Network wars on a different planet

Network-produced TV commercials redefine advertising boundaries in The Philippines. Will they change the landscape forever? Or are they just a fad.

Picture this. In the advertising setting, the advertising agency reigns supreme and is in charge of Client’s creative and media needs. Right? Well, not exactly. The Philippine advertising landscape has changed. Radically. The lines that differentiate functions provided by agency, media and suppliers for the past decades have blurred. It’s Open Season now in the playing field and Client seems to be enjoying the perks. The image of the powerful agency on record – the one that distributes largesse among suppliers (for creative needs) and media (for ad placements) has morphed. Other entities have joined the playing field. On the one hand, there are media independents – media departments of ad agencies that have been spun off as separate businesses – who vie for media-only accounts and who can take on projects alongside competing agencies that handle just the creative aspect. On the other hand there are the networks themselves, who now do their own prod and post and deal directly with client. Together and separately, they have rocked the old definitions of what an ad agency is and ought to be. And the industry itself. The new landscape tolerates what used to be unthinkable – clients using different organizations for creative and media; networks producing creative materials for client, leaving both agency and suppliers out of the equation. Networks now provide the talents and produce the TVCs and skip two steps in the admaking process. They can be both creative and media, and get the ad placements directly as well. How did the shift happen? A Different Balance of Power Adrian Tecson, Director of Post of Underground Logic, says shrinking budgets created the conditions for the new set-up. “Clients are always looking for ways to save and yet get the same amount of advertising. From (selling portions in) game shows, they (the networks) just took it to another level. Since they already have the talents, it’s very easy to use them in commercials if they want to. They have all the hardware anyway. Yes, it has affected not just the suppliers, but the whole industry itself.” The balance of power has indeed shifted dramatically – and not just because of the networks doing creative work. Clients can now work with both advertising agencies and media agencies as part of one team – or separately. Competing agencies can now even work side by side. A client may use the creative and media services from partner agencies (like O&M and Mindshare) or deal with completely different, unaligned agencies. The results are the same for Client. It’s just the process that’s different. Where in the past, two different teams from one agency worked together on his account, this time it’s two different teams working for separate organizations doing their respective things and banking on their respective specialties. The Client feels he is getting a better deal. The agencies feel queasy. In the end, Client always invokes the bottomline. Back To Roots The root of the development can be traced to the mid-90’s when advertising agencies merged and global communication groups emerged. Mergers and acquisitions directly affected local ad agencies because local multinational agencies became aligned with one another, forming new groups that have more access to the resources and clout of the mother group. These eventually brought about the media specialist agencies like Mindshare (J. Walter Thompson, Ogilvy & Mather), Starcomm (Hemisphere-Leo Burnett) and Universal McCann (McCann Erickson), among others. Media costs also skyrocketed, with the peso-dollar exchange rate driving up production and equipment costs. Agencies scrambled for accounts and looked for other sources of revenue. Large multinational agencies spun off their media departments to pick up more accounts, including those that they couldn’t access in the past. Clients believed they were getting better media plans and the best rates for their media investments from the media specialists. Eventually, media independents like Starcom, Universal McCann, Zenith Optimedia, Mindshare, Media Edge, and Media Camp would be major players and change the Philippine advertising landscape forever. The Allure of the Networks But media specialists are only one side of the equation. The networks have stirred up the brew even more. Top networks GMA and ABS-CBN, besides just being on the receiving end of media budgets, have now also gone into content creation and offer selected clients a deal that’s difficult to refuse. Commercials aired exclusively on either network, starring their most bankable stars, in situations that allow the advertiser to slip seamlessly into the storyline of a much-loved soap by incorporating a product’s tagline or usage into the script is one execution. Getting the top stars of a network’s various shows to star in a made-for-this-network-only commercial for a shampoo or other beauty product is another. Both are tour-de-force achievements, and are cost efficient. After all, the most watched networks are also those that have thought up the innovation and have the means to execute it. They also have most of the TV viewership cornered. What a way to reach target markets! And at a fraction of the cost to create and air regular advertising! “We call it ‘creative marketing’, says Ferdi Marcos, head of ABS-CBN’s marketing services, as he explained how an herbal tea brand used the romantic leads of a leading soap series to talk about the brand as if it were a scene in the series itself. The commercial airs only in ABS-CBN network stations, and give viewers a thrill to see their favorite characters invading their sets even beyond the regular time slots of their soaps. That arrangement was made directly with client, says Marcos. But the network can also partner with the ad agency if there are already existing materials that need enhancement. There are so many options to choose from, he said. “We can also prepare generic material, then offer it to different clients. If a client likes it, we just add the tag and the logo.” He mentions a commercial featuring successful, beautiful women – all