Features

State of the industry: A view from the CEO, Vincent Digonnet – ‘no industry game-changer for last 10 years’

MullenLowe Group Asia-Pacific chief executive officer Vincent Digonnet tells Mumbrella’s Dean Carroll that the marketing industry is failing to adapt quickly enough to change, meaning the future will be uncertain unless leaders grasp the nettle today

Digonnet of MullenLowe Group

Many people suggest the media and marketing industry is in transition at best and managed decline at worst – but what’s your view on the trajectory and how fast the industry is changing?

“I don’t think we can put the media industry and the marketing industry in the same basket. And I would add the “creative” advertising industry in the mix. The marketing industry until 10 years ago was mainly defined by advertising and media, and is now defined by social commerce platforms and martech companies led by data. 

“It is without doubt in transition, with new actors like business consultancies transforming it. The media and advertising industries on the other hand aren’t just in a state of managed decline, they are also becoming less managed. The industry is not changing fast enough and so now finds itself on the back foot, making any attempt at transformation more painful. 

“The old model is no longer economically viable, and the new one is not profitable enough yet; forcing holding companies to walk a very tight line between managing short term profitability and investing in the future. Take Publicis for example – its acquisition of Epsilon and Sapient show it has invested heavily in the future, but this bold move is costing them a lot in the short term. It’s worth noting that no industry in history has ever managed to disrupt itself – the triggers for change are always external.”

What is the next big thing coming down the line for the industry whether it’s a technology, market trend or something else entirely?

“The problem with our industry is that we tend to speak about trends long before they actually exist, but then take no action to prepare for them until those trends become reality. We are too slow to react. So we find ourselves being currently disrupted by trends now that we were writing about 10 years ago.  

“We need to adapt our existing business models so they are ‘fit for purpose’ and able to respond to the acceleration of technological development (programmatic, data management and artificial intelligence) impacting media consumption. So this should be our immediate priority.  

“But if I had to make a bet, I would say that the next big thing is a backlash to globalisation, and a sharp return to localisation – which we are already witnessing with in the resurgence of nationalism and protectionism across the world.”

Can you explain the obstacles, as you see them, that need to be overcome in order for the industry to move to a better place?

“We have been for years like frogs happily frolicking in water getting warmer and warmer. It is close to boiling now. One of our biggest problems as an industry is that we have been talking a lot about transformation, without ever really challenging the very structure of our organisations. 

“We thought that adding skill sets and disciplines would be enough. And it is not. We need to structurally challenge the existing interconnection between departments, and we need to redefine the meaning of those departments or divisions. 

“We also need to redefine what creative means. Can it still be a department built around the combination of art directors and copywriters? Can we still have digital departments when our whole industry is now digitally driven? Creativity is at the heart of who we are, it is separating us from business consultancies. 

“However, we have to recognise that it is an absolutely fundamental soft skill that should be a prerequisite to all our talents across departments, as opposed to a pseudo hard skill limited to a single element of our business.”

What work or innovation during your tenure are you most proud of and why?

“The creation of a data science centre of excellence in Tokyo, impacting the development of some of our clients and practices globally. And more importantly, the combination of data science and experience design to totally rethink how we collect and utilise that data along the consumer journey. 

“We call it ‘designing for data creation’ and it is a response to the previous question on redefining the way we organise ourselves, as well as combining skill sets in an unconventional and creative way to generate better outcomes.”

What was the biggest mistake you’ve made in your career, and what did you learn?

“In 2008, I was heading a start-up in mobile communication in China and we were investing in technology to drive CRM programs in the mobile communities of that time (Bedo, Fenyang and soon) all heavily supported by serious funds. In the space of 18 months, the market was totally redefined by the development and exponential growth of Tmall, Weibo, and later Weixing – creating new ecosystems that made all these mobile communities obsolete before they could even take off. 

“I learned a painful lesson that I have not forgotten, which is that we were entering a world – led by China – of increasing speed in terms of disruption and technology changes. That means that agility is becoming more important than scale, and that we have to be extremely careful when piggybacking on ecosystems.”

What is the landmark piece of work by others that was a game-changer for the industry, in your view?

“I am afraid that I am not aware of any work by anybody in our industry, which has actually been game-changing in the past 10 years. And that in itself is an issue. The last game-changing developments I can think of were the emergence of service design led by the likes of Uber and later AirBnB.  

“Their approach has redefined business models, experiences, branding and loyalty. I believe there was a world before Uber and a world after Uber. That is a real game-changer.”

Given that marketing is an industry designed to create more consumption, can it be considered a force for good in a world of diminishing natural resources?

“This question is at the heart of all current debates everywhere in the world, and two forces are frontally fighting each other. The declinists, who believe in a finite amount of resources and an increasing number of people who fight for a new society based on economic decline and the reduction of consumption. And then those who believe that technology and progress will find new ways of producing resources without taxing the earth to death. 

