Global digital advertising spending broke through the $100 billion barrier last year, according to eMarketer, meaning that desktop, laptop, tablet, and mobile advertising now accounts for about a fifth of the market. While the milestone made for eye-catching headlines, it’s only the first phase of an inexorable revolution which will see the advertising and marketing communication industry go entirely digital within a decade, predicts Mark Read, CEO of WPP Digital and Board Member of WPP. Today over 30% of WPP’s business is digital, making it the seventh-largest digital media company globally. Read, a scheduled speaker at the Web Summit in Dublin on October 30th and 31st, recently shared his thoughts on the state of digital marketing with Informilo correspondent D’Arcy Doran.
Q: Your job is to get WPP to focus on digital. What are you concentrating on now?
A: At WPP, we have five areas that we’re quite focused on right now. The first is mobile. I saw a statistic that says that mobile now represents 25% of people’s media consumption and only 1% of media expenditure. That’s just one metric, but it shows consumers are ahead of brands and companies in terms of mobile usage. The second area is e-commerce where it’s increasingly important to our clients — and not just retailers, but packaged goods companies and B2B companies — because it’s taking out a whole layer of transaction costs and opening up new opportunities for brands. The third is the data analytics area, where every marketing interaction has to be tying those together. The fourth is content. We took an investment in Vice, the youth media company, and more recently in Fullscreen, a YouTube multichannel network and youth specialist and the last is social, which is something we’ve been looking at for years but even more relevant with the upcoming Twitter IPO.
Q: You’ve just returned from China and tweeted that you wished more of your people could see what’s going on there because its “digital market is more advanced than most of Western Europe.” What did you see that impressed you?
A: If you look at the percentage of ad spend on digital vs. traditional media, it is higher in China than in Western European countries. Many campaigns in China are digitally-led. They start with an idea that works in social media, or that works as a content-based idea. I don’t think you see that in many southern European countries. In Spain, Portugal, Italy, it’s not as prevalent. We saw a campaign that Ogilvy & Mather China did for a property in Beijing. It was called the Galaxy SOHO building. They made a newsreel about a monkey China sent into space returning to Earth with a message. It was a viral video that launched on Youku, China’s YouTube. Here, we’re not advertising a building by doing this sort of marketing. We’re still running ads in the Sunday Times.
It may be the case that smartphone penetration is lagging in China, but there’s a MI [Mobile Internet] phone that we saw made by Xiaomi. While we were there they came to talk to us and showed us this phone. It’s an Android phone. The cheapest iPhone costs $730 because there’s no handset subsidy, but Xiaomi’s founder Lei Jun is selling his phone for about $250. I think every phone, not just in China but everywhere, will be a smart phone soon.
Q: When it comes to mobile, you’ve said in the past the biggest opportunity might not be traditional advertising but marketing that offers something useful, such as a service, to consumers. Do you have any examples?
A: Barclays’ mobile banking app is one, or if you look at how British Airways is using their mobile app to let people manage their travel and some of the similar stuff that’s going on for Network Rail. There are quite a lot of services through the mobile devices in Kenya. One of our agencies did some work with one of the operators, Safaricom, adding healthcare as part of subscribers’ service. They have M-Pesa (a money transfer and microfinance tool) obviously, but they also have a service called “Daktari 1525.” In Kenya, there’s one doctor for every 10,000 patients. So they teamed up with a service called Call-a-Doc and the customers can call a doctor and the calls cost 20 Kenyan Shillings (US$0.24) a minute. But these are subsidized calls, so effectively as part of having the phone, you have cheaper access to a doctor. In the first four months, they got 40,000 calls, about 2,500 calls a day.
Q: Is it difficult for brands to make that shift into seeing marketing as a service?
A: No, I don’t think so. It might be harder to measure in a traditional way in terms of the brand metrics, reach and frequency, but the brands see there are new opportunities.
Q: Among the brands that do it best, when do they tend to bring innovation into their planning?
A: This goes beyond just marketing; this goes into all areas of the organization. This goes into IT, it goes into sales, customer service, it goes into whatever the product is. It goes beyond the marketing process. You have to think it through: “Now that everyone has a smartphone, what can you do with them?” There’s no real methodology. The winners are the ones who come up with the best ideas.
Q: How can marketers work best with technologists?
A: Marketers should immerse themselves in technology. It’s not one, or the other, that’s the mistake many make. It’s not either or, it’s both. You have to have great ideas and you have to have the technology. The technology allows ideas to follow.
Q: The technology makes amazing one-to-one engagement possible, but can it scale up to achieve the numbers that brands need?
A. There are brands like Red Bull or Nike, Barclays, the airlines, that have done it I think it’s been pretty impactful. It’s tougher for packaged goods to come up with engaging messages in so-called low-interest categories, but if you look at the work that Ogilvy did with Dove on the “Real Beauty Sketches,” you can see they can do it, It would be tougher in pharmaceutical and healthcare because of the regulatory issues in social media. But a lot of the health companies have been using digital channels and developing this whole concept of digital health. Another example of innovation is Sleepio; it’s a cognitive behavioral erapy-based sleeping app. Instead of taking sleeping tablets for insomnia you follow this app, which has certain algorithms that look at how you sleep and advise you what to do. The statistics show it’s pretty effective in helping people manage insomnia and much much more effective than drug-based therapy, which only lasts a certain period of time. They’re extending it from sleeping to look at problems like smoking or depression.
Q: Are CMOs increasingly basing decisions on digital?
A: Big data is a horrible cliché but what it really means is, ‘Can you connect the data you own to help make decisions? Can you look at who’s coming to your website so that you can serve them, so that you can target better advertising to them when they come? What do you know about them?’ You can give them more tailored offers. In some ways, it’s all about small data and little pieces of information.Digital media is very good at what I call the “Small Data Problem” and using lots of small data adds up to big data. In the old days, we used to spend $5 million on TV and it would lead to X% trials, X% purchase, X% sales with certain bands and we would plan on that basis. Digital media is harder and it’s harder to do that kind of planning. But as more commerce moves to digital channels — just like the way more sales are moving to mobile — ads will move to digital as well.