Saatchi & Saatchi’s (S&S) South China managing director Alexis Chiu, who oversees the Hong Kong and Guangzhou markets, describes the barriers to business growth in Hong Kong’s advertising agencies, and how the company is preparing itself internally for the challenges.
How do you see the advertising climate in Hong Kong today compared with China?
The advertising market in Hong Kong is a bit saturated. Many agencies have seen their budgets slashed and profit margins declining.
All of our lower hanging fruits have gone and we are losing our advantages. That includes a shrinking talent pool, declining resources and budget cuts from clients, to name a few.
Inevitably, everyone is going for digital. The whole advertising environment, if it’s not going down, it mustn’t be going up.
Just across the water, China is an unbelievably fast-changing market, both on digital and innovation, where both the clients and agencies have to adapt so quickly on copying formulas.
Theoretically, there should be huge potential and great opportunities for agencies in Hong Kong to expand to China, but there are factors and constraints hindering them to gain a bigger market share in the Mainland – such as declining competitiveness in terms of talents, market positioning, and the capability of not just meeting the needs, but also leading the market.
The Chinese act very fast, especially on digital and innovation. For example, they can spend billions of dollars on a single billboard on the Guangzhou tower simply for the sake of making noise. There might not be a clear marketing objective or even a brief behind it. They just want to make a statement to build brand presence.
Many agencies in Hong Kong are in lack of a clear market positioning to differentiate themselves from each other.
I’d say a lot of Hong Kong agencies are like a dead fish that swim with the stream; for example, jumping into WeChat.
If you’re thinking in this kind of framework, you’ll just keep doing something similar, or even worse, as they have already done before. It’s a challenge for Hong Kong agencies to step up and lead the market.
In times of change, agencies in Hong Kong should create trends to lead the market.
At S&S, we are hiring more digital talents from China, but not necessarily based out of Hong Kong. We have 130 employees based in Guangzhou and 90 in Hong Kong, and they can move around.
So instead of seeking agencies from Hong Kong, why don’t brands in China pick agencies from within their country?
Hong Kong is still serving as a strategic gateway to connect East and West.
There are always international companies that want to enter China, or the other way around, and China brands that want to gain entrance to the world, such as Huawei and UnionPay.
They’ll go through Hong Kong if we still have those advantages and competitiveness, namely connectivity between China and Hong Kong, agency networks, global vision, creativity, service quality and international standards.
How does Saatchi & Saatchi prepare for digital transformation?
Many agencies are building digital arms, but that’s not our way. We choose to blend digital talents into different teams, such as creative and account servicing. That’s why we don’t have a digital division.
Eighteen months ago we started to recruit people using what we call the “one in one out” policy, meaning when one person leaves, we fill it up with a digital professional.
And it works. Over the past year we’ve won pitches such as Puma against digital agencies. We now cover e-commerce for our long-term clients like Mead Johnson, Pampers and Olay.
How do you define “digital talents”?
By digital, it means people come from a digital agency background. For example, our business director for Mead Johnson comes from Agenda, and our GCD Kevin Chiu comes from Wunderman.
We judge applicants’ portfolios by the degree of digitisation of their previous projects in terms of diversity and depth. It’s definitely not about online banners, Facebook campaigns or websites.
Now more than ever, brands dive into digital for the sake of going viral, but viral is just a small part in a complete digital ecosystem. Everyone is asking to use more digital, but no one cares how “digitalised” it is, and how the digital campaign can help build the brand in a long run.
The success of a digital marketing campaign depends on how social it is, how big is the impact of the campaign, how relevant it is to the brand, and how complete it is to the overall strategic plan.
Any difficulties facing the management team in the transition to digital?
In the midst of digital transformation, conflict is just inevitable between traditional and non-traditional employees; how the management team can better manage these discomforts is an art. What we can do here is to shorten the conflict period.
Many independent shops have eliminated the role of account servicing in search of a better relationship between creatives and clients. Why don’t you follow?
The account servicing teams are supposed to know the clients best. In a sizeable operation, you cannot put too much pressure on creatives; you just can’t ask them to deal with numbers and presentations at the same time. They need space.
So how do you manage your own staff at S&S?
The strategy of leadership has changed. Commending your staff to work for you doesn’t work anymore, this applies especially to Millennials; you need to keep them engaged to make them willing to work for you.
Managing Millennials is all about how you engage them to make them feel good working at your company, and it all comes down to employee empowerment.
We’re now witnessing the birth of individualism.
Social media is dominating our lives because it allows us the freedom to present ourselves in the public the way we want. The rise of individualism is co-related to the growth of digital, and it also suggests how an agency should operate.
Starting this year, S&S employees have been empowered to drive company initiatives such as the “Bark You Up at 6:45pm” campaign and a three-year cultural renewal campaign titled “Monsters Attack”, which includes a string of activities, mobile applications and mini games for employees.
In the name of “Monsters Attack”, we arranged a five-day trip to Seoul for some 400 employees from Hong Kong and China, dressing up in special “Monster” costumes to learn more about the “Monster” culture and to boost morale.
Just like our employees, each one of the “Monsters” actually has its own unique character. They represent a fighting spirit. The use of the “Monster” theme shows our commitment of building a better office culture.
Today, we live in a world dominated by social media, technology and digital. To catch up with the fast growing digital trend, brands should focus on individual power and listen to consumers, as well as your employees. Winners will be those who are able to engage and adopt changes.