“Depending on where you stand, you believe that marketing is a force of destruction or that it is a force that can be adapted to generate a different kind of consumption as opposed to ‘always more’. I am a believer of the latter.”       

Is brand purpose a worthwhile goal?

“Brand purpose has become the new pet of the marketing industry, to the point where it is currently so used and abused that it is destroying the very essence of what it is supposed to stand for. Not every brand and every product needs to have a purpose outside fulfilling a very specific need. 

“Companies, on the other hand, need to include social responsibility in one form or another into their reason for being. Making a profit or even satisfying stakeholders is no longer enough in our polarised societies. But putting a brand purpose veneer as a communication tool on every brand is going to backfire and bring discredit on the whole exercise.”   

If you had to pick one thing that has damaged the industry as a whole, what would it be?

“Award shows. As long as [Cannes] Lions are awarded to work for a brand or a company that goes bust six months later (as happened this year), it will put our whole industry in the category of ‘entertainment’ with no relationship to our client’s success or failure. We cannot complain thereafter if we are treated as entertainers, and that we have lost the ears of CEOs. And I am not even mentioning scam work here.”

Do you think scammers should be banned from awards shows when they are caught, just like doping athletes face sporting bans?

“‘Yes’ would be the easy answer. The complexity is in the definition of scam work outside the obvious. Work for a real client that actually ran in the media is not enough. In 1992, I was a client service director in charge of the Dior account, and we developed a fantastic TVC that we believed could win a Lion at Cannes. 

“We had a huge debate with the client on the ending and shot two scenarios. The brand was Miss Dior, and the TVC was about a very modern young woman walking down a gigantic staircase with her dress flowing in a huge spiral, with the train bearers floating behind. 

“Ending one: At the bottom of the stairs she undoes her dress and walks out in a miniskirt, leaving the groom behind with the super: ‘Always Miss, always Dior’. Ending two: The same but instead of leaving the groom behind, she walks out with him with the same super.

 “The client chose ending two, which was meaningless. In the end, a compromise was found, and the client accepted the argument to buy a few spots at night on some cheap channels to run ending one, allowing us to enter the film at Cannes and to win a silver lion. Was it a scam?”

What makes for a great client?

“The power of saying ‘yes’.”

What makes for a bad client?

“The power of only saying ‘no’.”

Can you outline the opportunities ahead, as you see them, for the industry?

“Personalised experience at scale is the opportunity ahead of us, which means better understanding of consumer journeys and requires experience design, data creation, technology, insight and creativity capabilities. This opportunity requires new skill sets. Above all though, it calls for a different way of organising ourselves as I’ve explained earlier.”

And, conversely, what are the big threats to the industry – whether its consultancies, in-housing, technology or something else entirely?

“The biggest threat to the industry is the industry itself, and its inability to adapt deep enough and fast enough. Historically, there is no business that has managed to reinvent itself in the face of a major disruption. This is the scariest thing.”

Are you paid well, or not enough, by your employer for what you bring to the table?

“There are consultants defining market prices for leaders and senior management in our industry. It is a competitive game, as opposed to a siloed ROI game. That being said, one of the biggest threats to our industry is that as our profits shrink, our ability to pay our talents well is diminishing, and that makes it more difficult to attract top talent.

“Some 30 years ago, the best talents from the top universities wanted to enter advertising because it was sexy and you could earn a lot of money fast. Those days are long gone, and now our industry is severely challenged, and way down the pecking order when it comes to being able to attract and hire the best.”

Looking to industry talent – is it more difficult now to find the right people now than say 10 years ago – given the pace of technological change – and how do you see this playing out over the next decade?

“Finding and securing the right and best talent will be one of the most difficult and fundamental challenges in the years to come. According to research conducted by Dell, 85% of the jobs required in 2030 do not exist now. It will not just be about finding the right people but transforming organisations to adjust to that shortage. Currently, people are chasing jobs. In the future, jobs will chase people.

“The way agencies operate needs to change from being primarily organised around a market-level operations model to become more focused on organising around skill sets. Geographical boundaries are no longer a barrier and technology now allows for seamless workshopping and collaboration.

“Structural shifts, evolved training and a systematic mapping of roles, and their tasks, will be needed before technology even enters the equation. Any successful transformation must start with people. And our people will remain a key asset. They will still be the critical point of differentiation.”

Mental health is a taboo topic for the industry, but given the long hours, short deadlines and sometimes unreasonable demands on staff – are you as a leader doing enough to combat the effects of stress within your organisation?

“We are never doing enough, but we have begun to put programmes and policies in place across the region to address some of the issues faced by our people. For example, we are exploring offering professional counselling services from next year onwards to employees under an insurance arrangement.

“This would give them access to information and the financial support to seek help from professional therapists, if needed. We also recognise World Mental Health Awareness Week every year in October, where our focus is on encouraging employees to take time out of their day for themselves; and to also acknowledge how their colleagues might be feeling that day and to consider how they might be able to help them. 

