Digital advertising is not a two-horse race between Google and Facebook: Daryl Lee

e4m Conclave: Lee, Global CEO of IPG Mediabrands, spoke to exchange4media's Director & Co-Founder Nawal Ahuja

e4m by exchange4media Staff
Updated: Dec 14, 2021 8:39 AM  | 17 min read
derly lee

Daryl Lee is the Global CEO of IPG Mediabrands, and is responsible for the vision, strategy, and performance of the company’s global network. On Monday, Lee participated in the 21st edition of e4m Conclave. He spoke to exchange4media Director & Co-Founder Nawal Ahuja on a range of topics, including disruption in advertising business due to pandemic, shake-up in the agency landscape due to the entry of consulting firms, Google-Facebook duopoly and his view of the Indian market.

 

Excerpts

 

In what way will this pandemic fundamentally change the advertising and marketing ecosystem?

The pandemic has been an unprecedented experience in our lifetimes. It's not like  typical boom and bust cycles since it is not financially driven. We have seen this extreme behaviour shift not due to some economic crisis. It's a global health crisis which is happening at the same time. It has led people to change their work pattern and life pattern. When you change your life pattern, that's a change that will never go away. This is a fundamental shift in the life pattern where we have begun to understand what we can do in a traditional work environment and what we can do outside it. Technology has been a big differentiator in allowing us to do that. In that sense, the pandemic is a disruption as opposed to just a blip.

The question is what is it disrupting and what is it accelerating? The Indian market is very exciting from a digital perspective. We just released our Magna forecast report, and we are showing a 15% growth in the Indian marketplace but a 19% growth in digital spends. That is a reaction to the consumer behaviour where smartphone adoption or online channels have become more important as people spend time at home but still crave the connection. The thing that we understand about human beings is that we crave connection even when we are in our own bedroom for 1.5 years. Digital is not a trend but a way in which human beings will behave, which doesn't mean that everything we do will be digital, it means that everything we do will be digitally mediated. We will have a digital component for absolutely everything in our life because in the pandemic we saw that it is not just possible but preferable, and we are able to use digital to make a whole range of areas in our life better, whether it is groceries, food, healthcare, and online education. In the past, digital was for early adopters or for either the elite or for the avant-garde of the culture or GenZ/teenagers/millennials who were early adopters. Now I think all of that digital convenience has become a parent to a widespread consumer base regardless of income, geography, and age.

The big trend underneath this digital acceleration is connected commerce. The e-commerce boom is now a loud shout and no longer a boom. The thing that is interesting is the connection around e-commerce. We talk about connected commerce at IPG Mediabrands which is all the shopping behaviours, the personalisation that comes from those behaviours, and the physical delivery and distribution system, how do they all connect together to create experience for brands and brands that can create all of those experiences are winning today in the pandemic and will continue to win.

 

Which are the big areas where agencies must focus on to be future ready for their brands and their clients?

The dealbreaker for all agencies will be 'do you have strategic intelligence about consumers', which is not just data as data is just the fuel for that but do you use that data to create intelligence about audience segments, growth segments, and the real people within that and then are you able to use that intelligence strategically. I always believed that there are two kinds of agencies in the world and not creative or media. There are strategic agencies and executioner agencies. Some agencies are strategic and build integrated strategies around their consumers and then look to partner within the agency ecosystem or outside the system to execute. Then there are some agencies that just do one thing that they are supposed to do and do that well from an execution perspective. I think the strategic agencies are the ones that are going to win because there aren't channels any more, there are opportunities to connect with people. We look at media from channel types, but really there is an unlimited amount of opportunity to connect with people. Agencies have to be based on data which is challenging for creative agencies because they are usually based on intuition, but all agencies have to rebuild themselves around data, use that data to create intelligence and use that intelligence to create strategy and ideas and then partner.

There is a big ecosystem with consultants, production companies, experiential companies, creators, and influencers. The ability for an agency to have a clear strategic insight built on intelligence and then partner with tech companies and influencers is the key and that's the thing that clients are looking for. I do feel that media agencies are in a better position there. I want to be more provocative and say that media agencies are five years ahead of creative agencies not just in access to data and understanding how to turn data into intelligence but the ability to partner. Creative agencies look inside for all the ideas and the execution whereas media agencies are used to working with Snap, Instagram, TikTok, Google, to build creative ideas, to come up with them and build them.

 

Consulting firms are buying creative agencies, do you think media and creative agencies need to do something similar by going and buying some of these nimble start-ups in the ad tech space or creating these companies ground up?

