2014 China agencyScope Findings Sharing - EFFIE China

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Sharing of China agencyScope, a research study on the TRENDS of the Advertising Industry and the PERCEPTION and PERFORMANCE of agencies in China at EFFIE China award ceremony.

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  • 1. 1 CHINAagencyScope 2014 A research study conducted by Grupo Consultores and R3, since 2006 2006Grupo Consultores 5th Edition, 2014 , 2014
  • 2. 2 AGENCY RELATIONSHIP + REMUNERATION + REVIEW CONSULTANTS 1978 2008 2011 2003 2009 2013 2012 2010 2006 2005 2009 Introduction -
  • 3. CHINA agencyScope2014 A research Study on the TRENDS of the Advertising Industry and the PERCEPTION and PERFORMANCE of agencies in China.
  • 4. 4 AGENCY RELATIONSHIP + REMUNERATION + REVIEW CONSULTANTS 285343425 29215 20138-20141 Introduction
  • 5. 5 AGENCY RELATIONSHIP + REMUNERATION + REVIEW CONSULTANTS Technical data (59%)
  • 6. 6 AGENCY RELATIONSHIP + REMUNERATION + REVIEW CONSULTANTS More than 34 ADVERTISING AGENCIES IN THE SAMPLE 34 Technical data Advertising Agencies in the sample Base: 261 interviewees in 2014 2014261
  • 7. 7 AGENCY RELATIONSHIP + REMUNERATION + REVIEW CONSULTANTS MORE THAN 62 DIGITAL AGENCIES IN THE SAMPLE 62 Technical data Digital Agencies in the sample Base: 182 interviewees in 2014 2014182
  • 8. 8 AGENCY RELATIONSHIP + REMUNERATION + REVIEW CONSULTANTS IMAGE STUDIES # RELATIONSHIPS Marketers on Advertising agencies 314 Marketers on Marketing Services agencies 157 Marketers on Digital agencies 243 Marketers on Media agencies 230 Methodology Base: 425 Interviewees from 285 Companies (343 brands) 285343425
  • 9. 9 AGENCY RELATIONSHIP + REMUNERATION + REVIEW CONSULTANTS 1
  • 10. 10 AGENCY RELATIONSHIP + REMUNERATION + REVIEW CONSULTANTS 53.037.0 10.0 38.0 50.0 12.0 Agency selection Integrated vs. Specialized Agencies vs. 28.5 58.7 12.8 Integrated Agency Specialized Agencies DK/NA / (Both) ,
  • 11. 11 AGENCY RELATIONSHIP + REMUNERATION + REVIEW CONSULTANTS Agency selection Criteria 43% 56% 34% 62% Base: 261 interviewees in 2014 2014261
  • 12. 12 AGENCY RELATIONSHIP + REMUNERATION + REVIEW CONSULTANTS ITS CREATIVITY THE AGENCYS PEOPLE / TEAM STRATEGIC PLANNING IN ADVERTISING AND COMMUNICATIONS / AGENCY EXPERIENCE IN A SIMILAR SECTOR IN CHINA AGENCY WITH NO CONFLICT IN MY SECTOR MY PREVIOUS RELATIONSHIP WITH THE AGENCY THE COST OF SERVICE RECOMMENDATION OF ADVERTISER HEAD OFFICE DIGITAL CAPABILITIES OFFERS INTEGRATED SERVICES MULTINATIONAL AGENCY /INTERNATIONAL NETWORK / SIZE OF THE AGENCY ITS RESULTS FOR OTHER CLIENTS MULTIPLE LOCATIONS / PRESTIGE OF THE AGENCY HELP OF EXTERNAL CONSULTANTS THE AWARDS WON BY THE AGENCY 62.5 56.3 43.3 33.7 28.4 16.9 16.9 16.5 13.0 12.6 11.9 8.0 7.3 3.4 3.1 1.5 0.8 29.9 35.6 44.1 50.2 44.8 62.8 61.3 32.2 49.4 54.0 34.5 44.1 47.1 26.4 46.4 26.8 25.3 6.1 10.0 14.9 12.6 14.6 27.2 23.8 22.6 32.2 32.2 34.9 40.2 34.5 42.9 47.1 Very Important Important Base: 261 interviewees in 2014 2014261 Agency selection Selection criteria (%) (%)
