We as marketers are facing challenges from modern trade, e-commerce and digital media.
If you look at the modern trade, the way supply chain works, modern trade is willing to only stock three of the top brands and they supplement it with their own store brands. Tomorrow, if a brand is not in the top three it could go out of business in a modern trade environment. One of the things in India was the lack of market access.
Now because of e-commerce, brands can theoretically enter any market and does not need a distribution network as e-commerce gives them the access.
The significance of e-commerce will only increase in the days to come. In China, 15-20 per cent of all retail comes from e-commerce. In China, brands can do without a distribution network and win through e-commerce.
That changes the competitive landscape very quickly for us. Lastly, digital is changing the way we consume media.
The challenge is where does one begin and where do you end. The question is how do you take ideas across? It’s a very different ball game and it’s not about ticking one medium over the other.
Dearth of talent An example from another industry will help us analyse the problem better. Till not so long back a mobile handset maker dominated the market in India. Gradually it lost its grip over the market as it did not change with changing consumer preferences and was eventually sold out.
If you look at the advertising business, there are insight agencies, media agencies and creative agencies. Insight agencies are delivering, media agencies are slightly better, but the creative agencies are out of sync.
They have not moved at all. What you have is similar looking products and every agency complains of low margins. Do clients ever complain that they have low margins because their products and brands are not differentiated? If any client said so, you would ask them to go ahead and differentiate their product and brand. If you deliver a plain vanilla product you will not get margins.
And when you do not get healthy margins one cannot invest. The biggest issue that plagues advertising today is the shortage of talent. And finally, like Gutenberg invented the printing press and opened up knowledge, digital has opened up the TVC.
It’s at this point that leaders in the creative business will have to really look at and say, will we change, will we disrupt or will we get disrupted?
Sameer Satpathy is CMO, Marico Limited