InThe Lessons of History, Pulitzer Prize winners Will and Ariel Durant said, “The present is the past rolled up for action, and the past is the present unrolled for understanding.” Disruption therefore should be viewed not as a new phenomenon, but seen in the larger context of human evolution which has ebbed and flowed since time immemorial, preceding the first to the current Industrial Revolutions.
In that regard, we are all subjected to the processes and trials of evolution, to the struggle for existence and the survival of the fittest to survive. If some of us seem to escape the strife or the trials it is because our group protects us; but that group itself must meet the tests of survival. Unfortunately, some groups haven’t fared as well as others in managing the disruption arising from today’s digital economy.
In spite of exhortations from marketing industry leaders such as Sir Martin Sorrell, to turn his group of “Mad men” into “Math men”, many agencies belonging to the world’s largest holding companies have become victims of natural attrition. Shares in WPP, Publicis, Omnicom and Interpublic Group were down sharply over the past 12 months.
Agency clients such as consumer goods groups are rethinking their marketing spending. For example, in the past three years, Procter & Gamble (P&G), the world’s biggest advertiser in that category, has cut agency and commercial production spending by US$750 million. It forecasts almost doubling that sum in the next three years.
While marketing holding companies struggle, digital behemoths Facebook and Google have virtually become a digital duopoly. Today, they represent about 60% of a growing global digital advertising market, effectively disintermediating these holding companies both from their clients and the audience they try to reach.
Fortunately, if history has taught us any lessons, is that what results from natural attrition time and again is a stronger species than its predecessor. While marketing holding companies might be languishing, the modern day marketer shouldn’t have to.
In its bid for greater efficiency, P&G marketing chief Marc Pritchard has reportedly said that his company would “take back control” of its marketing and move more of it in-house, saving over US$2 billion.
Acknowledging Pritchard’s sentiment, WPP chief Sir Martin Sorrell said: “We had too many people between us and the consumer,” adding that it was “taking too long to get things done. We have to move a lot faster.”
While traditional holding companies are facing declining revenue and profits, firms that are embracing digital capabilities – from AI to analytics – are projected to see efficiency gains translate into solid growth rates. A recent IDC study commissioned by Microsoft predicts that approximately 60% of Asia Pacific’s gross domestic product (GDP) will be derived from digital products or services by 2021.
A study by McKinsey echoed these findings, showing that businesses enjoyed five to six percent more in returns on investment in profitability and productivity by harnessing analytics. Another research firm New Vantage found that 73% of their respondents received measurable value from harnessing data – which was 50% higher than last year. This suggests that more value is being achieved as companies grow familiar with harnessing these data analytics platforms.
In the same vein, the modern day marketer will need to the march to the beat of disintermediation and which ability to keep step rests on one’s pace of personal mastery of digital capabilities. Which begs the question: “What core digital capabilities should marketers should acquire?”
In a recent article by Marketing, an Adobe and Econsultancy study surfaced the top three areas of priorities for marketers in 2018 as being “Content and customer experience”, followed by “analytics” and “audience and data management”.
