Advertising as we know it, which is placement of content in a location you have bought, is to a certain extent dead. This is so because what platforms like mobile, Internet and social have done is made media infinite… The advertising sector is still moving forward on its own inertia. There is still a lot of money being spent on traditional advertising, which is going to carry on, but if they don’t start transforming themselves drastically, they will come to a stop once the inertia runs out.
Vincent Digonnet joined Razorfish in January 2011, as President of Asia Pacific to build Razorfish China, India, Hong Kong and Australia operations.
Fresh from an MBA with a major in International Business Strategy and Finance, Digonnet started a career in advertising that over the next 25 years would take him from Paris to London and eventually to Singapore. He embraced the challenges of globalisation and led advertising changes in Europe for brands such as Mars and Master Foods as well as the marketing transformation of companies such as Air France from national to worldwide carrier. As CEO of the Euro RSCG Group in APAC for eight years, he led the transformation of a collection of advertising agencies into a network of 21 fully integrated operations in 15 countries through the development of marketing services and emerging digital capabilities.
In 2005, he became an entrepreneur and started a joint venture in Shanghai with a major Chinese digital company to develop a high-level, online operational marketing consultancy as well as a platform to manage CRM programmes on mobile phones.
In conversation with exchange4media’s Abhinn Shreshtha, Digonnet shares his insights on the changing nature of brand communications, the growing relevance of social commerce, the Chinese social networks and more...
Q. Razorfish’s belief is in business transformation through technology. Where does traditional advertising fit in this transformation process?
Razorfish lies at the merger of technology, creative and media. When I say media, I do not mean it in the sense of paid media like advertising. The digital world has changed profoundly, but what has not been recognised yet by all of the players is that moving forward, paid media is worth nothing. Advertising as we know it, which is placement of content in a location you have bought, is to a certain extent dead. This is so because what platforms like mobile, Internet and social have done is made media infinite. Today, people are getting access to all kinds of information and content without having to pay for it.
Q. So, it’s more about marketing than advertising?
Yes, advertising is one way to communicate. The digital world has transformed the way we communicate, so it is still about communication, but doing it in a different way.
Brands need to stop thinking in terms of what message they deliver. People do not want messages any longer, they can get it anywhere, what they want is value addition. Brands need to think about what they bring to the market.
One of our major clients in China, Nike, has merged digital capabilities with their products. Nike is now about performance sport, so all of a sudden, in the eyes of the consumer, this is a good value they bring. We handle some of their marketing and it is all about social media, application development and content creation.
Q. What about Facebook and its ad revenue-based model?
Having a paid model on social media does not make sense. When people try to make this model work, not only do they fail, but they see the number of subscribers decreasing.
Facebook is going through the same problem, because they cannot just monetise through paid media and the more they try to do that, the more they are losing (users). The acquisition of WhatsApp is a defensive measure. They are trying to copy the model used by Chinese social networks such as Tencent’s WeChat (Weixin in Chinese), which are way ahead of Facebook or WhatsApp. The big characteristic of Weixin is that there is no advertising. It is an entertainment and lifestyle platform sitting on top of an instant messaging platform. Brands can interact through a native application on the platform.
A user will only subscribe to something if it gives them some value; not if it is for delivering advertising. That’s why technology and platform builds are transforming the way we communicate with customers and we want to be at the centre of it. Technology, by itself, is brilliant, but you need creativity to actually invent what that technology is going to bring to you, through responsive design and innovative designs for different devices.
Q. You say that traditional advertising has no future, but brands still expect some tangible benefit from their communication…
What is the value of advertising? It is either creating awareness or changing the behaviour of the people. But people do not change their behaviour any more due to advertising. What brands should do is start to think of it as ‘brand as a service’. You can even think about monetising it if you want.
Let me give you a great example, Kraft developed an application in 2008 that provided recipes and shopping tips (iFood Assistant). When the app was being launched, the question Kraft had was whether to keep it free or make it a paid app. Kraft thought about it this way, “one can move from paid to free, but one can never move from free to paid”, so they decided to charge 99 cents (The app is now available for free on all platforms) for the application and made a lot of money. Here is an example of not only an immediate return, but also a much better communication of what your brand does. Kraft communicated in a way that added value to the users and they were ready to pay money for the services being provided by Kraft’s app.
We did an application in a similar vein with Special K, where instead of promoting the product, people can set health goals for themselves and the app keeps track of their progress, and helps them to adapt to the diet according to the goal. Again, it is bringing value and services in a different way.
Q. Do you think the Indian market is ready to accept these ideas?
Not all of them. I run APAC and I can see the difference in development in China and India. Sometimes, I wonder if India is not looking in the wrong direction. India was built on servicing clients based in the West and the intelligence and technology potential of India is immense, but it has always leaned more towards the US and Europe.
