Category / Uncategorized

by Ajinkya Pawar

Shifting to Colombo, Sri Lanka?

I am an Indian, living in Colombo, Sri Lanka. And I would have done a few things differently had I known a few things about Colombo before I came here. So here’s a heads-up for future expats heading to the wonder island.

The summary

If you are a savvy business person and looking for new opportunities, Sri lanka is a great place to be at. If you are a salaried person looking for career growth… assess your options well before coming here.
For a South Asian salaried person:
Come here for the wider footpaths, less crowded city, the blue sky, the greenery and the amazing beauty of the island. Career or economically, it is probably worse than your other options.

For someone from developed economies:
Come here for an interesting addendum in your CV and a relaxed work culture. Again, career wise or economically, it is probably on-par with other opportunities you might have.

For somebody from China:
Welcome to grow with your nation’s colony.

Either ways, bargain a better deal with your company for a better pay pack and hopefully a house and a car as part of the deal. If you don’t get a house and a car, look for substantially high allowances. If neither, do not come.

The lowdown –

  1. The walk

    Among South Asian cities, it is easily amongst the cleanest, neatest cities. The single most important reason for me to choose a city is its ability to allow me to walk pleasantly from work to home. So discounting the terrible traffic fumes, I like Colombo walks quite a bit. I do get to enjoy a good  three km walk everyday. Besides, it is not as crazy crowded as other Asian cities, yet.
    Having said that, the housing bubble here now is dangerously inflated. Housing is very expensive. I was lucky enough to get a company house in the heart of the city at subsidized rate. If it were not for that, it would not have made any sense for me to shift here. If you stay beyond 5-6 km from your work place, the commute could be harrowing (like in most cities, but slower.) So you are between a rock (expensive cars for commute) and a hard place (expensive housing close to work) when it comes to quality of life in the city.

    So here’s the first tip – move here only if your company provides you with a house and a car, or if you are desperate.

  2. ‘Nice’ People

    The stereotype is true to a certain degree. Sri Lankans, by and large, are mild in temperament and they have the patience to indulge others. Neither do they have the brashness and loudness of Delhi-Gurgaon-Noida hell hole nor the incessant busyness of Mumbai folks. Any town in India on its way to become a ‘city’ becomes a little sharper, a bit brasher at its edges. That too happens here, but to a lesser degree I feel.
    Having said that – my perspective is limited. I live in a fairly upmarket area so that shields me. For instance, I wouldn’t be as carefree in Pettah as I am in Kollupitiya. If you are  woman, you could experience catcalling, stares, occasional hooting too, especially in the evening.
    So it isn’t a paradise either.

  3. Getting repairs done is a pain

    The flip-side of the ‘niceness’ is the inefficiency and lack of dependability. Getting anything done in Sri Lanka is quite a challenge. The first challenge is finding people – there simply aren’t many electricians, plumbers, etc. Those who were in the trade have left for Gulf countries for better pay. Those who didn’t go, are driving cabs and tuk tuk (auto rikshaw) since it can pay even better than these trades and with the added bonus of freedom. So Sri Lanka is facing a huge problem of skill-shortage. This matters because if something breaks in your home you better fix it yourself or wait for weeks and months to get it fixed.
    There are a few professional services that work alright, but i won’t trust all of them. The norm is that of repeated calling, reminding and cajoling people into getting things done.

    I see it in positive light though – A labourer here is much more respected than in India. Indian workers are treated poorly and driven to work ruthlessly. Indian households and companies can be brutal assholes. Sri Lankan labour though has some amount of agency and they get paid much better than in India. So YAY for that. I accept the inefficiency as a welcome cost for living in a (slightly) better world where fellow comrades are treated fairly. (again, unfortunately not to the extent of Nordic or German fairness, but a welcome experience coming from Indian cities.)

  4. Advertising career

    Well, if you have revenue responsibility – Sri Lanka would be a smaller market but one with decent growth potential. That has its own set of  dynamics though. The long term prospects for Sri Lankan economy are not too bright, unless you are Chinese (from my perspective – bad deal with china, currency in doldrums, low preparedness on developing strategic markets or skill development and terrible deficit.) There is a vision to make it the next Singapore, making it a financial hub, aviation hub etc… But I don’t see any proof of that helping the middle class. The money is staying with the Chinese and a few rich local parties. Strained middle class -> strained consumption -> strained agency growth.
    Besides, most FMCG categories have nearly universal penetration, that means growth is not in expanding markets like in India, but in stealing competitive shares. With impending opening of the economy, there will be competitive bloodbath for local brands. High inflation rates means subdued consumer confidence (even as compared to India, per-capita wealth in Sri Lanka is better).
    All this means – Agency clients are not doing too well, and won’t do spectacularly well in the future too. That means, pressure on agency for margins, cuts in marketing expenditure etc. So if you are a suit and coming to Sri lanka to manage an agency, be prepared to lead a smaller biz with uncertain prospects.

    As a planner too, the experience would be quite different. To begin with, since the businesses are smaller, agencies hire planners to look after  a wider set of portfolio than anywhere else. In Ogilvy, I am the only planner. In other agencies too the teams are either non-existent or fairly small – largest being a team of three planners.
    But the number of brands is not fewer – so it means I have less time on most brands. Pitches, launches, fire-fighting – a planner is spread thin over many projects. I never have visibility of my time beyond a week’s time. I am always busy or waiting to get busy soon.

    So that means I don’t get to deep dive in category/ consumer understanding. I don’t have the luxury for doing it. I typically crack the brief on the day of client briefing, prepare the strategy deck the next morning. and iterate it over the next week while attending to other brands. I have adopted this work habit and am ‘comfortable’ with it. I doubt there would be many planners who would want this though – since this limits your control over long term projects – building IP, sharpening your skills, going after bigger challenges…

    Like in most other countries, agencies are laggards in adopting their business practices for the digital age – they can’t foresee their marginalisation and plan for it. So even as I see opportunities with business strategy projects, design projects that could get us in higher margin services, the agency is simply not prepared to change yet. Like India, even here there is much room for learning growth of both servicing and creative folks. Like India, there is a limit to how much and what you can push for.