At IPG, we do have venture funds, and we do look at picking stakes in various small ad tech or martech or ad execution companies, just to see where innovation is being driven. We don't want to go back and combine creative and media agencies like it used to happen 20 years back because the 21st century is not about looking back unless you want to learn a lesson. The lesson in the past was when you had a media department which had the last 3 minutes of your creative presentation you were doing advertising. We are no longer doing advertising, we are not living in the age of advertising, we are living in the age of brand experience and in the world of brand experience, what we used to do in the advertising model is no longer interesting or powerful. So how do we build a model where 1) you deliver brand experiences for clients, but 2) you have this ability to use audience intelligence and information to design it. So much of what we used to do in the past is 'here is what the brand wants to say and here is how we broadcast it' versus today 'here's what we are listening to audiences, here's what they are saying in terms of what their interests are and here's what brands can participate in their conversation'. It is a democratic marketing. As a media agency, we look at what real people are saying in a category therefore what do the brands of our clients need to say to participate in that conversation.

We are not going to recombine media and creative agencies. That's the old model. What we are going to do is partner with anybody and everybody in the ecosystem that includes big brand communication agencies. We have an open architecture system at IPG. We partner really well with our agency partners, but we also partner with creative agencies, we partner with a digital shop just as we partner with a brand shop because the entirety of the experience is what we need to bring together. The question is who is the conductor of the orchestra and typically that has been the McCanns and Ogilvys of the world, but I don't think that is the case any more. Certainly not at IPG with our new CEO Philippe Krakowsky who used to be the CEO of Mediabrands we have a truly agnostic approach. The old aristocracy of the advertising agencies is over, and now we are in the democracy of marketing.

You talked about acquisitions, I think there is a lot of money in the venture capital market, but most of the start-ups that we work with want too much money, and they will get too much money, now they should get that money from the marketplace, but we have this thing that we have to make profit every quarter. But that doesn't stop us from working with them, and we have an IPG Medialabs within the IPG Mediabrands, and we have a relationship with R/GA Ventures. We are constantly in the marketplace looking to test with different start-ups on how we can bring new experiences to our clients.

 

India is an outlier in the global media landscape as TV and print are still going strong whereas globally digital has overtaken traditional media in terms of ad spends. How do you think the media ecosystem will shape up in India three years from now?

I always get a question 'why TV advertising is going so strong even in the US and who is going to be that brand which buys the last TV ad?' and I say that the brand that will buy the last TV ad is a brand called Facebook because they are the fastest growing spender on TV in the US. The Indian marketplace is incredibly healthy. I do love that there is a newspaper industry and that it is competitive and it's so vibrant and punchy and that's a very good sign for a country. We are seeing 15% growth in India which is above the region and in fact above the global average.

There are big trends. The growth in digital is such an obvious point that I hate making it. Of course, digital is growing across all formats: social, search, video, display, and commerce, but what is also happening is two other things. One is the digitisation of all media. What we in the US would be having to do, and I know in India you will need to do this, is to look at news brands and to know what portion of news brand is print vs digital. Look at radio brands and look at what portion of them is linear audio vs digital audio. The same with out of home. All media are getting digitised which means that you can do real-time customisation around content, location, and targeting across all mediums.

Do I think that India will get to a 50:50 marketplace in terms of digital and traditional? Yes. That's the right equilibrium. I think in the US where it is over 50%, we can all feel that the equilibrium is not right. There is a lot of demand for TV in the US because of that. There is no better experience than a shared experience in a live event. Much of our culture is so personal and intimate. I can be watching a show on Amazon Prime or Netflix that is from 20 years ago, and you are watching Money Heist, so there isn't that same moment of shared connections in media and live events give us that moment. I think there is going to be the same digitisation of media, but that doesn't mean that digital can just become 100% of the market. There is still going to be a 50:50 split, we still want to feel the smaller medium experience in the traditional way.

The thing that is interesting in India is the OTT explosion. I think that the streaming wars in any category are giving the market something new to think about because there are two kinds of streaming platforms: advertising supported streaming platforms and subscription supported streaming platforms. There is opportunity for advertising in ad supported platforms, but the subscription driven models also give brands the opportunity of building brand films. We are doing films for several clients including clients like J&J where we make a long-form film or a documentary or a scripted film of 1.5 hour duration that is sponsored by the brand, but it is not about the product but about the brand, and then we sell them to streaming platforms. It's never been my experience ever as long as I have been in this industry that you sell a piece of advertising and get money for it. Instead of paying people to run advertising, they are paying us to run long-form advertising on Netflix or Hulu in the US. Having brands embrace opportunity around content and not just content for advertising but content for telling your brand story is going to be powerful and exciting.

 

What will be the challenges that the growth of digital advertising will bring upon consumers, brands and agencies?

