Wavemaker was one of the first media agencies to put out detailed research on the COVID-19 pandemic's affect on the industry, first in China, and later across APAC. Interestingly, even when initially hit hardest, Chinese industry sentiment showed extreme resilience. We wanted to check up on how the media landscape was shifting in China compared to elsewhere, so Campaign caught up with Gordon Domlija in late May. Our conversation has been edited for clarity.
How big is the disconnect between the pace of business in China's recovery compared to the slowdown elsewhere?
It's a different mindset. Definitely. All of our clients are just so full-on at the moment in China. It's really relentless because everyone's just got to catch up what they lost, if they lost anything, and then build on the momentum if they actually gained.
And particularly for a lot of the luxury business we have here, so many of them have accelerated their digitization through COVID-19, that it's transformed business quicker than any planned, or staged learning model that we could actually build. So we've seen massive acceleration that comes through in terms of spending patterns and investment. It's been the biggest 'tear-up' of how you do things in such a short space of time based on genuine real-time changing consumer behavior, which is absolutely incredible.
But it leaves us in a bit of a strange situation, those of us working in China, because you're full-on during the days on your China business and then in the evening you're on global calls about 'what does recovery look like exactly?'
What does the need for flexibility in media planning mean for your services and how are you able to respond with greater adaptability on behalf of clients?
I think it's slightly different in China because we never went through that same phase of testing like link testing or copy testing where you put things to committee or focus groups. Here, it was always about activation. See what the trends are, see how people are changing behaviour, then test in real time in the real world. That's what actually drives business. For us that level of adaptability has always been there. There's always fluidity to planning across channels and across investment. And that has accelerated here.
It's very rare for clients in this market or in this region that you lay down rigid annual plans about how to spend money. But the data sets you have are still based on old school reporting. So you have to take into account that there is a baseline in our understanding of what media channels do, or what communication channels do, what role they play. But the relevance of them has changed, and the availability of those channels and the impact they have and the scale of them have also changed.
Increasingly the traditional data panels used to attribute journey behaviour and therefore investment allocation rationale have become less useful, so being able to apply insight and data derived in near to real time is a great advantage. For example, we have clients across the region in luxury, beauty and premium spirit categories that have product lines historically focused on travel retail as the primary sales channel. Being able to qualify and quantify the purchase journey through to a new conclusion has been the most valuable demonstration of our value in these changing times.
Since January our teams have experienced huge disruption. Along with WPP, 95% of our workforce has been working remotely for many weeks. Despite this we have been working to support our clients in many new ways, supporting with insights into consumer behaviour, reviewing how the consumer journey is changing (changes we believe will continue throughout at least the rest of 2020) and providing tangible support and advice on media choices and investments. We now have new planning tools to rapidly audit client performance and create actionable roadmaps.
Is livestreaming being overdone? To what extent are agencies at risk of influencer campaigns siphoning spend away from other media campaigns?
Livestreaming has been a huge and growing trend for a number of years now. But it's really accelerated massively from a point where it was based on platforms and brands and KOLs, to where it's not just at that level anymore. It truly has democratized retail. It's everybody. Everybody livestreams everything.
We see everything from the biggest brands in China to people making their own clothes and selling them through livestreaming. We have sold Tommy Hilfiger collections straight off the runway via livestreaming, successfully accelerating purchase and creating buzz around the brand. Major brands are taking cues from individuals from like local store owners just in terms of how to innovate and how you sell things. Restaurants and chefs are advertising this way. It's almost become the expectation that this is how you buy things.
And the appetite for it as a channel, both in terms of entertainment and in terms of retail and instant gratification is enormous. You've got 1.5 billion people here so you have an audience for everything, so I don’t see it as being saturated or overdone as long as the quality control is there. The format is something which I couldn't have dreamed of probably five years ago. This could put a lot of agencies out of business, I'm sure.
So livestreaming is a useful part of the paid, owned, earned mix. But as with any other channel, the effectiveness of using livestreaming can vary dramatically dependent on why and how it is being used. There is a huge appetite from people to consume information, engage and of course purchase through livestreaming in almost every category,
Our advice to clients is to access this type of campaign by focusing on relevant innovation. Some brands are dynamic and well prepared to control their brands message well within this environment. Nike in China is a good example, delivering live-streamed workout classes via their WeChat account that have embedded links to other Nike online properties including their other apps and mobile retail store. Banner ads on fitness-related touchpoints are used to attract new consumers to ongoing classes. This works seamlessly and organically within the consumer journey. For brands where control is key, developing a clear strategy and way of testing this platform is recommended, rather than jumping in because it is something everyone else is doing.