    What that means is – same expectations as in other markets but with fewer resources and time.
    Come here for – Experience of working with reasonable people. Experience of wider set of brands and consumer segments. Experience of pre-bubble universal-penetration economy.
    (I would give another 2-3 years for the Chinese money to sustain Sri Lankan housing bubble.)
    Don’t come here for – Bigger challenges, innovations, pushing boundaries of what you can do.

  5. Very expensive living

Here’s my perspective about cost of living in Sri lanka compared to cities in India – (I have previously stayed in Gurgaon, Mumbai, Hyderabad). Here’s a useful link from numbeo.com that compares cost of living fairly well. (though they tend to err on the side of caution.)

From a top level – I would say I spend about twice as much in Colombo as I did in Gurgaon. Consequently I am saving less here.

Coupled with the recent drop in exchange rate for LKR, (0.41 now for 1 INR. it was 0.46 half a year ago) the savings have taken a further hit. This rate of depreciation should be alarm enough for any would-be migrant to reconsider his negotiations.

Details are as follows –

Apart from restaurant, everything else is fairly expensive in Colombo.
1. Barring a few items (Soaps, etc), most Consumer goods (imported) could be two to three times costly. Consumer goods from local companies will be 1-5 to 2 times the Indian rates, mostly. There are exceptions of course.

2. Grocery is fairly expensive too , apart from seasonal local produce. Most things for Indian diet would be atleast 2-3 times costly.

(For eg. Bread – 160 – 200 LKR (In india 25-40 INR) , local Biscuits pack – 100 LKR (in India it would be 25 INR) , Eggs, 200 LKR for 10, etc)

3. Cars – i didn’t buy any – nano costs 15 million LKR here. that gives a perspective. Fuel costs are similar though.

4. Rentals – Hmm.. I would say expensive than Gurgaon, a little cheaper to Mumbai. It can go down if one plans to commute for an hour. But expensive vehicles punctures that economic logic. I would say, Gurgaon was cheaper because one can get new good apartments at much lower rates in a fairly decent locality. I was paying INR 30,000 in DLF Phase 1.  For similar locations, here one might have to pay more than 150,000 LKR per month for a comparable home.

5. Electronics – similar to India in a basic electronics. However, as you go for beyond-basic electronics, your would be paying 3-4 times higher for value-added items.

6. Utilities – Phone bills are similar. However, electricity and water is a bit more expensive. I am again spending 1.5 to 2 times the amount here, even as I am using much less electricity. (Don’t need AC here that often).

7. Public transport – is similar to India in cost and experience. a bit cleaner though. My wife uses Pickme (a local uber) often and finds it fairly useful. Some annoying drivers notwithstanding, it is largely a decent experience.

Overall, cost is higher, but it is compensated with relatively cleaner air and opportunity to walk without being trampled upon and honked at.

In summation – Sri Lanka is a growing economy and a lovely place. So there are business opportunities that you may find here that you might not find at other places. So do come here if you have a plan in you mind and a realistic assessment of how you are going to achieve it. If you are coming here to serve in a company, demand a substantial hike and a house and a car. Hope this lowdown helps somebody in negotiating a better deal.

Cheers.

_______

May 2018 update.

I just did a  bit of analysis of my salary in view of inflation and exchange rate getting worse.

I received around 12% increment. It wasn’t a great year for the company, even though my contribution had been above average (more pitch wins by our team than the year before. first gold in Effie for agency. First ever WPP Atticus award too won by me.) In team spirit, I didn’t contest.

But the inflation from Aug 2016 (the month i started living here) to May 2018 has been effectively 8.39% (I considered CPI for each of these months to arrive at this.) In this period, the exchange rate has gone down from 2.169 to 2.428. And there was a revision in tax structure where allowances are also taxed.

So all in all, i received 4% effective increment in LKR. But in terms of INR, my income went down by 3.17%. Effectively, my income decreased here!

For anyone considering to move here, i would advice considering these factors – high inflation, high taxation, weak currency and no strong prospects unless you are investing in Chinese plans for the island.

I think my move was beneficial, since i got to escape one the most polluted places on the planet at a salary that wasn’t too bad. so it’s ok for me. Evaluate your own priorities and options.

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by Ajinkya Pawar

The feedback loop

There is one definitive characteristic that separates the competent from the mediocre; the practice of giving, seeking and acting upon constructive feedback.

I was fortunate enough to get good bosses early on in my career who were kind and thoughtful with their feedback. I learnt a great deal from them.

One of the most valuable artifacts I have, is a printout of my ‘yearly evaluation’ by my then boss, Anirban, who took the pains to write multiple pages worth of insights about my work. He saw the good in me that I was not aware of. He kindly pointed out areas of improvement that I was afraid to even acknowledge. Without feedback like that, I would have remained insecure and incompetent. But I was lucky to get good bosses. I shudder to think about those who work in companies that do not have a culture of giving, seeking feedback at all. And there are many companies like that – I have worked in one where the bosses never gave any constructive feedback at all, they would just sit on judgements. Young creative guys would not know what will hit them. The creative process became a religious process – blind, fraught with terror and delivered with superstitious hope. Superstitious folks are not the ones to reason and improve. It was a terrible place with low morale, high insouciance and middling prospects. I was at my busiest in that agency even as none of the work we did was worthy of going in anyone’s portfolio. We were a factory of uninspiring ads.

Don’t be at such a place. And rescue your own workplace from becoming one.
A good place to work is where the boss provides kind and thoughtful feedback often. A rookie might not even know what he needs to know, so the onus is on the leadership to cultivate a culture of thoughtful dialogue, of thoughtful analysis of our work.

Without feedback, there is no improvement.
Without improvement, there is no growth.
Without growth, there is only existential dread and career insecurity.

Why subject yourself to it? If you are senior enough, get in the habit of engaging your team in thoughtful feedback dialogues. If you a junior, get in the habit of asking for feedback.

