A lesson from China: More integration and enhanced digital presence

After assessing various marketing trends in the Chinese market, at the face of it, it looks like there will be Chinese agencies that will be looking to expand their network and services into other markets in the not too distant future.

Chinese companies are already very active in Africa and it is only a matter of time before Chinese independent agencies start looking into the South African market to collaborate or acquire agencies to provide better services to their clients.

SCOPEN Africa recently met with more than 400 senior marketers in China to understand the process, perception and performance of the agencies they work with.

This wave’s report covers more than 250 multinational and local companies, with over 700 client-agency relationships analysed.

Push towards integration and digital

Marketers’ desire for digital capabilities is fueled in part by a massive increase in the percentage of marketing budgets spent on digital media in China, which is now 25.4%, up from just 18.6% in 2014.

It is not only digital agencies under pressure to improve their offerings; marketers expect advertising and marketing services agencies to have these capabilities as well. For example, nearly 85% of marketers claimed that digital capabilities are very important or important when selecting an advertising agency.

©Shannon Fagan via 123RF

The push towards integration and digital are just two of the several trends identified through the study, with changes occurring in several other areas, including the rise of in-house marketing teams and shifting remuneration models.

What South African agencies need to understand is that it is vital to provide integrated services because marketers are demanding more and more agencies that can solve all their needs under one roof, in turn clients also need experience and knowledge because agencies work with multiple clients in a wide range of services where they face various challenges in an environment where it is important to showcase their broad experience and prowess in the industries that they operate in.

The power of data is also a critical component as clients have various sources of statistics, facts and figures but sometimes do not know how to use it or often enough do not possess the required tools to take advantage of it appropriately. It is therefore safe to make the deduction that some agencies can help their clients interpret and use their data which is crucial for sales and growth.

Key highlights of marketing trends in China

Some of the key highlights in the broad Chinese market indicate that players often look for longer relationships which are less project based, coupled with a bigger demand for integrated agencies.

With the research that SCOPEN is carrying out in South Africa, the relationship between the two entities is that the methodology being carried out is the same and many of the questions tend to be common which means that the findings will provide for an interesting comparative analysis when the research is finished.
However, what the South African market can attain from the Chinese market is that short and project based relationships do not produce the best work, are less effective and are often time consuming for the marketer.

At the face of it, what the Chinese are doing differently is that a larger percentage of communications budget is dedicated to BTL functions such as: activation, field marketing, experiential. As China is such a big country, marketers dedicate larger amounts to activate their campaign across 35 major cities with more than two million habitants.

From a global stand point

On the flip side, the South African market is well known around the world for its big and transversal ideas. Although our research has not yet been completed in this respective market, the country has benefited and garnered immense respect internationally for the famous campaigns that were produced from this region, which have resulted in numerous Cannes awards and other festivals.

From a global competitive perspective, based on our research, other markets around the world are indicative of their shorter relationships between agencies and clients. These markets tend to be more competitive, largely due to the fact that there are more agencies greater economic complexity, taking into account all the different media entities that are available in developed markets.

The United States is still number one, but the Chinese market is growing and fast approaching in comparison, which is only rivaled by Japan as number two. Many global forecasts and publications state that China will surpass Japan by the end of 2016.

This is largely due to a combination of two key factors: population as well as media and technological development. Population is key and that is why US, China, Brazil, Germany, UK or Indonesia are among the largest countries by ad spend. However, India, Nigeria, Mexico, Philippines, Russia are not as large as they should be if one takes into account their population.

With that said, if South Africa aims to make the cut, the effective usage of various media and technological development tools will serve as important factors in the growth of the industry which also explains why other markets such as South Korea, Australia and Canada are also leading contenders in our industry.