AnalogFolk opened its new office in Shanghai, the agency’s first in Mainland China, 18 months ago. While the team won work from both new and existing clients and grew to eight people, Bill Brock, who co-founded AnalogFolk in 2008, still felt that from his base in London he wasn’t getting a good enough grip on the China market.
“Whenever I would get on the phone with our directors there I just had this uncomfortable feeling in my gut that I was giving them Western advice,” says Brock. He asked around for points of view about what the environment was like in China, he says, but would get back differing answers, many of which already seemed dated when he knew how fast the market was changing.
Brock was so sure there were more nuanced and up-to-date insights to discover that he moved his wife and 2-year-old son to Shanghai for four months to take an overview of the situation for himself. While the family had a great adventure—Brock’s son has blonde hair, and was greeted with such enthusiasm in China that Brock says he will spend the rest of the year “trying to bring a 2-year-old’s ego down to earth"—Brock also picked up some key lessons about operating a creative digital agency in China today.
Here’s what he learned from four months on the ground talking to “roughly 100 people”, from clients and competitive agency heads to journalists and prospective employees.
1. Creative marketing services is an incredibly crowded space in China
In the last 15 years, every agency worth its salt globally has set up in China, Brock points out, drawn, obviously, by the size of the market. At the same time, consultancies have landed, digital media players like Tencent have started to work with brands in much more depth and local Chinese agencies have become much more tactical, hiring better talent.
While there's been enough volume of work for everyone to grow and flourish in that environment, Brock thinks it has led to brands “feasting off the opportunities” from rising consumer wealth and growth without needing to think long-term. “With the internet explosion and social-media explosion here 10 years ago, no one really cared how your website and Facebook page and Snapchat channel connected with your physical retail environment," he says. "Brands didn’t really think about that. They just thought: 'Can I do a campaign on Facebook that will create fame around Black Friday and drive more sales with my products?'”
2. Demand is now shifting from strategic services to tactical requirements
“My sense is there's been a shift in the last 18 months, and client demands for strategic creative marketing services is waning,” says Brock. He comments that while a few strategic briefs still exist in China, there has been a drop-off in how much brands are willing to invest in long-term strategy and a subsequent rise in demand for shorter-term tactical activations, such as establishing WeChat channels or creating campaigns to drive footfall for Chinese New Year. This creates a dilemma for agencies.
"Either you hold strong and you wait for all the other agencies to drop off a little bit in their ability to invest in strategic services, and you play to your still small startup strength, or you shift towards being able to provide at pace those tactical requirements and focus on the specialist delivery in particular channels,” says Brock.
While neither option is appealing, the latter amounts to little more than “a race to the bottom” in which everything becomes incredibly price sensitive. Brock describes a handful of big pitches AnalogFolk has entered in the last four months, for each of which they might spend roughly RMB200,000 (US$28,990). They'd win the work but then discover the brief for the project was just RMB500,000 ($72,478). “It’s unprofitable, and there’s no promise of future work, unless the tactical work is so exorbitantly successful that they just default to you the next time. I think it is a very difficult environment to flourish in,” he concludes.
3. Opportunities lie in the ‘experience ecosystem’
If that ‘feasting’ boom period was ‘phase 1’, Brock does see some new doorways opening in the next stage that China is moving towards. “While strategic thinking is being undervalued in terms of communications, I think there's a opportunity in China to partner with brands on strategy and innovation that relates to customer experience and technology,” says Brock. He’ll be keeping this in mind as he plans the Shanghai office’s next moves in terms of recruiting and planning, he says.
It means working out what a brand’s complete ‘ecosystem of experience’ should look like, and overhauling existing piecemeal strategies. “Brands pay Tencent to make their Tier 1 Tmall experience, they partner with Alibaba to create their e-commerce experience with Alibaba and they don’t really use websites because their entire digital existence sits within those existing platforms. And, they have internal teams that do retail technology and experience and they they use specialists for things like events and the more experiential side. I just think that's sort of changing.”
While Brock says that two years ago people told him there wasn’t a market for this kind of strategic service, the agency’s Hong Kong and Shanghai teams already have between them a few clients who are starting to think like this. “The one thing I would say is really different about China is that fact that the platforms consumers are existing on are so connected in the way that they move from film and content through to commerce and retailing,” he says. “The thinking around how those journeys work and how you execute a rich experience in those journeys—I believe there'll be an increased demand for that.”
4. You don’t need local Chinese mainland leadership to succeed
His time in Shanghai also revealed to Brock that even though every member of his team is Chinese, there’s an “over-perception—or possibly an over-communicated perception”—within the industry that you need local leadership to succeed. “I just didn't find that at all,” says Brock. “I think there is a cultural thing which is super important, but that's important in every part of the world. You need to be respectful of a culture that has different traditions and ways of communicating in meetings and in email and all that sort of stuff, but I don’t think that requires you to be born and raised to understand that."
Most of AnalogFolk’s clients fall into the bracket of “international people”, he says: they may have been born or raised in China, but very few haven’t spent their careers travelling throughout the world. “My conclusion is I think it's been overplayed. People talk about it more than it is a reality.”