Feedback is a lot of work – you have to think hard, analyze… most are too lazy to do it proactively. So demand a feedback from your superior after every project. No other education/ ‘training’ is needed if you have a culture of thoughtful feedback.

by Ajinkya Pawar

Essential Mutations for the 21st Century Brands

1. Rise of the walls

21st century weather report

The world is reeling under the hate wave of right wing xenophobia, binaries of ‘Us vs. Them‘. The hate wave is projected to continue and expand as people turn their back on ideals of liberty, equality and fraternity, which had yielded unequal fruits for the globalised citizens of the 20th Century. While the globalisation opened up the barriers for free-flow of money across the world, the flow of people has been artificially impeded creating great pressures at the arbitrary borders. The potential energy arising from the stalled flow is bound to turn into kinetic energy, overpowering the borders – eventually. That possibility of bursting of dam obviously scares people on either side.
Uncertain times, uncertain times.

In times of uncertainty, people seek certainty –the privileged seek Certainty of ‘walls’ to save their way of life. The underprivileged ‘others’ seek certainty of the better life on the other side of the wall. Hence, we have Trump’s wall, refugee crisis across the globe and right-wingers gaining political power.

Netherlands, India, Australia, Nigeria, Philippines… xenophobic demagogues are gaining political power everywhere. Are we collectively getting more selfish? Or is there something else beneath our collective psyches that needs recognition?

The new Modernism: From globalist to Nativist

For the purpose of this essay, understand ‘Modernism’ as essentially blinkered optimism and ‘Post modernism’ as the recognition of futility of Modernism’s idealism. So most –isms (Capitalism, Socialisms, Casteism, Communism or even Taliban’s vision of Islam or even art movements such as Dadaism, Constructivism) that imagine a simplistic utopia, that propagate a simplistic worldview are essentially modernist imaginations. Modernism is about believing that utopia is within reach and that ‘only if these things change, the world will be perfect and harmonious’. Those who want walls are also modernists in that sense – they believe that closing their worlds to others would solve their problems.

Post-modernism is about recognizing the tragedy of modernism – that the world is simply way too complicated for any utopias to come to fruition. Dissolution of Soviet Union, Quantum Physics, LGBTQ pride parades, Crypto-currencies, Tech Billionaires eschewing suits, memes… Events like these puncture worldviews of modernists. ‘Sacrilege’/ ‘Blasphemy’/ ‘Traitor’ they yell. The edifice of certainty comes crumbling down. Nothing hurts as much as disavowal of a dearly held worldview – the source of one’s identity, the coordinate of one’s perceived reality.

When the pace of change becomes unbearable and humanity needs a carpet to dust away its confusions and dissonance under, modernist rail against the symbols of authority, symbols of status-quo in an attempt to ‘reset’. They hope to start over to ‘do it right this time’. Hence, Americans want to make America great ‘again’ and Chinese & Indians want to ‘regain’ old glory.

What does this have to do with brands?

The cultural role of brands is now fundamentally changed. It is an important shift that marketers must understand. In the last century, global brands were at the forefront of propagating western values of individualism, freedom to enjoy & dreams of building personal wealth, accessing evermore-exclusive lifestyles. The globalist philosophy of brands marginalised national, cultural, tribal identities & associations. There was one ideal lifestyle, one ‘-ism’ shaping the global culture most stridently– that of individualistic consumption over everything else. Slavoj Zizek qualifies this cultural force engineered by brands as the ‘obligation to enjoy’.

However, people are reacting to that imposition now. Some by questioning their consumptive choices, some by questioning the globalist legacy of brands and some by outsourcing their consumptive choices to search engines/ suggestion engines/ Alexa.

Let me illustrate this with two recent historical events.

From the Berlin wall to Trump’s wall

November 1989 – The Berlin wall was brought down by the will of people.

November 2016 – Americans elected a real estate developer as their president for his promise to build a ‘beautiful wall’ at the southern border of USA.

What had changed between November 1989 and November 2016?

In the 80s, East Berliners craved for the choices that the West Berliners had – to own stuff, to travel, to listen to music, to use deodorants, to smoke cigarettes. A thirst for freedom to choose one’s own destiny brought down the Berlin wall in November 1989. Eventually, the freedom to choose destinies was conflated with the freedom to choose brands. Bbrands used that confusion to their advantage.

27 years since, the realisation is setting in – choosing brands of your choice is not the same as choosing your destiny. A recession and a few maxed out credit cards later, a typical consumer is beginning to realise that the very act of consumption is ensnaring him/her in a vicious cycle of debt, instead of setting him/ her free.

It was implied with overwhelming branding, that the consumer would succeed, would be happier due to his brand choices. Instead, it only helped him project his success and happiness at the cost of actually gaining success & happiness. Without actual success, the credit card loans caught up with him. Without actual happiness accruing from individualist brands, he was left in want of social relationships, a cultural identity. He was left feeling powerless – he had to suffer in the recession and then the bad economy, even as he was doing what was expected of him. That resentment was amplified by accelerating inequality.

Since we cannot accept our own powerlessness, we direct our blame at ‘others’ – South Americans, Africans, Muslims… It is psychologically easier to find a scapegoat, rather than confront our own powerlessness against the real tyrants. Hence, people elected a real estate developer promising to build a ‘beautiful wall’ at the southern border of USA.

Implications for brands

  1. The role of brands in our culture is changed. Brands are not beacons of progressive ideals of individualistic freedom and fraternity anymore.

In a walled-in world wanting out, brands were symbols of freedom, of free globalist identities.
In a wall-less world wanting in, brands are addictive identity crutches that must be pared down, in favour of collectivist identities.  
This is the reason for meteoric rise of brands like Patanjali in India (which is positioned on Indian heritage and traditional know-how) or rise of agitations against global brands (such as these ones in China).

