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Melanie Lo on the procurement dilemma facing the media industry

At a time when the ad industry is facing increasingly demanding clients and tighter budgets, Melanie Lo, CEO of GroupM Hong Kong, tells Jennifer Chan about another encroaching worry – procurement.

Tell us your most memorable pitching experience?

It was when we first won the 20th Fox Century account. It was an account in the entertainment category and its brief was interesting. So we wrapped the presentation into a cinema experience.

First we sent mock trailers and movie tickets to the client ahead of the presentation day. We then adorned the venue as a cinema with popcorn prepared, mock trailers running and our employees disguised as theatre ushers escorting clients to their seats.

It was more of a team-building exercise than a pitch. Even if we hadn’t won the pitch it was such a nice experience.

Tips to impress clients?

Most media pitches have no creative work or storyboards to show, hence, they can be pretty tedious.

In those maximum two-hour pitches, especially when background researches are 70% similar to other agencies, how we can make a difference to the other 30% is to impress clients.

Packaging is therefore crucial. When the difference between agency recommendations seems all alike, you have to go the extra mile to deliver your execution ideas and strategies to clients. I encourage staff to use more varieties of deliveries such as videos boards and out-of-the-box ideas, instead of only powerpoint.

But note that you can’t ignore one basic rule – understand you clients’ businesses, then their chemistry. Clients are actually looking for a partner. Many successful agency appointments are based on chemistry between the two parties.

It’s also important to show synergy and communications between your teams from different regions.

Are clients becoming more harsh and demanding on the media industry? 

This is a general problem across the industry. Basically, what clients value the most is ideas (on strategies), yet, the exact same thing clients are reluctant to pay for.

In the media sector, our charges for clients are calculated based on what we can buy out of the media plans we offer. In most cases with all the ideas we’ve thrown up, we only get a commission to the most basic plan. Those ideas that bring in less money will be eliminated.

For example an on-site event, where media agencies are often being put in a position of project manager, costs us money to help manage vendors and to provide manpower for event monitoring … extra work that is often excluded from the original plan we proposed.

Of course, we agencies think it’s fair to charge for those extra works for which clients often assume should be delivered as part of the plans they’ve already paid for.

Traditionally speaking, the media sector handles the largest portion of an overall campaign budget with 80% going to media planning and 20% on creative, thus clients are used to conducting procurement on us, which obviously means hard bargaining.

But brand owners focus too much on price comparison, rather than caring about the ideas agencies deliver. They undermine the value we can deliver.

Will the conflict drive away big clients to independent firms?

Not necessarily, as most of them are international clients with tough demands. Most self-owned small agencies are more freehanded to reject pitches, hence, they take less pressure coming from big clients.

We have a high variety of systems for data storage. We purchase and conduct loads of research and international learnings and we have regional backups – advantages international clients need for regional contracts, but independent firms may not be able to deliver.

What kind of pitches would you turn down?

Pitches that we don’t stand a chance of winning. For example, clients that have already established an intimate relationship with their incumbent agencies, being forced to put up a show to review their accounts every two to three years … they are not worth your while to pitch.

We don’t usually turn down pitching invitations. It’s rather complicated to do so, particularly for international agencies.

What is your most embarrassing experience ?

I remember there was a time I was late for a client’s meeting by about 10 minutes, a client that was close to me. When we settled down in the meeting room, the client shouted abuse at me saying: “My time is spent wasted waiting for you.” I felt so embarrassed, I’ve never seen her so furious before.

Certainly there was a negative atmosphere in the meeting, but gladly it ended up OK. I felt particularly bad to make such an elementary mistake when the client has always been good to me.

Sometimes, agency people are poor timekeepers. They may assume it’s OK to be late five to 10 minutes but, indeed, why should clients have to spend time waiting for you?

Anything you’ve always wanted to tell brand owners?

I hope they can be more generous on media agency remuneration. Digital talent shortage in our industry has resulted in severe labour cost inflation. We’d like to deliver our best, but our hands are tied if clients are unwilling to spend on talents, and this would be a lose-lose situation.

And to young talent?

They indeed have an edge in this digital era. At their young age they already know much more than we do. Young talent these days tend to be very vocal. But smart is not everything; client servicing and setting up strategies all requires experience. I hope they can stay humble and be patient to learn.

I hope they have clear awareness of what they want moving ahead. Living the agency life is no easy business and a clear goal helps you move forward.

 
Jennifer Chan
Journalist
Marketing Magazine Hong Kong
Jennifer Chan covers daily online news and monthly features for Marketing magazine. She began her journalism career in London as a fashion writer and food reporter, where her interest in writing was sparked. Now based in Hong Kong, she most recently discovered the fun of reporting about the creative industry, uncovering marketing trends and hanging out with marketing and agency insiders.

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