ABSCBN talents – which was bought by a shampoo brand. “Or we can partner with the client by supporting their existing commercials. We can simply add a ‘brought to you by – the name of the client — and ABS-CBN’ at the end of the commercial. We can also weave the brand and its attributes into the actual script of a telenovela,” he adds. He mentions one execution where one soap character offers a headache remedy to another character and tells her that it’s safe to take, even on an empty stomach – the exact tagline of the advertised product. In short, the network can now offer to do the creative material for the client and air it directly on the network. It saves time and cost and gets the message directly to the networks’ viewers – an arrangement client likes,” says Bong Osorio, ABS-CBN’s head of public affairs. “Clients get fascinated with this arrangement. Network-sourced creative material can provide clients with flexibility and unheard of options – like getting into the storyline of an existing program. It is also 20% cheaper and it’s faster to produce. I think at this time, it fits in well with what we call clients’ media maximization program,” he adds. “The trend goes with the popularity of reality shows,” he explains. “Anything goes in a reality show. So a reality show like Pinoy Big Brother would probably bring about a situation where a house mate opens a refrigerator door that reveals only one brand of iced tea as contents. There are other variations to explore. You can even have mini-novelas within a story, or an entertaining infomercial that sells.” For this, networks have beefed up their creative marketing departments, says Bong. He explains that ABS-CBN did not need to create a new department. It simply added the responsibility of helping TV production increase its rating and viewership and to be more attuned to clients’ needs. The strategy is apparently succeeding. More TVCs – in both networks – obviously did not pass through the regular route of advertising creatives and media strategizing. What is the impact of this new trend in the local prod and post prod industries? “As far as post is concerned,” it (network produced ads) has not had much impact,” says Pete Jimenez, general manager and COO of Manila’s leading post house, Optima Digital. “What they are airing is not effectsheavy, or use no effects at all. If ever there is going to be a sensitive aspect, it will be basically color grading, but not the total post industry. We’re not worried at all.” Those who are getting worried are the production houses, says Jimenez. “These production houses already do in-house editing and have bought FC Pro Mac-based software. What networks are doing is run head-on to what production houses do,” he said. “I can understand why they are getting popular. Networks package value-added perks for clients : assured exposure, stars,” Jimenez adds. “But production houses and agencies, especially, are angry. They produce their own commercials and this new development is running straight into their turf.” Bong Osorio says agencies and prod houses shouldn’t really worry – not in the long run. “All that we’re offering is more options to client,” he says. “In the end client will still rely on the agency for long-term concerns like the brand’s image and equities. This network option is only tactical – it’s a special, creative tool. It won’t carry the brunt of the whole advertising campaign.” “Yes, this is a cheaper alternative. And these days, that can really be a deciding factor. But not all clients are concerned about costs. There are still those who are willing to spend, and to go for high-end productions. We are just a welcome treat, although having come from advertising myself, I know that this emerging trend can be very threatening. I think we should understand that this is all a part of Client’s desire to make his marketing efforts more efficient. I think there is room for everyone in this whole spectrum.” Another Threat Rick Hawthorne, managing director of ABS-CBN affiliated post house, Road Runner, agrees. Although he admits that many clients have resorted to network-produced TVCs, he doesn’t see the trend as a definite threat. Only a certain classification of products and advertisers really go for it, he says. “The risk is not as great as may be initially thought of.” Network-produced commercials, says Rick, “are limited to their talents. They are simpler and cheaper to produce and have star appeal, but in terms of quality, are nowhere near the commercials produced by agencies and production houses. There are products such as telcos, liquor or banks that won’t use them. The products that do are those advertised in the telenovela time slots (which is from 7 to 10 or 11 p.m.) that target mostly women. It’s shampoos, herbal tea, and generally, new products that want to get TV exposure on smaller budgets. Besides, these (network-produced) TVCs are very talent-based.” He implies that in the long run, the fad may exhaust itself. “There is not a very big talent base in the Philippines,” he notes. The same talents come out in almost every production, and some are overused. The bigger threat, he says, is the emerging trend of commercials being done in other parts of the region. Generic regional commercials – usually for beauty products or soft drinks – are produced abroad and aired here. Some government rules – especially those that govern child talents and babies, which have become stricter — may drive some clients selling baby products to do commercials elsewhere in the region where child labor laws are less stringent and uncomplicated. The Counter Move So what counter move do suppliers and agency people have in the face of this industry tsunami? “As far as I’m concerned, there is no counter move. There is nothing we in the business should do except make our craft better and look at the competition as an impetus to better ourselves. I believe that despite the competition from the networks and from the region, agencies and clients will be attracted to you because you’re doing exceptional work,” Tecson says. Perhaps if this new trend is making everybody learn new things and identify more options, it can’t really be a bad thing, can it?

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