  • 13. 13 AGENCY RELATIONSHIP + REMUNERATION + REVIEW CONSULTANTS Agency selection
  • 14. 14 AGENCY RELATIONSHIP + REMUNERATION + REVIEW CONSULTANTS 22.2 22.2 28.7 35.6 36.4 68.6 Good service Implementation / Execution / Strategic Planning Professional team / Knowledge of market Creativity / Innovation / Agency selection Characteristics of the ideal advertising agency (%) (%) Base: 261 interviewees in 2014, 215 in 2012 and 188 in 2010 201426120122152010188 2012 2014 2010
  • 15. 15 AGENCY RELATIONSHIP + REMUNERATION + REVIEW CONSULTANTS 60.8 29.3 28.0 21.1 13.9 10.4 7.5 86.5 46 25.1 26 9.8 6.5 84.6 51.1 20.2 28.7 8.5 9 Pitch (Strategy and creative) Trial assignment / Project / Pitch (Just strategy) Selection by credentials Workshop / Chemistry session direct appointment/ global decision / Consultants Agency selection Selection methods (prompted) / (%) Base: 261 interviewees in 2014, 215 in 2012 and 188 in 2010 201426120122152010188 2012 2014 2010
  • 16. 16 AGENCY RELATIONSHIP + REMUNERATION + REVIEW CONSULTANTS 2
  • 17. 17 AGENCY RELATIONSHIP + REMUNERATION + REVIEW CONSULTANTS 24.1 11.1 13.4 11.1 5.7 10.0 4.6 5.0 6.5 3.4 None < 3 4 - 5 6 - 10 11 - 15 16 - 20 21 - 25 26 - 30 31 - 50 > 50 COLD CALLS New Business and relationship Average = 32.14 Effectiveness Ratio (Presentations /Cold Calls x 100) = 25.63% 31.4 30.6 16.0 9.1 0.4 0.8 0.4 0.4 None < 3 4 - 5 6 - 10 11 - 15 16 - 20 21 - 25 26 - 30 31 - 50 > 50 PRESENTATIONS Base: 261 interviewees in 2014 2014261 Average = 8.24 95% of CMOs ask their assistants to block cold calls from agencies. 95%
  • 18. 18 AGENCY RELATIONSHIP + REMUNERATION + REVIEW CONSULTANTS Base: 261 interviewees in 2014 2014261 12-15 50 95% CMO New Business and relationship
  • 19. 19 AGENCY RELATIONSHIP + REMUNERATION + REVIEW CONSULTANTS 4.87 6.60 3.18 3.60 4.85 6.10 BENCHMARK BRAZIL CHINA INDIA MEXICO UK China has shorter relationships than any other market. Clients in the UK and Brazil work with their agencies for more than 6 years. 6 Agency-Advertiser relationships - Duration of the relationship (average) ()
  • 20. 20 AGENCY RELATIONSHIP + REMUNERATION + REVIEW CONSULTANTS AVERAGE DURATION OF RELATIONSHIPS (Years) 2014 2012 Average Number of Years for Advertising agencies 3.2 3.4 Average Number of Years for Digital agencies 3.0 3.1 Average Number of Years for Marketing Services 3.2 3.8 Average Number of Years for Media agencies 4.1 2.9 Agency-Advertiser relationships - Duration by type of agency (average) ()
  • 21. 21 AGENCY RELATIONSHIP + REMUNERATION + REVIEW CONSULTANTS TYPE OF AGENCIES # AGENCIES Average Number of Advertising agencies 2.22 Average number of Marketing Services agencies 2.31 Average number of Digital agencies 2.48 Average number of Media agencies 1.20 TOTAL AVERAGE OF AGENCIES 8.21 Agency-Advertiser relationships - Number of Agencies by advertiser (%)
  • 22. 22 AGENCY RELATIONSHIP + REMUNERATION + REVIEW CONSULTANTS 3
