BUSINESS

Getting the message

Ad agencies face new challenges from abroad

BARBARA WICKENS February 1 1993
BUSINESS

Getting the message

Ad agencies face new challenges from abroad

BARBARA WICKENS February 1 1993

Getting the message

BUSINESS

Ad agencies face new challenges from abroad

BARBARA WICKENS

The television commercial has the disconcerting appearance of a dream where things are familiar but, at the same time, disconnected. To the beat of a throbbing rock song, a group of incredibly fit, scantily clad young men and women take turns reaching into a refrigerator for a frosty soft-drink can. One blond youth presses the can against his sweating brow. But the familiar gives way to the otherworldly when the people step outside. There, surrounding fields of sugarcane are ablaze—which seems to concern none of them. “In spite of the fact that you won’t find a sugarcane field from Prince Edward Island to Vancouver, that ad was a big hit in Canada,” said Peter Sealey, senior vice-president of global marketing for Atlanta, Ga.-based Coca Cola Co. The commercial, made by McCann Erickson in Sydney, Australia, is a sign of a fundamental change that is sweeping the advertising industry. A growing number of multinational corporations like Coca Cola are launching global advertising campaigns, rather than having subsidiaries in foreign countries plan their own strategies.

That development poses a clear threat to Canadian advertising agencies. Only a handful of the world’s largest multinationals have their headquarters in Canada, while many of the foreign-owned giants that have employed Canadian firms are shifting their business back to

agencies in Manhattan, London or other major business capitals. Now, many Canadian ad executives, instead of creating comprehensive Canadian campaigns as they have for decades, say that they fear that their agencies could soon be relegated to producing less lucrative regional or local campaigns, or merely deciding where to place print or broadcast ads created and produced elsewhere. “We have to ask, ‘Is advertising going to flee this country?’ ” said Rupert Brendon, chairman and chief executive officer of Toronto-based DMB&B Canada Inc.

The new threat from abroad arises at a time when Canadian ad agencies are already grappling with other pressures. In particular, the growing use of lower-cost alternatives to print and TV, including data-based direct-mail campaigns and so-called point-of-sale promotions in stores, have cut deeply into the agencies’ revenues. John Sinclair, president of the Toronto-based Institute of Canadian Advertising, said that 15 years ago, advertisers spent twothirds of their marketing budgets on media advertising and one-third on the promotional alternatives. He added: “In recent years, that trend has flipped so that some advertisers now spend two-thirds on promotion.”

In part, the shift to global ad campaigns is a result of changes in the multinationals’ overall business strategies and organization. Donald MacDuff, president of Gillette Canada Inc. of

Montreal, a subsidiary of the Boston-based razor and toiletries giant Gillette Co., said that until 1988, Gillette marketed its products country by country. But now, MacDuff said, individual Gillette managers supervise the company’s product lines in several countries.

MacDuff said that Gillette’s top-level executives in Boston make all major strategic decisions, while company executives in each area execute that strategy. “As a multinational marketer, we constrained ourselves to the boundaries, cultures and traditions of the individual nag tions,” said MacDuff. “As a § global marketer, we strive to I look for commonalities, veris sus looking for differences.” I Indeed, one TV ad that Gil1 lette used in 17 countries “ simply showed a series of smiling, clean-shaven men in a variety of everyday situations.

Despite that campaign to centralize decision-making, some Canadian ad executives say that they can slow or reverse the trend. DMB&B’s Brendon, for one, was one of several industry executives who have spent much of the past two years organizing the first Canadian Congress of Advertising, a three-day conference and trade show held in Toronto this month, which more than 750 delegates from across Canada attended. Several speakers at the forum argued that local activities, interests and opinions are too entrenched to allow global advertising campaigns to take over completely.

Patrick Beauduin, for one, creative director of the Kadratura agency in Brussels, said that even though his country is small and shares the same languages as France and the Netherlands, market research showed that Perrier, the French mineral water bottler, could not use the existing advertisements from either of those countries. Instead, Kadratura borrowed aspects of the French company’s campaign, but used images more appealing to Belgians.

Other executives argue that the advent of global advertising is as much an opportunity for Canadians as a threat. Several Canadian agencies have recently won contracts for international campaigns. Brendon’s DMB&B recently won the account for the Barbados Board of Tourism for all of North America. Montrealbased Cossette Communication-Marketing has the worldwide Pennzoil account, except for the United States. And Coca Cola’s Sealey said that the company has had great success around the world with three TV ads that it picked up from Canada. As the global advertising world shrinks, Canadians may have a chance to ensure that their unique point of view remains visible—both at home and abroad.