  1. There is no single ideal that can be universally understood as ‘progressive’. Is wearing a burkha patriarchal or is it a will-full choice? Are revolutions always desirable or not? Is science always progressive or should we be worried about its advances? (For instance with GM foods). Does individual’s rights matter more than nation state’s priorities? The right answer is – it depends! There are no absolutes. Contexts matter. Hence, brands need to be cautious about their stances.
  2. Local relevance: In the pre-liberalised world, accessing an ‘imported’ Dove moisturiser in South Asian countries was in itself an adventure, an occasion to celebrate and talk about. Never mind the product was not made for the skin type or the weather. One was happy to be able to access an international quality brand. That is not true anymore.
    The profusion of brand choices means that people are used to accessing brands that are more sharply relevant to them. There is no incentive now to go for a global brand that does not answer the local, contextual need.
  3. Cultural currency: The internet was supposed to open the world. Instead, it has created ‘filter bubbles’ – echo chambers for people who exchange local cultural memes at warp speeds. In such a world, language, ideas, cultural heroes, stories mutate and gain layers of meaning on an hourly basis. To be relevant to different cultures, different ‘bubbles’, one must be immersed in it. You cannot skim it; you must devote a part of you to it. That necessitates a fundamentally decentralised and spontaneous way of working.
  4. Rise of the need for ‘Authenticity’:
    A wall-less world is a free-fall world where there is no concrete identity, no concrete reality. For example, ‘If you are defined by your profession alone, how are you different from the hundreds doing the same job across the globe?’ ‘If you are a global citizen, where do you exactly vote?’
    Hence, in an uncertain world, we need the buoys of brands to shore up our identities. For example – ‘I might be a replaceable software engineer, but I am an irreplaceable Indian who likes classical music’. It is easier to build a seemingly authentic identity by wearing a FabIndia kurta (a traditional shirt from South Asia) and to ‘like’ a local artist on Facebook.

A walled world is concrete world, not just of concrete walls but also of supposedly ‘real’ culture – with predefined customs, biases, beliefs, rituals and heroes. It is a more comforting world with lesser cognitive tax of building identities by simply subscribing to an existing one, instead of building identities independently.

2. Rise of platforms

Brands in a world of mediated choices

1989: From freedom to choose

To

2017: Unlimited scroll of choices accessed through few platforms

Prof. Byron’s influential book ‘How Brands Grow’ suggests that advertising should build and reinforce associated memory structures. But the nature of these very memory structures is changing now. A Columbia University study found that Google and other search engines are literally changing the way our brains process and retain information.
We forget things that we are confident we can find on internet.
Brands are on internet.
Ergo… Google, Amazon, TripAdvisor become the primary portals of brand discovery. Now you do not need to remember brands, the search engine and the suggestion engines would do that for you.

This dependence on internet to remember things is an illustration of a concept called transactive memories, where one depends on others to recall a memory. This is in contrast to independent memories, which rely on one person providing complete recall. The interdependence to remember, to consider, to prioritise has accelerated with platforms. We are dependent on others’ reviews, others’ opinions and platforms’ ability to serve these to us. For instance, you will not straight away go to Dove’s website to buy its moisturiser. Most probably, you would search for the best moisturiser for your skin type for your local weather on Google or Amazon.com. Based on consumer reviews and suggesting engine, you would choose a brand to buy.

This has profound implications for brands as more and more people shift their memories & decision making online.

The strategic perspective towards building brands must change accordingly. The goal of branding then is not necessarily to build ‘memory structures’ of individuals, but rather to make it easy for the brand to be recalled by the transactive memory of the hive-mind of platform-users combine.

There is an important nuance to understand here. Brands can still build ‘memory structures’, but that is not ‘essential’ anymore to grow. What is essential is to be ‘available’ for the hive mind to find you and like you. The profound shift is that of addressing the ‘memory structure’ of a collective instead of the ‘memory structure’ of an individual. This perspective, if understood well, can give tremendous competitive edge to marketers.  For instance, imagine the savings on ‘not doing commercials for Superbowl and instead putting that money in improving product access, product experience, encouraging consumer to review it or instigating a cultural conversation in the platform-users hive.

Platform brands & brands sold on Platforms

There are essentially two kinds of brands – platform brands and brands that are sold through these platforms. In the new economic ordering, there can exist a limited number of platforms, but almost an unlimited number of ‘long tail’ brands (precarious, unless governments regulate online platforms). Understand what you want to be and adapt accordingly.

Becoming the next platform is very different from winning in the long tail.

To succeed as a platform,

  1. One must understand that it is a race for monopoly. It might be a specialised platform, but for that particular purpose/ consumer set/ needs targeted, there can exist only one platform in the long term.
  2. The growth strategy is about building a network of users and leveraging the ‘network effect’. Network effect is the phenomenon of some services to become more valuable as the number of its users increases. For platform, this is universally true. With each new user, the platform gets better data, improves its service and enhances its relevance. Therefore, to succeed, it is imperative to recruit the biggest segment of users and to incentivise them to stay in that platform.
  3. Platform brands succeed when they create egalitarian access to valuable exchanges that were not possible earlier. Hence, the focus of the brand has to be on making such exchanges possible and communicating the value of it.

To win in the long tail,

  1. People key in their queries, as against asking an attendant to help or seeking a brand directly. This is true even in some retail shops these days as the attendant key in keywords on consumer’s behalf). This behaviour shapes the nature of brands that would come on top. It is in the nature of keywords to be linear and additive – People get more and more specific until their needs are met. To acquire a consumer before he has to get specific, brands need to build ‘memory structures for the hive of platform-users’ for the specific need it uniquely fulfils.
  2. This incentivises brands to be specialists – the sour tasting chips, the scented toilet papers etc. Be a specialist.
  3. There is a limit to growth for ‘a’ brand. The flip side of this level of segmenting and specialisation is the limit to the size of addressable segments. The brands would necessarily be not large or global.
  4. The key branding considerations for a brand are how to become easier for the consumer to find it, use it, and recommend it?

