Drugi jezik na kojem je dostupan ovaj članak: Bosnian
By: Asja Dupanović and Adnan Arnautlija
Stephan Loerke is the man standing at the very top of the World Federation of Advertisers (WFA), the voice of marketers worldwide, representing 90% of global marketing communications spend – roughly US$900 billion per year. Before he speaks at this year’s Golden Drum festival of creativity, we asked him to share with Media Marketing the perspective of the WFA on some of the burning issues in the industry today.
Media Marketing: Markets globally are changing faster than ever before. Such turbulences bring a host of issues for brands, but what would be the greatest concerns for them right now?
Stephan Loerke: Marketing, in general, is going through a phase of disruption manifesting itself on three different levels. One is globalization. Brands have visibility which crosses boarders like never before. This is not limited only to big international brands but is an increasing reality for smaller brands too. Second is technology. We are seeing a huge shift of the marketing spend towards digital platforms. Year 2017 was the first in history when digital became the single largest media spend all around the world, overpassing tv. The third level is that of society. As brands become more visible, as governments and other institutions lose trust on the big scale, people’s expectations of the brands are increasing significantly. Brands are increasingly expected not only to deliver good and safe products but to also be doing the right thing for the society. These are the three major disruptors. You ask about the biggest concern. I would not call it a concern, as it is not really what it is. Disruption means change but change doesn’t only represent a threat. The Chinese word for crisis means opportunity and threat at the same time. With every change come both. If I was to pick one opportunity for the brands, let’s just look at the discussion around the Me Too Movement and the importance of the brands contributing to a society, which is actually fair and more equal to different sexes. I see it as a great opportunity for the brands – embracing an agenda, which is one of fighting gender stereotypes. Of course, you can look at this agenda as a threat but we wish to look at it as an opportunity.
Media Marketing: WFA has recently issued its Global Media Charter, designed to improve conditions for marketing ecosystem. What are the main elements of this initiative?
Stephan Loerke: Back to what I was saying earlier, digital has become a very important part of the marketing spend. A lot of money is flowing into that ecosystem and we are increasingly noticing the many significant dysfunctional elements in it. There are eight key shortcomings, which we believe need to be looked at.
In WFA we estimate that between 10 and 30 percent of digital media spend is actually subject to criminal activities. That is absolutely huge, when you think about it. If nothing is done about it, we estimate that by 2025 digital ad fraud will be the second income in the world after drug trafficking. So there is a huge responsibility the brands have in taking the necessary steps in order to minimize ad fraud. The ecosystem is far too complacent today, we think, and not acting sufficiently.
We find it absolutely unacceptable to see brands funding extremist web sites and being seen in certain contexts, which are simply not acceptable. Placing ads for products high in fats and sugar in content seen by children under 12 years of age or alcohol ads in content seen by people under drinking age etc.
The average viewability in the largest markets is 50% today. So, only half of the ads you pay for are visible. Visible is being defined in a very modest manner. Visible means being able to see an ad for 50% of its size for one second. That is what is called visible. And even with such a modest benchmark, only 50% of ads are visible. There is a huge challenge here again in increasing viewability in order to make a medium an effective one.
We have a very complex ecosystem built on a number of intermediaries, which all play a role and collect a part of the cake. We have a waterfall chart in WFA, which shows that, on average, when you spend a 100 EUR, it ends up being 40 EUR for the publishers. We think that is simply not sustainable. Because, what happens in between, is often not known to the client. Everything is way too little transparent. Some of those intermediaries have a conflict of interests. At times they can be purchasing the same inventory and selling it back to the client without the client knowing this. There needs to be much more transparency in order to address the deficit in trust.
Third party verification and measurement
It has to be the basic. We simply can not rely on whatever a platform tells us in terms of how many views it has and what are the profiles of the people who’ve seen an ad. Clients need much more accountability in order to justify the type of investments they are making.
Removal of walled garden issues
We increasingly see the walled gardens appearing in the ecosystem which basically means the ecosystems around facebook and Google, which make it difficult to reuse data from one platform to another. This also makes it difficult to use third party verification providers.
We think we need to be much more open, transparent and pedagogic with people in terms of what data we collect, when and for which purposes. That is linked to GDPR. It is not only a question of complying with the law, but it is a long term good marketing practice to be ultimately asking people whether they are ok with what we do. If they are not, we think that data should not be collected because that ultimately generates a back clash and mistrust.
When it comes to the user experience, some formats we are using are annoying to people, as they report. They overcrowd the screen, are intrusive etc. This leads to ad blocking and in many European countries, we have markets in which up to 30% of the population is blocking the ads. When you look at demographics, 15-25 year old block ads up to 50% of the time. We need to look at what are the formats we need to get rid of in order to remove the level of annoyance.
Media Marketing: Can the global trade war started by president Trump, bring to an economic crisis such as we’ve seen 10 years ago, which would result in big crisis in the advertising industry?
Stephan Loerke: There is a number of uncertainties in the global economy today. There is also a correlation between economic growth and the growth of the ad spend, of course. Every downturn, such as the one we’ve seen 10 years ago, affects our industry.
Media Marketing: There is a growing trend of brands moving more and more marketing operations to in-house teams. Why is that so and how worried should agencies be?
