Korean tide ride
Rapid expansion at Cheil will determine which skill sets the business needs
Despite Aaron Lau's sobering view of the current state of the advertising industry, he has an optimistic outlook on the prospects of the marketing communications company of which he is CEO, Cheil Greater China (CGC).
"The economic climate over the last 10 years has decimated the agency business. Many people would say it is a sunset industry that has been commoditised, with the differences between agencies becoming smaller and smaller," Lau says. "The world doesn't need another agency from Korea, but what it may need is a new agency that brings innovation into communication."
CGC is a subsidiary of South Korea-based Cheil Worldwide, which is one of the world's largest marketing communications companies and part of the Samsung Group. Given that since its founding in South Korea in 1973 Cheil Worldwide has grown to become, by revenue, the world's 15th-largest agency, Lau's confidence may be well founded. With Cheil's
range of high-profile clients, including Samsung, 3 Mobile, New Balance Asia Pacific, Jetstar and Life Nutrition USA, Lau sees an exciting future for the company based on its ability to combine the art of communication with the science of technology.
Cheil scooped up 21 awards at this year's Cannes Lions International Festival of Creativity. "But what's really exciting about what we've won is not so much the number of awards - though we have won more awards by far than any other Asian agency network - but what we've won them for," Lau says. "At Cannes, software we wrote for creative collaboration won the Grand Prix for Innovation."
CGC's revenue for 2012 was around US$113 million. "In terms of revenue and profit, the business has grown in excess of 35 per cent this year and last year we grew by something like 60 per cent," Lau says.
He points out that this rapid expansion has been largely driven by harnessing digital technology. "The digital agency that we operate, called OpenTide, is now the fifth-largest in China. The interesting thing for us is not just traditional digital marketing programmes, but also working on [different] platforms. In China, there are 51 million Galaxy smartphone users and three million households that use Samsung smart TVs, and we've been working with Samsung to develop their app store."
With Samsung adding smart devices to their other domestic appliances, Lau sees the app store becoming more and more important.
In Greater China, Cheil has, in effect, become a wholesaler for Samsung, and this part of its business has grown about 50 times in the last three years, Lau explains.
"As a business, we have evolved beyond the traditional agency model. We are involved with e-commerce and some retail management businesses. For instance, in China, there are 39,347 Samsung stores. In any one day, we have about 20,000 promoters selling items like TVs, fridges and Galaxy phones. For the past few years, Cheil has managed, trained and monitored the performance of these promoters," he says.
Lau sees a good opportunity for growth in the integration of Cheil's customer touchpoints. "We have four key touchpoints: traditional communication, which is stuff like TV and print ads; digital - online, dotcoms and social media; event management for some of our clients; and we also get involved in retail," he says.
CGC has over 1,200 employees, with over 80 of them working in Hong Kong. Lau says that the skill sets that the business needs to service its future expansion plans will be acquired through a mix of joint ventures, alliances, acquisitions and a process of going out and buying talent.
With over 30 years' industry experience, Lau has seen the average duration of the relationship between a client and an agency plunge in recent times. He considers the loss of a long-term perspective based on trust as damagingly counter-productive.
"When I was younger, I used to think advertising was about campaign after campaign after campaign. Now, I realise it is actually about the consistent delivery of an image. Over the years, we have moulded Samsung from a company that was once seen as producing inexpensive, bordering on cheap, copycat products, into one of the world's most desirable brands, selling on the basis of its design and innovation," he says.
Lau also notes the differences between Asian and European or American ways of communicating. "I'd say that Asian clients take their services, business and products much more seriously than the Europeans or Americans, so humour is not widely used," he says. "And, generally speaking, East Asians don't want to talk about the past so much."
WORK HARD, BE CURIOUS, THINK GLOBAL
Aaron Lau describes the ultimate skill set for advertising
Curiosity “You have to be interested in all that’s new in the world, ask questions, and be willing to learn.”
Global thinking “You have to think local to communicate with the consumer, but
also be mindful of your client’s global vision.”
Persistence “Of 10 ideas you present, three to five will get rejected, so you have to keep coming back with consistently good new ones.”
Passion “Though this is still a very rewarding industry to work in, it doesn’t pay as well or get the same respect as it used to.”
Hardworking “Because, despite this, the hours are just as long.”