The essential mutation

There is no escaping change. In a world of resurgent nativist identities, global brands need native mutations. Brands must audit their local relevance and the authenticity of their engagement with culture. Secondly, technology is changing the nature of exchanges between consumers and brands. To succeed in this new reality, they have to appreciate and leverage the fundamentally different market dynamics of platforms.

by Ajinkya Pawar

Advertising industry’s new ‘Pivot’

No planet for old businesses

Exhibit 1:

On 16 June 2017, Amazon.com Inc. announced that it is acquiring Whole Foods Market Inc., for $13.7 billion in an all-cash transaction.
By the end of that day, Walmart, Kroger, Target & Costco had lost their market caps by 5.8%, 7.1%, 9.1% and 15.7% respectively.
On the eighth day of the announcement, Amazon’s market cap had increased by $18.9 billion.

In a sense, not only did investors reward Amazon by funding the acquisition, they also punished the competitors of Whole Foods for not being acquired by Amazon.
The situation is such that as soon as Amazon enters any category, leaders in that category lose market valuations almost instantaneously. That is the promise/ threat of platforms like Amazon.

Exhibit 2:

“In 2017, almost 80% of every incremental ad dollar spent globally will accrue to digital. In their domestic market of the US, Google and Facebook are capturing more than 100% of this growth, up from 85% in 2015.” So read the 2017 Redburn Report titled, ‘Ad Agencies Marginalised.’
“More than 100%…”

If someone captures a share of more than a 100%, it means that that share came at someone else’s expense. Certainly, many digital advertising companies and ad exchanges saw decline in share of digital ad spends. Advertising agency holding companies too bore the brunt of Google and Facebook’s growth. 2017 perhaps has been the worst performing year for WPP since the recession of 2008-09. For the latest quarter Q3, the firm reported a 2% drop in organic growth.

Essentially, growth is almost a zero sum game now in which platforms are winning. This is in stark contrast to the nature of growth in the last century, where globalization created avenues for many to grow: It was not a zero sum game then. The monopolistic ‘Platforms’ are stealing lunch of legacy businesses – ours too.

Platforms are winning in today’s zero-sum game of growth. The monopolistic Platforms are stealing our lunch.

What are platforms?

A platform is essentially an enabling infrastructure/ environment that,

  1. Gives freedom to connect with others
  2. Enables valuable exchanges which were not possible outside of the platform
  3. Enables external applications/services to be built on top of it, (APIs)

Platforms like Amazon, Facebook, Google and Uber are enjoying unprecedented growth and consequently unprecedented investor interest, because they allow that egalitarian access to valuable exchanges that were not possible otherwise. By their very nature, the exchanges become more useful, more valuable with expansion of user base. Amazon is able to fine-tune its suggestion because it has access to purchase history data of billions of its customers across the globe. People use Facebook because all their friends use Facebook. This phenomenon, of increase in usefulness and consequently the value of a service with increase in the number of users, is called ‘network effect’.

The sinister consequence of the network effect is the potential of monopolies. The logic of Platform growth inevitably leads to hollowing out of existing market structures. The logical conclusion of Platform economy is a world of monopolies rising upon the ashes of old businesses.

Shift in client priorities

From ad spends to spends for innovations in product, supply chain or marketing.

As if the threat/ opportunity of ‘Platforms’ was not enough, companies these days also have to wrap their heads around 3D printing, Blockchain technology, CRISPR/Cas9 and so on. These are amazing technologies promising revolutionary changes. These technologies present new opportunities that we never knew existed before.  However, many legacy businesses are ill equipped to respond to them.

Thankfully, a whole industry has sprung up to cater to these needs – needs of business transformation in the face of existential threats posed by new technologies. Traditional consultancies have adapted to offer new expertise to clients. Specialist big data analysis agencies are helping companies make sense of their consumers. There is even an AI (Artificial Intelligence) agency now, that helps create ‘intelligent agents’ for brands. Market is demanding newer mutations of agencies like these, mutations that help them navigate the brave new world of the new economy.

Market is demanding newer mutations of agencies; mutations that help them navigate the brave new world of the new economy.

The question that we must ask ourselves is – do advertising agencies matter as much in these testing times? On one hand, the budget allocated by clients for marketing is under pressure. On the other, technological investments, specialist hires and consultancies are claiming an increasing share of the budget. Will this twin phenomenon erode the value of our services? Will the share apportioned to advertising shrink further?

Advertising agencies, if they remain what they are, will secede their privileged partnership status to digital transformation agencies, to business consultants and to platforms like Google, Facebook and Amazon.

One obvious yet terribly difficult-to-pull-off implication of this is – to become an advertising platform. I have discussed this in detail earlier. The reality though is, not everyone can win in that race to become a platform. For the majority of marketing services agencies to survive and thrive, we need a ‘specialist’ strategy, not a generalist one. Here is why.

Age of specialists

Creative agencies are made up of a unique set of people: People who can think laterally, think big, think informally. Apart from a few top tech companies, not many companies have the asset of free thinkers who are not stifled by hierarchies and suppositions. As such, creative agencies are uniquely positioned to create new solutions for brand growth, beyond branding ideas.

For marketers trying to make sense of a fast changing world, agencies need to adapt to remain the priority partners they turn to for help. Can the planner’s customer centricity help companies improve their business plans? Can the creative talent’s mastery over conceptualization propel a client brand’s product and service design?

Why not to be a generalist?

Advertising agencies help clients ‘position’ their products as distinctly relevant. But we forget to apply those lessons to ourselves.

Google and Amazon is fundamentally rewiring our brains – even our clients. The ‘search’ and ‘suggested’ result mentality means that for every emerging need, the client searches for services he/she needs with sharper definition. She is more likely to send out a specific query out in the world – either digitally or among peers – ‘Who is the best at product design in our category?’, ‘Who can help me assess Blockchain’s potential to disrupt our category?’

What results she might get? Would people respond with a generalist agency’s name even if they have the capabilities? Will a generalist be on ‘Top-Of-Mind’ for such queries?

Well, many private agencies can choose to continue doing what they do, with likeminded clients catering to traditional consumer segments. But that set of marketers is shrinking, the addressable opportunity is getting smaller. That means making peace with low growth.

However, for publicly traded advertising holding companies, coming years could be the years of transformation – either willingly or engineered by activist investors who demand growth.

Hence, it is increasingly likely for large advertising players to ‘Pivot’ to go for the biggest emerging opportunities.

