Opinion

What’s stopping ad agencies from innovating?

Art LeeIn this guest post, Art Lee argues that the future is looking bleak for agencies in Asia if they do not find ways to innovate.

If you look closely at the marketing campaigns run by many traditional ad agencies in Hong Kong and elsewhere in Asia right now, there doesn’t seem to be a lot of innovation going on. The mass marketing approach is still prevalent in outdoor, print, email and even social media, and it’s holding the industry back.

Even agencies with solid digital capabilities seem to be more focused on driving pure awareness using mass marketing and seldom use the true power of social media or data analytics to really understand what their client’s customers want.

Understanding what a customer wants should be the main driver behind innovation.

In a recent talk organised by the Hong Kong Trade Development Council, Ming Chan, CEO of the company The1stMovement, said that less than five per cent of businesses in Hong Kong are spending on digital marketing. Those who are spending are focused on mass marketing, either in search to drive traffic to websites, increase Facebook fans or building email lists.

With the speed that technology is changing, consumers are now more demanding. They don’t want the noise of mass marketing. They want very specific and targeted one-on-one personal conversations.

So what’s stopping agencies from doing what consumers want? There is only one clear answer. Clients control the marketing budget and have all the say.

It’s really up to agencies to influence their clients on why they should do things differently. But to do that, agencies are faced with several challenges.

Keeping it simple

Business are mainly focused on creating the best products and services for their customers and will dedicate the majority of their resources to doing so. To produce more innovative marketing, their agencies need to come up with ideas that are simple to execute – no matter how complex they are to set up in the backend. Agencies need to do the majority of the work, with as little tax on client resources as possible.

Tight on time and money

Innovation costs time and money – which are both limitations for brand owners. If agencies want to allow for innovation, the execution must be managed tightly with enough budget to make it happen. Of course, the win for the agency is that if that piece of innovation proves to have value to the client’s ROI, it is easier to influence the client to increase marketing budgets in the future. It’s very much a show-me-proof-before-I-spend mentality.

Limited control

Global brands with headquarters outside of Asia drive the majority of marketing efforts in the region. Limited control and budgets are given to regional offices in Asia. So agencies should try working more with local partners and use local channels. If they can prove that this works, then it’s more likely that headquarters will give them more control – and more power to try new things.

Low risk tolerance

In Asia, risk tolerance is not high. And high expectations for a fast return on investment among clients creates an environment where agencies hold back from trying anything new. They worry that if they fail, and the results are poor, they will lose the client. Sharing risk with clients is the best way to try new things, and running parallel campaigns that ensure overall marketing objectives are met, allows for new ideas.

Sales and objectives

Meeting business objectives and boosting sales is all clients really care about. Agencies that want to drive innovation should align their more daring plans without compromising bottom-line sales and objectives – but of course this is easier said than done.

For agencies to stay profitable and survive, time must be spent mining opportunities for innovation that create quality, value, convenience, relevance, security and a more personalised experience for consumers.

If they fail to do this, the only competitive edge agencies will have is the quality of service and the strength of their relationships.

Art Lee is the chief marketing officer at PassKit and strategic marketing director at Internet Marketing Coach

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