“Becoming an agency which is organised around skill sets and competencies will also open up new opportunities for employees beyond the silo of working for only one or two clients. They will be able to experience working in multiple markets, within different teams and learning new skills.  This all hopefully adds up to more flexible working and work satisfaction.”

If your children wanted to enter this industry, would you say it was a good idea or a bad idea?

“Difficult for me to say it would be a bad idea when they saw me their whole life doing rather well from it, and more importantly enjoying what I did. Anyway, it is a bit late as they all have an activity they love, and all of them are in creative fields – if not advertising.” 

 

I’ve heard industry leaders state that ‘everything will be programmatic soon’. Is that a good or a bad thing – and why?

“I am always prudent with these sweeping statements. Let’s define everything first. Programmatic will most likely be the future of digital advertising, although the real question is whether digital advertising will be the future of marketing and brand building. I believe not.

“Serving ads or content will become a small, albeit important, part of an industry that will be driven by the personalisation of experience at scale – involving developments and skillsets way beyond programmatic.”

With internet peer reviews now driving the last mile to purchase for consumers, is the traditional marketing funnel dead?

“I would say that the traditional marketing funnel is seriously challenged, but not dead. Internet peer reviews are also influence and they become another critical element of the funnel we need to act upon. Not through traditional advertising means, but through marketing activity, content diffusion, macro influencer leveraging and so on.”

How valuable is creativity in the modern industry landscape so dominated by technology and automation?

“Creativity is at the heart of who we are and will always separate us from any other industry. It just needs to be applied differently than in a department consisting of copywriters and art directors. 

“The technology powering our industry and the social commerce platforms is extremely different from the tech powering ERPs, and requires more agility and creativity to develop. Even data science and analytics applied to marketing requires creativity.”

      

Are you optimistic or pessimistic about the rise of artificial intelligence and its effect upon your industry?

“I am always optimistic about any development, invention or progress when it comes to our industry. It forces us to challenge the status quo and reminds us why we came into that business to start with. 

“On the other hand, AI will have such an impact on our lives and on the definition of humanity that it is scary. It is like contemplating infinity and trying to make sense of it.”

Virtual personal assistants and artificial intelligence – should marketers be scared or view the technology as an opportunity?

“Marketers should never be scared of technology and AI. Humans should as they will change everything about our society.”

How long will it be before ‘voice’ becomes a force in marketing?

“Siri has been around for years and nobody has ever made anything substantial out of it. I am not certain that voice will ever become a force. It will be a means for sure, before we’re able to make commands directly from impulses in the brain.”

Esports – is it an opportunity or waste of energy for marketers?

“It is an opportunity straddling traditional sports and gaming. When you witness the final of the FIFA game in Korea in a huge stadium containing hundreds of thousands of supporters watching two guys battling with a joystick, it is scary. 

“The egaming opportunity is very similar to sponsorship opportunities. It is a waste of energy, if you consider that you have done your job through the sponsorship investment. It is an opportunity, if you consider that the sponsorship investment is only the starting point of your marketing activities. The ad equation with the brand, and the ability to leverage the sponsorship makes the whole difference.”

New millennial platforms are emerging like Twitch, TikTok and Snapchat – which of them, if any, will own the future?

“I do not think any of them will own the future, and they are all very likely to become outdated quickly every time another platform emerges. What is impressive is the speed at which those apps can become massive and global in a very short period of time. 

“TikTok was launched in September 2017, and it has already been downloaded 800 million times worldwide. The scale they reach gives them a false sense of security. There was a time when the saying was ‘too big to fail’. That was before the power of the internet and mobile powered by 4G and soon 5G. Now, I believe that these apps and platforms can disappear as fast as they rise.” 

The Google and Facebook duopoly – do you love or hate it?

“Neither love, nor hate. I am fascinated by the Western blinkers we have when it comes to those two American giants. While our governments debate whether we should dismantle Google and Facebook, China is doubling up behind their own giants: Alibaba, Tencent, Baidu. They are taking market shares in Asia and In Africa. 

“They will be the leaders of tomorrow. We should start thinking more about cultural influence and what will be the position of these companies versus their Chinese equivalent in 15 years, as opposed to thinking in a box walled by Europe and the United States. Six months after banning Huawei in the US, the company is launching its own operating system competing against Android. Watch that space.”

Finally, which international market will lead the way for your industry over the next 50 years and why?

“Without hesitation, China. I wrote a series of pieces six years ago on why China is 10 years ahead of the rest of the world when it comes to social commerce – and they are still relevant. China is investing in markets nobody is speaking about in Africa and building major positions in these markets with their own ecosystem. 

“Western companies are still focused on consolidating their positions in Europe and the US, which both have limited growth capabilities. They are also developing siloed technologies that have difficulties speaking to each other.

“Look at Whatsapp, Snapchat, Pinterest, Facebook, Amazon and Ebay. Meanwhile, China is building plug-and-play functionality on existing ecosystems. That is making marketing and transacting fast and cheap.”

Vincent Digonnet is the APAC CEO at MullenLowe Group 

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