The Hong Kong 4As has quietly abolished its controversial pitch fee
policy, which was ostensibly created last year to protect agencies'
intellectual property.
But critics - both advertising industry professionals and clients -
labelled the requirement that companies pay HK$20,000 (US$2,564) for every 4As agency participating in a pitch as
counter-productive and detrimental to business. Various means were
reportedly employed to sneak around paying the fee, including
reimbursing clients after a pitch.
But the 4As insists the axing of the rule had less to do with the
perceived loss of business than its relevance to the times. "It is not
part of our bigger scope of things," says 4As chairman Jeffrey Yu.
The association is reluctantly finding out that its scope of things has
expanded dramatically in the past few months, necessitating
unprecedented introspection and some uncharacteristic eating of humble
pie.
Slowing adspend, fears of a global recession, a shrinking pool of talent
from which to recruit, a nagging sense that Hong Kong had lost its
laurels as the region's centre of advertising excellence - all these
were happening even before the events of September 11 compounded what
was already a very tough year for advertising.
"The good thing about (what's happening) is that it brings a sense of
reality to us," says Yu. "Hong Kong has always been living on a lot of
inflated egos and misperceptions about our superior capabilities -
simply because the city is growing so quickly that everyone thinks he's
invincible. But are we really invincible? I don't think so."
Before the events of September 11, Zenith Media predicted a modest 5.5
per cent increase in Hong Kong advertising expenditure in 2001 - modest
in comparison to the 14.3 per cent leap in 2000 based on current
prices.
Zenith says this year's performance was bound to be "less spectacular"
coming from the pumped-up 2000 base, and slowing world demand is making
sure of this. "We expect consumer spending virtually to stop growing in
2001/2 and GDP rates to slow to two to three per cent," says the
report.
"This and uncertainty over property are dampening ad budgets and
encouraging spend to shift from above to below-the-line. This is making
media pricing softer and more negotiable."
The shift from above to below-the-line spending is just one of the
issues the 4As is addressing in its new charter. Yu says advertising has
changed.
"It's above, below-the-line, internet marketing, CRM, all sorts of
things."
The 4As, he says, will encourage member agencies to develop these
communications skills because "these are more recession-proof than
advertising. Come recession, they cut advertising by significant
percentages. But clients still have to sell the products by other means
so we must make sure we have other skills in place to help our clients
sell."
Clients like Douglas Brown, marketing director of supermarket chain
Wellcome, says advertisers are increasingly moving money below-the-line
as retailers consolidate and use their clout to demand better and more
frequent deals.
"Agencies have to evolve their above-the-line definition to include
media opportunities in the store. If the term below-the-line persists,
it should be redefined to describe short-term, tactical sales promotions
and exclude in-store branded advertising."
Brown says he echoes former Coca-Cola marketing guru Sergio Zyman's
belief that marketing is all about selling.
"A marketer's job is to bank sales and profits, and with the industry
and consumers responding more and more to sales tactics, finding that
balance between above and below-the-line is all important."
Within the advertising industry itself there is a growing consensus that
the line needs to be blurred.
DraftWorldwide regional director for Asia-Pacific, Greg Paull, says: "In
a down economy, services like demand generation marketing and CRM tend
to rise above branding since they offer far more measurability and
efficiency.
"Let's face it: a leaner market is a smarter market and clients are also
being forced to justify their budgets. If they want to increase - or
keep - their dollars, they need to prove campaign performance."
There are some, however, who think the most important needs of the new
marketing environment as defined by the 4As will not relate to
advertising agencies' ability to move into below-the-line services.
UK-based Bigthinking Consultancy's Chris Jaques, who headed the BBDO
network in the region in the late 90s, argues that agencies have
traditionally derived their income from idea implementation: they give
strategy and creative ideas away for free, and make their money on
production, project management and media.
In an environment where brand differentiation is critical, Jaques says
the ideas become infinitely more important and valuable than their
implementation.
"Agencies will not be competitive implementers - their cost base is too
high, their processes too bureaucratic. Agencies and their clients will
increasingly need to outsource implementation to lower-cost specialists.
This has already happened in media and will increasingly happen in every
discipline," says Jaques.
Yu adds: "People with soft skills like ourselves, unless they add value
to themselves, they will find this period very tough. But on the other
hand, those people who have constantly been improving themselves and
regenerating themselves will have no problem going through this
period."
He could be talking about the 4As which, in its early stages, he likened
to being "always about putting out fires."
The solutions now need to be long-term, if the industry is to weather a
growing frequency of slumps. These measures range from lifetime career
programmes to greater interaction with other professional bodies to
assisting China in setting up its advertising industry.
Yu, who joined the industry 20 years ago, laments that raising the
professional bar and investing in people was never really the priority
when Hong Kong had it good.
"We were so caught up with our own success that we forgot about all of
this. We would just say, 'hey, look, now who is going to get how many
million dollar sales?'"
From now on, Yu swears, it will be different. "We're not going to be the
policeman," he says, referring to the 4As early days of in-fighting and
finger-pointing. "We're going to be the value-added organisation."
THE 4AS CHARTER - AMBITIOUS BUT DO-ABLE, SAYS THE AGENCY ASSOCIATION
It's an ambitious set of goals but the Hong Kong 4As believes its new
charter to "uphold Hong Kong's position as the pre-eminent advertising
centre of excellence in Asia" is do-able. The eight-point charter
pledges to fill noticeable gaps in the industry, from flagging creative
standards to providing much-needed training and career opportunities in
order to draw the best and brightest into the industry. It pledges
to:
- Provide high-quality lifetime learning programmes, working with
recognised professionals and educational institutions, and starting with
entry-level training.
- Recruiting the best talent to the industry, starting with university
graduates.
- Promoting the highest creative standard
- Promoting new and associated marketing and communication skills that
meet the changing needs of the new marketing environment.
- Issuing compensation guidelines to help the industry grow at a
sustainable pace.
- Assist in the growth and development of China's advertising industry
and participate in the professional development of member agencies
across the border.
- Cooperation with related associations and institutions, including
advertisers, marketing services, media, research and education bodies,
which will help the 4As achieve its objectives.
- To raise the association's profile both locally and internationally.