Stephan Loerke: I think there are a number of reasons for that, one of them being the breakdown in trust between agencies and the advertisers. In some cases the companies drew the conclusion that they need to bring the programmatic in house in order to address the issue of the lack of transparency. That is an important driver. Linked to it is, of course, the question of trust. Secondly, there is the question of efficiency. I spoke to you already about 100 EUR ending up being 40 for the publisher. When you add the ad fraud to it, the 10-30%, which are subject to ad fraud, in some extreme cases 100 EUR becomes 28 in the pocket of the publisher. So, it is a matter of being able to control the different steps in a manner which helps you increase the efficiency of your spend. I would add two more important issues. One is data, which is of strategic importance to the brands and finally agility, the need for speed and flexibility, in order to be able to react to the changes in the market.
Media Marketing: What will the future relationship between brands and agencies look like? What should marketers and agencies have in sight to give themselves a head start in that future?
Stephan Loerke: That is a big question. We did a big research among our members recently and, when it comes to how advertisers and agencies work together today, it is an unhappy couple. Clients give it a 5.1 and agencies 5.7 out of 10. Both agree that the relationship doesn’t work all that well. They also agree on some issues in terms of why is that. They agree that the agency model today is not fir for the purpose, that collaboration is hindered by structures on client side and they agree that increasing digital is a competence and not a specialty – it is something that needs to be there as a skill and not making you a digital agency. Then there are things they don’t agree with and I would especially like to highlight those from the client perspective. The ability to provide clear measurement of the return on investment across all channels is probably the most important point, ensuring that data, analytics and insights are shared across the entire roster. That is today a big, big shortcoming, across all the agency models that we’ve seen. Given that brands spend more and more on marketing and that there is more accountability, there is a demand to understand how the whole process works. The second big gap between what clients demand and what they see from their agencies, is the ability to see the end to end consumer journey, to understand who is the consumer we are targeting, how his journey starts and how it ends. In case of a big agency roster, there is the risk of everyone taking part in that journey without understanding the whole of it. At the same time, as the other party in this dysfunctional relationship, the agencies are making some fair points too. They say that internal structures stand in the way, that the briefings are poor, approval process far too long and clients lack strategic thinking.
Media Marketing: Slogan of this year’s Golden Drum festival is “Revealing the fuel of inspiration”. What fuels your inspiration?
Stephan Loerke: The world, in all its facets. I am absolutely fascinated by seeing the differences among cultures, people, religions, way of looking at things, all together in one place and the energy it generates. The places which inspire me and the moments, which inspire me are those which apparently have a contradictory way of looking at life, all coming together and creating an incredible opportunity of energy, vision and a new way of looking at things. There are a few places like this in the world. One, which strikes me, is Berlin. It is a city which has so much contradiction with its history – old and new, people coming in, start-up entrepreneurs and, at the same time, local population. And it all gives a pretty magical mix. There is an underground culture a more conservative culture and that is where I find energy and inspiration, in short.
Media Marketing: Any message you would like to send to Golden Drum delegates this year?
Stephan Loerke: Look at the people around you. There is a risk in our industry of becoming too self-complacent and too internally focused, celebrating ourselves too much without being in touch with people and society around us. When you start looking around you, you find incredible opportunities of inspiration and of doing stuff, which makes sense beyond the product. I am a big believer that the future of our industry, and this is why I am so passionate about marketing, is that we can truly make a difference in the world, in the positive manner. When you align brands and strategies with societal expectations, you can move mountains. People started giving up on governments and all kinds of institutions which are supposed to be making our world better. I think there is an opportunity for brands, for our industry, for marketers, to be more curious about what is happening around us and understanding better how we can contribute to making the society a better one. When you get that right, you get to that incredibly sweet spot where you get your brand to win in the market place and at the same time make the society better. That is my call to the delegates.
Media Marketing: This interview will be published a day prior to the 5th consecutive meeting of the presidents and CEOs of the national industry associations of the Adriatic region. They are trying to find modalities of cooperation, which would be of the highest interest to their members. What should they focus on, by your opinion?
Stephan Loerke: WFA works with associations of advertisers, with clients. Our agenda is helping clients become more effective and more efficient at what they do. An obvious agenda for the region would be – look at how you can make clients more professional and how you can help them do a better job. In you region we only have two associations – in Slovenia and Serbia – but we are very keen to extend that network. Now, if you wish to bring together agencies, advertisers and media, a potential common mission could be to look at what can be done collectively to make marketing more professional, more effective, more efficient. For example, in some of your countries you don’t have measurement systems, which are up to scratch. In some you struggle with transparency, with agencies’ commissions undermining transparency. You can look at issues of viewability in digital. I would pick themes where there is a collective interest in making things better for agencies, media owners and clients. Ultimately, the agenda needs to make sense for the brands as you want to be encouraging brands to be spending more, that is the engine for the industry. Look at the WFA Global Media Charter. It is a document which summarizes what we think the key priorities are. I have told you more in my answer to the second question. If you look at that, you can certainly pick subjects which are going to make marketing more effective and more efficient long term and therefor there is an interest for the agencies, who are interested in the market growing; Creating the conditions in which more money will flow into media, is in the interest of the media owners.
Please give my greetings to the Adriatic region and pass on my message of how keen we are to see a network of advertising agencies built in the region and build our relationship with those associations.