What is ‘Pivot’?

The purpose of a pivot is typically to go after a bigger & sustainable growth opportunity in the market that can ensure companies’ prospects for near future. You do so by changing the direction of your enterprise if the need be, while staying grounded in your core competency.
Firstly, it requires reassessment of your old business in the context of emerging opportunities/ threats. The reassessment should ideally throw up useful insights about your clients, your product/ service relevance or the way you work. Consequently, you quickly test possible improvements to your service. When you hit on something that works, you scale it up and go to town with it.
You might end up changing something about the way you do your business, while keeping some aspect of the business constant. For example, it might entail shifting to new markets/ consumer segments/ new clients. It might entail prioritizing a different sales channel or to gain new capabilities. It might even mean reinterpreting a consumer need and creating a completely new offering.

At its core, it is about changing with an ear to ground. An ear to the ground tells us of seismic shifts in advertising industry with issues of trust (Pritchard, 2017), profitability, and marginalization (Bianca Dallal, 2017) posing threat to advertising industry’s prospects. Common sense tells us that something needs to give – something must change.

It is about time advertising agency business models change for the better.

The pivots of advertising agencies

At its most fundamental level, advertising agencies exist to help marketers grow (Purpose). They do so NOT by helping make the product/ service better, nor by helping reach more consumers. They do so by helping create consumer demand with distinctly persuasive communications. (Competency) The perspective to understand here is that of two variables: Core competency and Purpose of existence. Hence, to evolve, agencies can either look at radically reassessing their competencies or their purpose.

To evolve, agencies can either look at radically reassessing their competencies or their purpose.

Pivot 1. Core competency:

a.      Marketing services agencies:

Typically, creative agencies’ core competency is in their access to creative & strategy talent. W+K, Droga5 or Ogilvy are well known for their creative rock stars. Yet another agency might be built on the strength of decades old client-agency relationships. A media agency might boast about the scale of media spends that it controls and can influence. A research agency might have proprietary methods of inquiry or access to qualitative data.

The logic of pivot tells us that – for advertising agencies, there is an opportunity to pivot with their creative talent. What is the biggest business growth opportunity for the kind of talent they have? Beyond ‘advertising’ what high-value products/ services can this talent create?
Similarly, a research agency might look at its proprietary tool and reevaluate its potential. How can they augment the value of their intelligence the most? Would tabulation of existing qualitative studies help build an intelligent map of consumer behaviors? Who might be interested in such products? If ‘Big Data’ is the new oil, why are research agencies not making their big data usable at scale?

Here is an example of Pivot thinking applied to creative agency business.

The “If You Build it, They Will Come” agency:

This pivot is about keeping company’s people and their abilities at its heart and purpose. It seeks not to build radically new capabilities or hire radically disruptive talent. Instead, it seeks to find the biggest opportunities that the existing teams can deliver on, with greatest amount of satisfaction for the team.
For a creative agency, that means identifying the distinct talents of its teams and then finding the biggest possible commercial opportunities for them, may it be in advertising or beyond.
Creative talent remains the biggest asset of any creative agency. Yet, there is a growing sense of being overworked and underappreciated among the creative teams. There is a sense of ‘missed opportunity’ among people who see others creative people garnering fame and fortune with digital content. YouTube stars, Vice, Refinery29 and so on, have shown that there are bigger avenues for creative expression that could be financially rewarding too. There is a market for every conceivable creative style, expression, idea, app, activity or content. The creative team’s dilemma is – whether they will be better off with a career in advertising or in new age digital companies or by going solo with content creation, curation or aggregation?
Each creative person grapples with these choices. It would be in the agency’s interest to see the potential of its people before the people themselves do. If their team is passionate about a certain kind of creativity, find the biggest market for that creativity. This logic perhaps would not have been very sound 20 years ago. The surest way to make money with creative expressions and ideas was with advertising alone. However, today, a creative person can do much more with his/ her ideas.

If one looks at an idea objectively beyond the context of its birth, it looks much grander. Here is a thought experiment to prove my point.
Think of the last idea you had for a client’s campaign (or if you do not work in advertising, consider ‘what were they thinking?’ for any of your favorite commercial). Now think a logical conclusion to that idea divorced from the brand. Put that idea onto another stage/ context/ medium – see how it expands. If it is a good idea, it will always fill up the volume of your imagination – more than any brand can do justice to the idea.
For example, divorced from Dove, imagine the biggest expressions for the idea of ‘real beauty’. Can it be a movement? Who would like to contribute to it? Which brands would like to associate with it? Would the idea find place in the women’s marches? Would it lobby against skin whitening creams among policy makers? Would it run community centers? What would be the business plan, revenue model for the fullest expression of this idea?

If it is a good idea, it will always fill up the volume of your imagination – more than any brand can do justice to the idea.

Imagine an agency that has a set of issues/ themes/ ideas that it works on instead of set of clients. Will it be more interesting for the creative talent? Could it be more profitable? I believe it can be.

Ideas can translate to bigger things if you let them run free. The digital world has brought down the cost of realizing ideas drastically. It has given us the tools to translate and mutate ideas in infinite ways. Creative shops must make it part of their credo, to not let any good idea go to waste and to bring to life only the biggest expression of it.

The tragedy for many creative people is to see their magnificent ideas not reaching their full potential, being rendered impotent for a smaller cause, smaller venue. Instead, this new agency would recognize the bigness of ideas and put their efforts and capital in realizing those big ideas. The belief being – If You Build it, They Will Come.

b. Holding companies:

Unlike consultancies whose competency is in housing domain experts, holding companies do not have palpably distinct competency any more. A holding company is as good as the companies it has in its portfolio. The value of a holding company used to be in its ability to help portfolio companies to scale. However, it seems to have exhausted its scaling potential, evidenced by lack of organic growth.
Holding companies are trying a few things to improve their value. WPP is hedging its bets on ‘Horizontality’; Publicis is attempting to create an AI enabled personal assistant for its employees called ‘Marcel’. However, unfortunately, both attempts lack vision and conviction.
In an interview for ‘Strategy + Business’ in 2016, PwC Principal Deborah Bothun asks Sir Martin Sorrell, “How far can you take that?”, referring to Horizontality – the effort to get people from different WPP companies to work together for certain clients. Sir Marin Sorrell responds, “Not far enough.”
If the idea cannot be scaled across the company, is it even strategically relevant? At best, it seems to be a tactic to keep key clients happy.
Marcel too seems to be born of a narrow vision; it simply is an internal talent-sourcing tool. Wit AI, and the data that Publicis already has, it can be much more – but there simply is no evident will to create something groundbreaking.
Currently, the business incentives for a holding company are structured in such a way that they cannot radically change their course. However, many of their operating companies can.