  • 23. 23 AGENCY RELATIONSHIP + REMUNERATION + REVIEW CONSULTANTS 55.8 4.2 37.1 45.8 5.6 51.453.0 11.9 42.3 2014 Mix (fee+commission): 0.3% 2014(+): 0.3% 2012 Mix (fee+commission): 0.9% 2014(+): 0.9% Fee / Retainer Commission Project based Base: 261 interviewees in 2014, 215 in 2012 and 188 in 2010 201426120122152010188 2012 2014 2010 Agency Compensation Compensation methods (%) (%)
  • 24. 24 AGENCY RELATIONSHIP + REMUNERATION + REVIEW CONSULTANTS 36.80 33.50 32.40 24.00 26.10 2014 2012 2010 2008 2006 +9.9 +3.4 +35.0 -8.0 Base: 261 interviewees in 2014, 215 in 2012, 188 in 2010, 220 in 2008 and 220 in 2006 20142612012215201018820082202006220 Agency Compensation Incentive Payment (%) (%) 37% 65%
  • 25. 25 AGENCY RELATIONSHIP + REMUNERATION + REVIEW CONSULTANTS 47.9 55.2 72.9 7.3 62.5 33.3 61.1 11.1 63.9 34.4 62.3 4.9 Client company performance Advertising performance Agency performance DK/NA / Agency Compensation Criteria for Incentive Payment (%) (%) Base: 261 interviewees in 2014, 215 in 2012 and 188 in 2010 201426120122152010188 2012 2014 2010
  • 26. 26 AGENCY RELATIONSHIP + REMUNERATION + REVIEW CONSULTANTS 46.1 14.5 27.0 15.9 38.8 68.0 77.6 2014 2012 2010 Marketing Procurement Both DK/NA/ Base: 152 interviews declare procurement involved in 2014, 135 in 2012 and 107 in 2010 201415220121352010107 Agency Compensation Who leads compensation process (%) (%) Nowadays in only 39% of cases Marketing leads the negotiation process. Figures have changed dramatically since 2010. In 46% of cases Marketing and Procurement lead the process jointly. 39% 2010 46%
  • 27. 27 AGENCY RELATIONSHIP + REMUNERATION + REVIEW CONSULTANTS 6.9 9.2 6.6 5.8 8.8 15.0 24.1 29.3 21.0 28.2 75.7 62.5 59.9 70.7 61.2 2014 2012 2010 2008 2006 Satisfied Indifferent Dissatisfied DK/NA / Satisfaction with Current Agency Base: 261 interviewees in 2014, 215 in 2012, 188 in 2010, 220 in 2008 and 220 in 2006 20142612012215201018820082202006220 76% of clients in China are satisfied with their agencies. The highest rate since we started agencyScope in 2006. 76% 2006
  • 28. 28 AGENCY RELATIONSHIP + REMUNERATION + REVIEW CONSULTANTS 4.4 6.4 7.4 7.4 3.1 8.5 21.4 19.0 17.8 23.5 19.6 9.7 17.2 15.8 22.9 67.5 62.5 56.4 59.0 50.5 2014 2012 2010 2008 2006 Won't change Cant decide Will change DK/NA / Base: 261 interviewees in 2014, 215 in 2012, 188 in 2010, 220 in 2008 and 220 in 2006 20142612012215201018820082202006220 Only 8.5% of clients in China are thinking of changing agency. This is the lowest rate since we started agencyScope in 2006. 67.5% clearly state that they will not change agency. 8.5% 2006 67.5% Satisfaction with Current Agency
  • 29. 29 AGENCY RELATIONSHIP + REMUNERATION + REVIEW CONSULTANTS 4
  • 30. 30 AGENCY RELATIONSHIP + REMUNERATION + REVIEW CONSULTANTS DIGITAL STRATEGY AND CONSULTING 14.2 6.5 10.7 1.9 41.4 3.1 6.5 1.29 DIRECT MARKETING 16.9 2.3 4.2 23.8 4.6 2.7 24.1 1.24 EVENTS / ROAD SHOWS // 21.8 4.2 3.1 46.7 3.1 10.3 3.4 1.28 FIELD MARKETING 20.7 1.9 2.7 29.5 1.1 3.8 18.4 1.21 MARKETING RESEARCH 58.6 28.0 20.7 3.1 6.1 51.0 0.8 1.87 MEDIA BUYING 23.8 2.3 69.7 1.5 6.9 1.5 1.1 1.26 MOBILE MARKETING / APPS / 10.0 2.7 5.0 2.3 38.7 2.3 14.9 1.16 ONLINE AUDIOVISUAL 12.6 7.7 7.7 3.4 36.0 3.1 11.5 1.25 INTERNALLY ADVERTISING AGENCY MEDIA AGENCY MKT SER. / BTL AGENCIES / DIGITAL AGENCY OTHER DOES NOT DO AVERAGE MENTIONS Base: 261 interviewees in 2014 :2014261 Who does what? Activities engaged by advertising agencies (%) (%)
