'A new golden age of marketing is here'

Q&A/ Hamish McLennan, Global CEO, Young & Rubicam

Hamish McLennan

In The World is Flat, Thomas L Friedman points out to how technology is driving the emergence of completely new business models. He says that to survive, businesses and industries need models and structures that are highly adaptable to change. The advertising business doesn't seem to be an exception.

Many argue that new media formats and the way they are being consumed are making the "traditional agency model" obsolete. So what is the future like for the JWTs, McCann-Ericksons and Y&Rs of the world? the strategist caught up with Hamish McLennan, global CEO of Young and Rubicam (which also has a 26.7 per cent stake in Rediffusion DY&R in India) to get the answers. In an interview with Amit Ranjan Rai, McLennan says that more than a challenge, new media forms are a huge opportunity for agencies. Excerpts:

Technology is affecting basic advertising strategies. It has been argued that the traditional agency model is becoming obsolete. What's your take?

The simple fact is advertising agencies are not becoming obsolete. In fact, they are becoming more relevant. You have media fragmentation happening all around the world, and you see people consuming media in different ways. You see them consuming technology in different ways. The cycles of new technology that are coming out are becoming more and more compressed. So we are seeing greater change more quickly everywhere.

Now, you couple that and look at what's happening from a client's perspective. Agencies have very serious relationships with their clients to handle their communication needs, and without a doubt our clients are turning to us and saying, 'help us understand what is happening in the marketplace, give us strategic and credible advice'.

Couple that with the fact that we are producing more communication across more platforms, which means there is a great opportunity. I'm extremely optimistic about the next 20 years. I think we are heading towards a new golden age of marketing. The pressure and the onus is to develop more skill sets, and that's a good thing. So if in the past, traditional advertising agencies produced TV, radio and press ads, they have to do more and that's a positive thing. It's throwing up a lot more opportunities.

But don't you see the "advertising agency" model changing?

As I said, we have to broaden our skill sets. What agencies deliver at the centre is strategic and creative advice to clients, and then we produce materials. Within that we now have to broaden our skill sets, say, we have to understand mobile marketing and interactivity on the internet "" that's a very exciting and dynamic part of our business now. And to do more, we need to understand what's happening at the marketplace more.

Ten years ago, consumers basically consumed press, TV, radio and outdoor advertising. It was very traditional and staid; now people are getting podcasts, emails on their mobile phones, they are participating in competitions on TV through SMSes, and consuming interactive and internet-based communication. Things are fast changing and I see advertising agencies as the best businesses to exploit these opportunities.

Look at the way media's changing: YouTube has become immensely popular. Bill Gates says five years from now we'll laugh at the way we watch TV. These points to a trend where audiences will be very selective in what they want to watch. But how do you tap such media for ads?

An honest answer would be, no one has definitive answers. Could I tell you what technology will look like 10 years from now? I don't have an answer. I know people are going to consume media differently, but broadcast television shows that whether they will be delivered by a mobile phone, the internet or television, people are still going watch them.

Clients are still going to communicate with their customers and agencies will have to help their clients tailor those communications. The delivery mechanisms are going to be different, but there is still going to be the need to communicate. That's where agencies will do well. And that's where the opportunities lies.

Has Y&R done any research or drawn a strategy on how to work on such lines?

There is a lot that's being done. For instance, we launched a "brand energy" philosophy in India that helps us understand the value and strengths of brands in a fast-changing environment where the rise and fall of brands is becoming more volatile.

We've also launched a new tool called Brand Asset Valuator that helps measure consumer perceptions of a brand. So a lot is being done to understand the fast-changing market.

There is a huge commitment on our part and moving forward we need to develop digital skill sets and productions that are strategic and creative within all our agencies. Our focus is that when we develop creatives, we have powerful ideas that can go across many different platforms.

There was a time when advertising was seen as the highest form of marketing or brand-building exercise. That view seems to have changed. Quality, costs, supply chains and so on "" areas where conslutancies do a better job "" are seen as important attributes to brand-building. Where do you stand on the agencies versus consultancies debate?

The two are very distinct. The principal skill set of management consultancies is supply chain management "" agencies don't have that skill set, and should never try it.

Agencies' principal skill set is demand-chain activities "" we create demand for our clients, drive promotions, we look at how to promote a brand, and drive market shares. I don't think management consultantcies can do that, or do that particularly well. Agencies should focus on driving value through a communication perspective on behalf of their client.

To build strong brands, you need both. Brands that are successful have a competitive difference. Quality is all the more important, and it doesn't matter even if you are at the value end of the equation.

You need to provide good value, have a differentiated position, you need to connect with your consumers, and offer, in terms of price, terrific value "" it doesn't matter whether it is a Mercedes-Benz or something in Wal-Mart. You have to represent good value in the eyes of the market that you are going after. The two are both very different businesses.

Y&R claims to have deconstructed the traditional agency model by creating a global network place. What does that mean?

For decades, the world turned to Madison Avenue in New York to see what the trends are. North America is still a very big part of our business, but what we are seeing now is that with the proliferation of the internet, people are picking up from global trends.

So we are taking a more balanced view of the world to say, don't just rely on what is happening in North America. Look at what is happening in China, India or Latin America. We want to bring people from diverse cultures together.

We have a very talented team in our Indian operations. We want to take these people out of India to the US, Australia, Europe and so on. That is how we want to operate in future and what we mean by a creating a global network.