Pivot 2. The purpose

In this pivot, we remain true to our purpose of helping client businesses grow. What changes is the ways in which we help them grow. The competencies become variable here. This means for this pivot to work, we must be radically adept at bringing in expertise for most growth needs of the client. If the client requires blockchain expertise, the agency must be capable and willing to provide that expertise. The key focus here is to become the de-facto growth partner of your client.

The “specialized business growth drivers” agency:

This pivot keeps the client base, the market, as constant and re-evaluates its options to seize the biggest opportunities in that market. Therefore, if your client base still feels that their biggest priorities are advertising/ branding to fuel their growth, continue doing the same. However, if your client base feels that their biggest priorities for growth are about leveraging emerging digital platforms or managing reputation in the age of instant outrage, adapt and train your teams to fulfil these needs well. The days for generalist agencies that could do everything for a client moderately well are numbered. Today, marketers need sharper, targeted expertise, which they can get most efficiently by looking at smaller, more specialized ‘vendors’. There is good money to be made servicing these myriad business growth needs. Specialize in driving growth for a certain kind of clientele with a set of competency they prioritize.

New age, new agencies

It is about time that agencies wake up to the reality of working in the digital world. It is not the time to be afraid and to be defensive. It is time to make bold new steps, to ‘fail fast’ and to ‘pivot’. It is time to start new adventures. The technological and societal revolutions are not threats, but opportunities for growth. It is time to grow magnificently with these new opportunities. Grow by either sharply adapting to emerging client needs or by investing in ideas you believe in. It is a brave new world, ready for the best of our ideas.

by Ajinkya Pawar

Targeting: the holy grail of 201x’s ad-tech creeps

Traditional advertising was famously opaque. As the old adage went – “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” So when digital advertising came about, the initial siren songs were about the promise of precise targeting and reducing the ‘wastage’. That siren song has not lost its appeal. More and more ad-tech firms pile on with newer and newer ways to target/ retarget by usurping personal data of unsuspecting consumers in morally repugnant ways, even if legal.
IoT, mobile phones, smart TVs, alexa…. the spying glass now comes in various shapes and sizes. And there are thousands of companies trying to incrementally increase the creep efficiency with each of these surveillance windows.

But to what effect?

  1. A vast majority of ad-tech firms are not making much money. A ridiculously large share of the profit pie goes to only two players – Google and Facebook. So the prospects for ad-tech guys don’t look all that well. Their hope is for the laggard holding companies to buy them off.
  2. Brands -Brands are waking up to the reality of indirectly funding fake news, hate mongers, trolls, sexual predators and so on with their programmatic buys. Even as the ‘inventory’ gets cleaned, they are getting a terrible deal on the rupee spent – for every rupee spent, merely 3 paise actually amounts to something useful. The rest goes to middlemen. So much for efficiency.
  3. Trust – and most insidiously, more and more people are looking at media, at devices, at brands with suspicion. All the tracking, hacking, retargeting efforts have left people uncertain about the faustian bargain. the deal perhaps was not all that good. free apps, it turns out, are fairly costly. The utopia of ‘Choices of brands’ is turning into dystopia of incessant, insidious and inescapable commercial propaganda.
    How insidious you ask? Here’s an interesting article telling you exactly how insidious – apps, ad exchanges pervasively track  (beyond your permission, your imagination or your awareness of it) your behavior in hope of ‘monetizing’ your behavioral data.
    The creeps go so far as to use sonar or wifi to monitor your every move in a store to figure out your preferences. Without your knowing ad tech guys are monitoring where you are, what you do and much much more. The ‘big data’ then gets traded around to ‘third parties’, mixed with and analysed so as to know you better than you ever can know yourself. Right now, no can say for sure who in the world has what information about you and how could it potentially be used two years from now.
    Things you wouldn’t care for ten years ago like your routine, your choice of retail shops, your click streams, your idle time on phone etc, are now data points that can be weaponised to influence you. We are being forced to care for our inane details.
    A lot of ad-tech is built by people who either can’t fathom the societal context of what they are doing or don’t care. They are at best naive, at worst slimy scumbags who profiteer at the expense of ruining the internet for everyone.

Most likely, like EU, many other countries will tighten consumer laws (or worse! Use these surveillance system for government’s use like in China) and put an end to overt targeting.
This can’t end well for ad-tech guys for sure.

Essentially we must realise that targeting is a false goal. 1:1 connection might be desirable, but is sustainably possible only in certain ecosystems – physical, amazon prime perhaps to an extent and such. That means  monopolistic powers might gain further, but not without them too getting under the scanner.

Stop obsessing over Targeting.
Make advertising great again. 😛

by Ajinkya Pawar

Effie Awards propagating wilful ignorance?

The incentive is structured against comprehensiveness

Effie awards are fairly important awards in Advertising. They are about ‘effectiveness’ – They recognize campaigns that have been effective in achieving their stated goals. So far so good.

We have won it, a lot of planners I know have won it. It is an essential career milestone for many in our business. Some job postings mention it too – ‘need planners with experience in winning at Effies‘. It is that important.

So the incentives are not geared to bring out reality of the marketing effectiveness. The incentives are stacked to create a straight narrative that joins the dots between the results and actions of agency, most convincingly.

I am yet to read a case that credits a favorable policy change, economic change, societal change for gain of brands. Even though they do impact businesses. There is simply no incentive for writing such a case. (Who will go to collect an award for an economic case? The FM?) So even if Paytm had a windfall of opportunity with demonetisation in India, you won’t see an Effie case for it (I hope).