For consumers, it is going to be mostly good. We are seeing in the US some of the Facebook whistle-blower leaks and there are concerns around Instagram and its impact on teenage girls and their body image and suicide and some very alarming research. Obviously there is a lot of talk around media responsibility and content that is offensive or inflammatory or creates violence. We need to take stock of the good and the bad of digital. I do believe that digital is mostly a private experience. But our approach as marketers needs to be sensitive. If we think of digital as a two-horse race between Google and Facebook, then we are doing ourselves, our clients and our brands a disservice. It is not a two-horse race, and it is in nobody's interest to think of it as a two- horse race, but it is just not true. I would say that the digital universe is wide and varied and constantly expanding. If you are a client and your agency is coming back to you with a social plan that includes Facebook and Instagram and nothing else, you should call them lazy and kick them out of your office and tell them to come back with a new plan. If you are an agency and think that Facebook and Instagram are the only two options for social, you should look better and look more clearly at the marketplace. Maybe you need some Snapchat glasses!

We need to create a diversity of experience. Brands need to deliver diversity of experience for consumers and audiences and we as marketers need to help facilitate that. We need to look at all the innovations that are happening in digital, whether it is AR lens with Snap or Spaces with Twitter, I know TikTok is not formally back in India and there is WeChat and all kinds of super apps being promised in the marketplace. So I think all of that is to say that we have an obligation to not be lazy in digital. We were so active and agile in all other media. We were looking for the best TV source, the best radio source and the best print publication. We choose at the programme level sometimes at the spot level. We did all that, and now we are saying 'oh Google and Facebook'. We talk a lot about media responsibility at IPG Mediabrands and holding Facebook particularly accountable for content that's on their platform. It's causing a lot of harm particularly around the pandemic with vaccine hesitancy, misinformation, disinformation, blatant lies, crazy talk about how vaccines are putting microchips in your blood and changing your DNA which a large proportion of the US population believes because of social media and particularly because of Facebook. We talk to consumers and ask if they are going to stop using Facebook, and they say of course not and when we ask if they want brands to do something about it, they say yes. Consumers expect brands to do something about the bad that is happening on social media which is obscuring and negating the good. We as an agency and a holding company are taking a strong stand against this because holding Facebook to account and forcing them to deliver some advertiser controls, so you can stop your brands from running against content that you find objectionable. Facebook has created those advertising controls, and we are putting the pressure on them.

 

Do you think the lack of innovation in digital is also due to shortage of talent?

We call it the fight for talent, and it is a fight because it is not a fight between different holding companies or agencies, but it is a fight for 'why would you want a career in media'. That's the fight. The reason people come to our agency is because of the brands, the power that those brands have to shape culture and to drive economies and the people they get to work with. Those are the key reasons. We want to work with the world's and market's best brands that are taking risks and brands that are driving innovation because that's why people join. Are we good at marketing ourselves? No. We spend a lot of time marketing our clients' brands. For the first time as an agency, we have started to do recruitment marketing. We are doing a lot of thinking around diversity and inclusion because it is the case that we are more progressive as an agency. Agencies have to be progressive because we don't have enough people for there to be hierarchy. We need everybody to be strategic. We don't have enough people, and we don't get paid enough by clients. We always have to do more with less. We need women, we need people who are in any way different or other to feel equally empowered in our culture. We have a sufficient number of women leaders in IPG Mediabrands and at IPG. All of that begins to make us more attractive. We are not going to offer people equity or shares that quadruple, but we are also not going to offer them the opportunity of being in a company that fails, and they have to look for a job tomorrow. We are going to give them the stability of a company that is growing double-digit YoY. Even in the pandemic, we were flat as a company. So we have stability and innovation. People are not looking for careers, they are looking for impact, and we spend a lot of time at Mediabrands where we can stream people into projects that help them get impact. We have people moving to Snap, TikTok and Facebook, but we also have people coming back because the power that agencies have is huge. You can influence what Amazon is doing in India.

 

What opportunity do you see in India?

What makes India different is the depth of cities that you have in the Indian market. How rich the regional differences are and the opportunity to do hyperlocal marketing. The hyperlocal experience in India is going to be extraordinary. There are richer media opportunities than in other markets where there is much more of a national footprint and much less local nuance. Another thing that is richer in India is live events. There is still this festive and wedding season and those are very powerful moments for brands to deal with more than just the products that they sell. Creativity is everyone's business. The opportunity in 2022 is going to be to create content that people want to listen to. India is a rich cultural content producer, but it can also be a big player in terms of brand content. That is going to be a big play for us, and you are going to see Mediabrands Content Studio really stepping out more in India. We have strong assets and amazing creative thinkers in Interactive Avenues and other parts of the Mediabrands ecosystem. We will also create a content studio whose sole focus is to help brands create content that people are going to watch.

 

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