Pepsi China CMO warns agencies of power of one-stop shop media owners, ‘Anyone with a mobile phone can be an advertising agency’


Richard Lee

One of China’s most powerful marketers has issued a warning to advertising and media agencies, saying that media owners such as internet giants Tencent and Youku have the capability to replace their function by creating ads and also to place media.

Richard Lee, CMO for Pepsi China, said in an interview with Thoughtful China that likes of Tencent and YouKuu, “have the capacity to do one-stop shopping for brands.”

“You can brief them about your brand positioning and your needs, they come back with a creative idea, and they have the means to produce an ad and even to place it,” he said.

He also suggested that anyone with a mobile phone has the ability to be a director or an ad agency, and that agencies needed to change the services they traditionally provide, and become not only creators, but also “curators and consultants.”

“Think about this. Everyone now has a mobile. It’s so easy to take pictures. And it’s easy to pass pictures around. Theoretically anyone can be a director, an advertising agency even,” he said.

An advertising agency “creative team is proficient – well, most of them are – in doing traditional television advertising,” he said, before arguing that agencies are less adept in new fields such as social media.

The Pepsi marketer also said the agency remuneration model is in need of overhauling.

“The compensation structure must evolve too, from a fixed retainer fee to a flexible structure based on performance,” Lee said, before conceding that clients were also responsible for resisting the introduction of a new payment model.

“I’ve dealt with a lot of creative agencies who say they want to change, but brands are saying that they don’t want to,” he said.

On the role of agencies in managing a brand in social media, Lee said that clients should play a more active role in managing their own brands.

“In the world of social media, brands have to step up and have a clear point of view; a clear perspective on what the brand is doing with consumers and also with communities.”

“Brands have to take a leadership role. They cannot delegate to agencies,” he said.

“I really hate the world agencies, as it makes you sound like a real estate agency or something,” Lee added.

Lee’s comments on agencies come three minutes, 24 seconds into the video interview with Thoughtful China presenter Trevor Lai.


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