I understand Effies serve a purpose to encourage marketers to put in more thought and rigour in their practice. But since out of the many other variables that affect a business, a comm strategy tends to remain in focus with Effies, we remain blind to the complete picture. I will give you an example.
Recently I was working on a brand that lost market share. We were working hard to figure out why we were losing. There was a new competitor in town, but it’s communication wasn’t convincing. We did consumer research, comm tests etc. Turns out comms was not a factor at all, though brand imagery had suffered. The culprit was pricing – SKU mix strategy. With the right SKU, the value paradigm had changed. A high Share of Voice for a fairly good campaign couldn’t convince people to choose our product over the better value relaunched product by competitor. The competitor is kicking our ass and he can’t enter a case in Effies. Would you give an award for winning by identifying a sweet spot with an affordable SKU? I wish Effies would.

Need to Change Effies to reflect the need of change with Advertising business

So you realise that there are a whole host of variables to win the market with and Effies tend to reward only a few of those. It is unhealthy. Because as agency business gets marginalised, what will help it become more relevant is to find out ways to become more effective beyond ‘campaigns’. To remain competitive against consultancies and fb/ google, agencies need to look at the big picture, start looking at and rewarding marketing efforts that go beyond campaigns.

If one were to make sense of the world solely based on Effie cases, the person would come out as a gullible idiot with false sense of intellectual enlightenment.

We need to engage with the complexity, the uncertainty

Read a few cases and it makes you think that the marketing world is a very rational and simple world. But it is anything but.

The cases paint a flat picture of the world – the causality between efforts and the market response seem ridiculously simple, even as they project conscience of all the factors affecting the brand’s performance. Is it even possible, to know all the factors that affects a brand’s rise or fall? If causality was truly that clear, would companies need the army of sales managers, favorable retailer relationships, the many offers and schemes and lets not even get started with consumer’s irrational behaviors and preferences. We assume these ‘variables’ as ‘constants’ in our grand scheme of building the case. And that is not helping anyone.

If anything, awards only reinforce our illusion of certainty. It creates a false sense of expertise about a subject as complicated as applied sciences, but without the rigour of applied sciences papers and awards. A medical sciences paper would go to great lengths, source hundred of experiments, cite precedence to establish correlation and yet shy away from ascribing certainty, there will always be a caveat. Causation is difficult to prove. More so with psychology, sociology. It is almost impossible with these fields. And yet, advertising professionals write thousands of cases a year, joining myriad dots to convincingly prove cause-effect between a brand’s success and their effort.

The cases gives you a sense that an enlightened mind was behind the campaign – some cases read as dramatic as the story of Siddhartha. One gets a sense of an incisive insight cutting away unprofitable behaviors and perceptions, suturing profitable ones. In reality, brands seldom follow as simple a trajectory. I mean, sure, great ideas do have out-sized impact on brands. But it is easy to ascribe out-sized impacts to even mediocre ideas, in absence of a culture of rigour. We want to believe in it, so we do without critically examining the cases.

Often the germination of such ideas are random, their expression might come from unexpected quarters, their reception might be dependent on a lucky social chain of events… Great ad campaigns often had a huge element of luck, of serendipity involved. But we will never find a case talking about such lucky lifts. The cases build a myth of straight thinking – business problem statement leading to insight leading to creative idea. How many times has this process really progressed so linearly in a real agency?

And there is no reason to absolve ourselves of this randomness. This very randomness will help us remain relevant in the age of AI. If causality truly was achievable, we would have been replaced with robots by now.

So perhaps, it is in our interest to institute another awards – Lucky Ideas Awards perhaps. It takes efforts to get lucky, sure. I don’t wish to discredit the hard work behind good ideas. Indeed as John Cleese suggests – to get good ideas, one needs to work at it, push oneself harder and not be too pleased with oneself. Yes. But even then, to be in a position to think for a brand that has a cultural cache, that collects data and conducts researches, that has a confident and energetic marketing department who is willing to enter awards – needs luck.

Many brands simply do not have enough data on their business. Many do not want to experiment. Many do not have great ambitions. It requires luck to work with clients who are systematic, ambitious, willing to experiment. And after that you need to work hard for a good idea. and then immense amount of luck for that idea to be supported with the many thousand things happening that affect a business.

So essentially – recognise complexity and reward strategies that succeed, no matter the form of its execution, no matter the size of its footprint.

by Ajinkya Pawar

Right to a marketing free life

I am taking a marketing refresher course these days. In that course, marketing is defined as an exchange of values.

Seller gives products/ services/ experience in exchange of buyer’s money/ attention/ time/ trust.

The thing that struck me is that that in real life this exchange is not equal at all. The professor’s talk made it sound like marketing was a noble cause of increasing, providing value to a people in exchange of money, attention, trust given to it by free will of people. Yes, markets have enriched our lives tremendously. The exchange is bedrock of human civilization. But the 21st century exchange is a tad bit murkier. The globalised exchange is far too skewed in the balance of power between seller and buyer.

Marketers steal my attention, time and trust to make me think that parting with my money is completely my choice. But the exchange is rigged. The options are false. Where is the option of me to slam the door on marketer’s face? “I am not interested, please go ahead.” You can’t do that anymore. The marketing virus is as ubiquitous as air. Advertising industry, after all, is employed solely to hack the minds and hearts of consumers – to ‘incept’ brand ideas, as their own.

In absence of free will, can it really be called an ‘exchange’? its not between equals.

In that sense a better metaphor would be a colonised ground. Our minds are colonised by brands. They are fighting for our mind’s share. and there is no way for us to shoo them away. We can only chose between such and such consumptive lifestyle. You can’t escape brands completely in the 21st century.

Your minds are completely colonised. And marketing is the effort needed to expand their colony.

An opt-out option

In India, we can opt out of telemarketing sms/ calls facilitated by nation’s telephone regulatory authority. How about an opt-out option for consumers from all kinds of marketing?