What does the future hold. Companies? Lessons. advertising industry. 47 th ICCA Congress & Exhibition
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1 What does the future hold for Meetings Management Companies? Lessons learned from the advertising industry 47 th ICCA Congress & Exhibition Meeting Management Sector Meeting Sunday 2 November :00 h 14:00 h Speaker: Tony Prehn Lowe W/Wide Moderator: Jurriaen Sleijster MCI
2 Introduction The issues facing meeting planners Why look at advertising industry? The advertising industry: History Current situation Outlook Lessons learned Discussion Q&A
3 Issues Facing Meeting Planners Services provided (commoditization vs added value) Clients (behaviour, needs) Pricing, procurement Availability & quality of staff Competition Mergers & acquisitions Management challenges
4 The Advertising Industry? Similarity between these two "service industries": Communication Agency model & some inhouse services Similar clients Similar pricing models Management, HR Consolidation, M&A
5 Law Why look at Advertising industry? Advertising traditionally more mature than meetings industry Top 10 Firms as % of Total Market IT Consulting I-Banking Advertising Accounting Executive Search Management Consu HR Consulting Source: Aligning the Stars Lorsch & Tierney HBS 2001 sulting
6 Guest Speaker Tony Prehn is Chief Executive Officer of Lowe Thailand the largest advertising i agency in the country Originally from Sydney, Tony s experience includes Australina/NZ, China, Taiwan, Indonesia & Vietnam Leads an US$200 mil. diversified company with capability in Advertising, PR, Digital, Consulting and Events
7 The advertising industry Less than 100 years old but has operated for 80 years under the same business model The last 20 years has seen significant change and re- structuring across all areas of the business Clear parallels l exist between the Advertising and the Events business We are living in your future!
8 Industry Evolution 1890 s - First advertising agent set-up shop in the US selling space in newspapers 1899 JWT the first agency to set-up shop outside the USA 1917 Organised our ourselves into the Advertising Agency Association 1930 s commission system of remuneration widely adopted
9 Industry Evolution 1950s First media revolution: TV 1970 s Advertising science born as client began to seek more from their agencies 1980s Decade of the Deal 1990s Digital Decade 2000s Dotcom crash, 9/11, global downturn Financial earthquake
10 Industry Evolution Forget the first 80 years! Let s examine the events that we grappled with as our Industry went through a period of profound change and re-engineering Identify learning that t we can reapply to the Events business and hopefully steer a smoother path into the future
11 Decade of the Deal Agencies had been built around people who had some expertise and created their own businesses David Ogilvy Bill Bernbach McCann Frank Lowe Creative people, not businessminded. Privately held, not listed. PROLIFERATION
12 Decade of the Deal Shift from creative-led to finance- led Global holding companies emerged : Interpublic Omnicom WPP Massive consolidation Listing on the NYSE/others Seeking efficiencies and margin improvement creative? CONSOLIDATION
13 Impact of Consolidation Harmonisation of quality: +/- Drive for financial efficiency Margin improvement Wall Street the true master of companies Acquisition of adjacent services: Direct Marketing PR shops Events! DIVERSIFICATION
14 Digital Decade The 2 nd media revolution: www Agencies scrambled to go digital but we really didn t understand it Another capability to add to PR, Advertising, Events, etc So we created the idea of Integrated Communications! Client s bought it initially INTEGRATION
15 Dot Com Era Then it crashed taking many agencies with it Digital media unlike conventional media of selling space and time Old model of remuneration was ineffective Client s demanding a more equitable system of charging Fee-based and pay for performance
16 Dot Com - Impact New remuneration model led to re-examination of cost Higher margin capabilities were expanded while less profitable units were divested or closed Major right-sizing i i efforts Our Media business was spun-off as independent operations Bottom-line impact immediate!
17 BIG No Longer Best We had gorged ourselves with acquisitions that weren t delivering an acceptable return Moving into fields which were outside our expertise and clients felt this. Hence Rise of the Specialists Growth of Boutiques Invasion of Consultants
18 More Choice for Clients Ability to leverage budgets Procurement policies applied to Agencies Greater negotiability pressure on margins Relationships became project based rather than total alignment New client alphabet A for..
19 A ACCOUNTABILITY Agencies had to prove effectiveness of their campaign ROI had to be demonstrated Return on Idea Pay for Performance component introduced d into remuneration terms However, no reliable measurement tools existed
20 Industry Challenges Proliferation Consolidation Diversification vs Specialisation i Acquisition Ad Industry Evolution Creative Integrity vs Profit Mega Holding Companies Accountability Low Cost Providers
21 The Current Situation Re-examination of our core competency Not Advertising, PR, Digital, Events per se That is the means just as meetings, conventions, exhibitions are for you But what do clients really want from us? What can we provide better than any other industry?
22 Re-defining Ourselves Ultimately...clients come to us to build powerful and successful brands At Lowe, we do that by providing High Value Ideas Not just advertising solutions/ads
23 Industry Outlook Increasingly competitive Fewer, bigger players Race to keep ahead of consumers/customers in new media landscape My Space, You Tube, Second Life, Blogs
24 Industry Outlook Un-ending struggle to deliver appropriate added-value Increasing emphasis on accountability
25 Industry Outlook Huge competition for talent Fewer people entering the industry Higher expectations on performance Trend towards work-life balance not compatible with our Industry
26 Living in Your Future Lessons Learned Decide where your ambitions lie and build the appropriate level of scale Don t be seduced by client demands for one-stop service under one-roof Have the capability to manage complex activities but not necessarily ownership
27 Living in Your Future Lessons Learned Re-define your core competency by looking into your future not the past Invest in retaining your best people and in training i the next generation of business leaders
28 Living in Your Future Lessons Learned Create ability to measure true effectiveness not just quantitative metrics Attitude shift Image perception Reputation enhancement Brand credibility Review your remuneration model to reflect changing client expectations and deliverables
29 Living in Your Future Lessons Learned Move capabilities upstream into ideas/concepts, avoid downstream execution (reduced margin/commoditization) Understand the client s underlying business problems and brand strategy and be seen to align your activities to address that, not just delivering the immediate need for an Event
30 Living in Your Future Lessons Learned Get a seat at the Board Room table elevate your role and image within the client s organisation and deal above those who execute the task Provide a premium, high quality product but be prepared to negotiate
31 Living in Your Future Lessons Learned And finally.
32 Share whatever you learn.with us!
33 Lessons learned from the Advertising industry Discussion
34 Lessons learned from the Advertising industry Audience Q&A
35 International Congress & Convention Association Thank you! 47 th ICCA Congress & Exhibition Tony Prehn Jurriaen Sleijster
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