  • 31. 31 AGENCY RELATIONSHIP + REMUNERATION + REVIEW CONSULTANTS STRATEGIC / COMMUNICATION PLANNING / 73.2 56.7 33.7 3.4 12.6 9.6 0.4 2.04 TELEMARKETING / CALL CENTER / 19.5 0.4 0.8 6.9 1.1 6.9 25.7 1.13 TV AND PRINT PRODUCTION 16.1 73.2 3.8 3.1 1.1 4.6 1.9 1.24 WEB / MICROSITES / ONLINE PLATFORMS // 18.0 8.4 6.1 3.4 45.6 3.4 2.3 1.24 BRANDED CONTENT 36.8 23.8 31.0 7.3 9.6 5.7 4.2 1.59 COMPETITIVE ANALYSIS 59.8 44.8 38.3 4.2 15.7 30.3 1.1 2.15 CONSUMER INSIGHTS 61.7 42.1 26.8 3.8 11.5 40.6 -- 2.03 INTRANET 37.2 0.8 0.8 0.8 16.5 3.1 5.7 1.09 INTERNALLY ADVERTISIN G AGENCY MEDIA AGENCY MKT SER. / BTL AGENCIES / DIGITAL AGENCY OTHER DOES NOT DO AVERAGE MENTIONS Base: 261 interviewees in 2014 :2014261 Who does what? Activities engaged by advertising agencies (%) (%)
  • 32. 32 AGENCY RELATIONSHIP + REMUNERATION + REVIEW CONSULTANTS MEDIA ACTIVATION AND EVENTS 23.8 8.4 53.6 11.9 5.7 3.4 2.7 1.34 MEDIA NEGOTIATION 26.8 2.3 68.6 0.4 6.9 0.8 1.1 1.26 MEDIA PLANNING 24.9 3.4 70.5 0.4 7.3 0.4 0.8 1.27 MEDIA TRAINING 14.6 1.9 50.2 4.6 3.1 4.2 12.3 1.22 NEWSLETTER & E-MAIL MARKETING 11.5 1.9 1.1 5.0 21.5 3.8 26.4 1.17 ROI / ANALYTICS / 45.2 8.4 18.8 4.6 6.1 14.6 4.6 1.43 SHOPPER MARKETING 17.2 1.5 0.4 23.8 2.7 6.5 22.2 1.20 INTERNALLY ADVERTISIN G AGENCY MEDIA AGENCY MKT SER. / BTL AGENCIES / DIGITAL AGENCY OTHER DOES NOT DO AVERAGE MENTIONS Base: 261 interviewees in 2014 :2014261 Who does what? Activities engaged by advertising agencies (%) (%)
  • 33. 33 AGENCY RELATIONSHIP + REMUNERATION + REVIEW CONSULTANTS 5
  • 34. 34 AGENCY RELATIONSHIP + REMUNERATION + REVIEW CONSULTANTS 65.5 51.7 44.8 31.0 20.7 20.7 20.7 17.2 13.8 13.8 Procurement Procurements POV Selection Criteria Price / Value for money Account service Professionalism, experience Execution People/Talent / Understanding of brand Creativity Resourcefulness Strategy Transparency 34.1 22.9 20.1 14.9 13.7 12.7 7.7 7.0 7.0 5.7 Marketing Creativity / Innovation / Prestige in the market Knowledge / Experience Work done in past / Presentation Service Strategy Structure / International network Quality / Price Professionalism / Team / People It's my current agency Key criteria to select agencies by Procurement Directors are price and costs, compared with CMOs that focus on creativity, prestige of the agency and their experience with other clients.
  • 35. 35 AGENCY RELATIONSHIP + REMUNERATION + REVIEW CONSULTANTS 70% 69.0 31.0 Yes No Procurements POV Financial Audits
  • 36. 36 AGENCY RELATIONSHIP + REMUNERATION + REVIEW CONSULTANTS 24.1 20.7 17.2 17.2 13.8 10.3 10.3 10.3 10.3 6.9 Procurements POV Communication with agencies High turnover (staff & management) / Procurements position in agency management Establishing longer relationships Cost transparency Lack of execution Quicker response to changes Good value for mon...