social media networks. As a result, it leapfrogged and left other social media platforms behind. This is why e-commerce platforms in China are way ahead of any platform in the US.
Karg: Earlier, while working in India some global networks used to complain about the lack of infrastructure. This has changed now. The world knows that today India has the right talent base and technology. It will not be a surprise to see the maximum number of digital innovations coming from India.
As technology leaders Google, Apple and Microsoft are scrambling to create a seamless multi-platform user experience, customers are moving towards ad-free platforms. What will this do to the business of advertising?
Karg : The agency of the future will be just a consultancy. Any creative hotshop or a well-established network will have to understand the intersection point of technology, media and consumer behaviour to deliver the right creative. So companies will look at the new consultancies for advice on how to be prepared for this change and reorganise themselves. Interestingly, when this happens media planning will have a whole new meaning. Imagine the possibilities when millions of ad dollars will be saved and pumped in creating new user experiences and content. For instance, look at the brand journey of Red Bull. The company, which hardly advertises, has focused on owning properties through sponsorships (like F1 teams and various football clubs).
Digonnet: How can advertising sustain when mass media is crumbling? Access to information has become instantaneous and all advertising does is give more relevant and irrelevant information. There are only a handful of examples of brands that are talking about what matters to the consumers. For example, Nike is no longer about selling shoes and T-shirts. It sells 'performance' in products like NikeFuel or Nike+. We have reached a point where companies who do not spend 90 per cent of the marketing budget on content and only 10 per cent on media will lose consumers' attention.
While globally social media has done well in generating leads for small businesses and MNCs, there are still challenges in the area of payments. What can we learn from China's booming social e-commerce?
Digonnet: Everything starts from data. Before the internet, mass media advertising was a surrogate for getting the right data because there was no other way to understand consumer behaviour. In the digital age, you can monitor what consumers are doing online and harness this data to come up with insights. The social media platform of the future will not allow any advertising. China is the best example of social e-commerce today. For example, Nike uses Weixin (or WeChat) in China to build its brand profile. We have recently developed a native application (app within an app) that allows people present on the instant messaging app to access Nike content. The interesting feature is that as an open platform Weixin is doing away with the need of downloading a new app every time to access content.
Chinese consumers value peer-to-peer recommendations disproportionately. So if my friend on Weixin shares a picture of a new mobile phone, I can choose to purchase the same instantly without leaving the platform. This is because Weixin allows its users to link their bank accounts to their instant messaging application accounts. It is all about simplifying the consumer's life and getting rid of the browser environment.
Today clients are making choices between networks and boutique agencies. What will be the future of digital services once consolidation reaches a saturation point?
Karg: Agencies will look very different five years from now. At Razorfish, we have set up command centres with social media listening tools. Social media makes it possible for brands to test campaigns and incorporate consumer feedback. This will be possible when companies, agencies and big data experts collaborate and work together. This will also strengthen the bond between companies and their agencies because a lot of time wasted in calling project pitches can be used in creating better content. Having said that, networks that still get 50 per cent of revenue from media buying will reorganise themselves soon.
Digonnet: A lot of agencies that started off as advertising agencies also provided solutions for the internet. Soon social media platform development outgrew that model. As a result, the entry point is 'platform' and not 'media'. Technology will continue to be the core of our business. As mentioned in the Weixin example earlier, we are shifting our focus to platform integration and management.
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