The world is changing; more and more technology and platform developments are coming from China. Given the advances of the Indian technology sector, it can play an important role in the development of the Asian market, not just itself. But maybe right now it is too focussed on the US.
Q. Razorfish entered India last year. What is the strategic value of India to your overall plans?
India is crucial to Razorfish. Not having a presence in India was stifling our ability to grow worldwide into systems integration where we want to be. There is no system integrator in the world that does not have a backbone in the country in terms of development. The first thing is that it is going to accelerate our capability to develop technology for our operations in the US, Europe and Asia. All our divisions across these geographies will be using India’s expertise to develop their system integration capabilities. One leg of the growth of our capabilities worldwide will depend on our ability to scale in India. The second area for us is the domestic market; using the great technology capabilities we have acquired to develop complex solutions for Indian brands.
Social media linked with technology is a very strong part of what marketing will become. Basically, we have merged our creative, strategic and social media capabilities that we had organically with the technology centre we acquired through Neev (Razorfish acquired Neev Technologies in April 2013) to create the trinity I was speaking about earlier – the convergence of media, creativity and technology, to create experiences, because that is what we are about – creating experiences that build businesses.
Q. Speaking of social media, it started off as all about conversations and engagements. Before that it was about reach and visibility. People are now talking about whether there is potential for carrying out transactions through social media. Where do you think it will head next?
The future will vary by markets, because there is a strong platform component to it – some markets have it, some don’t. Take a look at China, which I believe is 10 years ahead of the rest of the world in terms of social media and e-commerce, nobody will buy anything without checking with their circle of friends. Consumer-generated content regarding products and services is changing the way we buy things, since, thanks to social media, people are now going to rate you on every parameter.
So, all of a sudden it has put the consumer back in the centre of things. The reason why I say it varies by countries is because the social media platform in China is hugely developed. In Europe or the US or in India, social media is mainly Facebook.
But, like I said, China will be a model for social media in the future and one of the things they have already done – and which will be the future – is ‘social commerce’. If I take Weixin as an example again, it is basically a social medium on which they built a lifestyle platform. So, anything you want to buy, you can directly do so on Weixin. This is what I call social commerce. It is a social medium in which you have the ability to carry out transactions. Basically, you don’t need to leave your social media application to buy whatever you need to buy. Think about it, moving forward, exiting from e-commerce sites through the use of QR codes is going to be so simple. It will basically be ‘You like something, you click, you buy’.
Q. Apart from social media, what are the key drivers of your business strategy?
Our key drivers depend on the market actually. In China, for example, social media and e-commerce are important for any agency. Advertising is no longer the driver of brand building, it is social media. Performance-based media, which is linked to social media, SEO, SCM, etc., is a key pillar. Data analytics is another driver. Then there is e-commerce development and operations management. Brand building is still a driver. Experience design, combined with technology, was what we started off with, so that is still at the core of what we do.
Q. According to you, what is hindering India’s growth as compared to China?
India is going to change like the rest of the world, but there are two things that need to happen. One is you need to get a massive number of people to a level where buying a smartphone is not a big issue, basically increase the purchasing power of people. Once you get there, then you need the infrastructure to become very robust so that accessing the internet becomes easier and much faster. From that moment on, the experience on mobile will explode.
Q. Quite a few Indian brands still hold that technology is more of an enabler than a partner in marketing communications. Your thoughts.
I think it is wrong to think that technology is just a delivery platform, though content is definitely king. However, the definition of content that brands are using is too restrictive. They think the message they want to deliver is the content, which is no longer the case. The service, the value additions, the responsive experience is the content they need to deliver. So, brands will need to get savvy with what these technologies can offer. I think, brands need to reconnect with the consumers.
Q. Where do you see the current advertising agencies fit in this new world?
The advertising sector is still moving forward on its own inertia. There is still a lot of money being spent on traditional advertising, which is going to carry on, but if they don’t start transforming themselves drastically, they will come to a stop once the inertia runs out.
Q. The gaming industry seems to be an example of the social and digital scenario you envision.
The great thing about games is that the entry is very easy. You have freemium games, which have in-game purchases. This mean you are basically selling services. Another thing is that instead of advertising, a brand can do product placements. For example, if you are playing EA’s FIFA, you could have different Adidas shoes as in-game items, with your ability changing depending on the shoe you buy. So, basically, what the game is allowing you to do is experience virtually what the shoe will actually allow you to do in real life. Maybe, you could have a system that allows you to exchange a set number of points for the real shoes. Of course, there needs to be a relationship between the brand and the game, but this is one example of a great way of brand development, which is more interesting than advertising.
You see, entertainment is the key of all of the growth that is happening in the digital space, and gaming is at the core of evolving brands in a fun way.