Is there evidence that ecommerce giants in Asia may use increasing clout to squeeze brand marketing, or force brands to play according to rules that chiefly benefit their platforms?
Our experience in China shows that ecommerce platforms have the potential to play a clear role around the whole consumer journey, often being one of the most influential touchpoints to build brand bias as well as convert to purchase. We have worked extremely well with the giants in China in helping them create opportunities for our clients beyond driving transaction. Working collaboratively between platforms, clients and agencies has benefits for all, and increasingly this way of working will become the norm across the region.
We see ecommerce platforms outside of China working to develop their capabilities in order to replicate this success, and it is our responsibility to ensure we partner with these platforms to provide opportunities for brands.
Here it is crucial to work collaboratively to define brands’ business critical KPIs, such as category share of sales or new customer acquisitions, and more now important than ever before to think about their equity, performance and ecommerce media through holistic lens. Ecommerce is not the last step before purchase, but the space where buying habits and brand preferences are built.
How do you time investment in outdoor media as the recovery happens? Will lifting of lockdowns lead to a rush back in?
Travel placements in particular are likely to see a continued severe reduction in audience across the next few months. At airports you rely on foot traffic and there's no international flights so that's pretty redundant and will be for some time. Then you've got cinema which I think will take a long time to get back to past levels. Likewise, longer-term static marquee placements may take a little longer to become as attractive to advertisers, compared to digital outdoor inventory where we have significant short-term opportunity to be more flexible in message and placement.
So I think there's a case for reassessing. What we've had to do is reassess value in terms of brand, the number of people that see it, and the proximity to a retail opportunity. All of that contributes to the value of OOH.
But for others, like digital OOH, downtown billboards and office buildings, here in China that's already completely full-on. Look at who the advertisers are and it's the digital retail channels marketing their apps, or tech companies. Those have no shortage of money and are in a fight to gain attention, eyeballs and downloads because that's part of their business growth. That's come back in a huge rush, and I can't see that slowing down.
By integrating live panel data into our planning approach we have made great progress in understanding the role that different out-of-home formats and sites play in making decisions about brands. This helps us assess the contribution and value of outdoor investment at a granular level across categories and campaign objectives, allowing us to better plan and phase investment which is more methodical and calculated. That’s not to say there won’t be a spike in demand as we see a gradual return to new-normality post-lockdowns, but that will be market by market and format by format.
Is there worry in the Chinese market over a recession?
The concern that this is not an isolated incident, that everything doesn't just go back to normal, I think, is prevalent everywhere. There is a distinct worry, as in the rest of the world, in terms of what happens when winter comes in the northern hemisphere again come September and October. No one really knows.
So for us that's the concern and it's probably why we are working at such breakneck speed to capitalize on this and perform this accelerated digital transformation. The feeling is to get everything online, make everything digital because what happens to those traditional media and retail channels if we shut down for another six months? If you haven't moved your business online, you can't compensate for what you were losing in physical retail. And that's a big journey for a lot of clients, but it's what we're seeing now, a mad scramble and rush. That's the role that we play now, to support you in doing that.
Do you agree with Byron Sharp that ad spend overreacts to recessions?
Yes and no. Generally the usual laws of growth still apply. On one hand we have seen evidence of a natural instinct to proceed with caution and assess this situation as it develops, which particularly for brands where supply is hugely disrupted there are short-term practical considerations impacting media spend focused on capturing demand. On the other hand there is short-term value and opportunity in the market, which as we have seen from our experience in China can accelerate the return to growth for brands.
A major consideration for brands is the risk factor of not advertising. Brands need to be aware that growth models of the past will not serve the future. Exceptional growth requires uncomfortable change, and at Wavemaker we know that growth needs to be provocative, even fearless. We also know from our Momentum (consumer journey research) data set that the impact of consumers seeing and experiencing brands in store or through seeing other people using them is a key part of building positive bias to brands. In the current scenario this kind of ‘physical availability’ is on temporary hold, making the role of advertising even more critical.
Being current is the currency. It involves not just merely hitting targets but business transformation too—what digitisation looks like in every workflow, process and everything we do.