The British executive spoke with
adlatina.com and analysed the current network status in the region
during his visit to the agency's offices in Buenos Aires. He
commented on MediaCom expectations for the future and the region's
potential growth. Moreover, he described the problems of the
agencies in terms of payment and affirmed that the investment in
digital media advertising is still growing.
"Globally today the MediaCom network
is number three and my wish is to be number one," said Stephen
Allan, Global CEO of the network.
"It is my first visit to Buenos Aires
and the time is right. In MediaCom we take our operations in Latin
America very seriously and we are very excited about the
opportunities in this market to grow our business," says Stephen
Allan, Global CEO of the network, showing his enthusiasm for the
future of MediaCom in the region. The British executive, in his
first trip to Buenos Aires, spoke with adlatina.com in the agency
offices in the city to analyse the network today. He also drew
attention to the strengths and weaknesses of the advertising
industry in Argentina and the region, and said that ad spending on
digital platforms is delayed compared to other markets
What is the value of Latin America for MediaCom?
We are growing in several aspects. We
want to increase our presence and we are opening offices in
countries where MediaCom had no presence. We also aim to increase
our service offering in the region. We are doing many things very
quickly, and that's because I think the media explosion in South
America is happening now and will continue.
We were in a similar situation in Asia
five or six years ago; we were a smaller agency. We focused on
growing our business and this year will be the third largest
network in that region. Globally today, the MediaCom network is
number three and my wish is to be number one. To achieve this we
have to be strong in Latin America, Europe, North America and
What are the strongest
countries for the network?
Excluding Brazil, which is a
completely different challenge, I think the most powerful markets
in the region are Mexico and Argentina. In Chile we made major
changes last year and we believe that Colombia is a very large
market that is growing very strongly. Although Colombia has not yet
the size of Argentina, it has an enormous potential. Furthermore,
we are investing in a good performance in the Andean region by
opening new offices in Peru and Venezuela.
What are your expectations for
GroupM forecasts 11.5 per cent growth
in the advertising industry for Latin America in 2013. MediaCom
doubled the market pace last year and project the same pace this
year. We had a very fast growth and we do not see why it would stop
in the future. Moreover, these figures exclude the acquisition of
Massive in Colombia last year.
In a market with so many
agencies, how does one differentiate?
We work hard on two aspects. The first
is the most basic; it is about the planning and buying of
advertising space payments that any agency makes. But in this new
media landscape, with digital media, mobile and social networking
platforms, that facilitates greater dialogue with consumers. We
have to provide a different service and become a content
distribution company. This involves creating content, producing and
distributing it, not only on television but also via the Internet
on different platforms. We are working on this through what we call
MBA (Mediacom Beyond Advertising).
MBA basically meets all our
specialties in content, SEO, mobile, PR and sports, because we
understand they all work seamlessly. If we take the case of sports
for example, buying the rights to a tournament or setting up a
sponsorship is not enough by itself. You have to make it work. That
means making people talk about it in social networks.
How does MediaCom plan to
expand the MediaCom Sport division in the region in the coming
years with the completion of major sporting events?
The division began a few years ago and
today Latin America is a very interesting region for us considering
the 2014 World Cup and the Olympic Games in Rio de Janeiro in 2016.
Many of our clients are major sponsors of events and leading
personalities of the sport. We believe that there is a great chance
to help them develop a comprehensive communications strategy, to
identify those relevant places that are meaningful and produce
results (for example, the P&G 'Mothers' campaign in the London
2012 Games). I think the time is right. There are not many media
agencies who have taken the sport seriously, and that's what we
want to do. The interest of our customers is high and the
possibilities are enormous, from a small sponsorship to the
organisation of a race or supporting a local team.
What do you believe are the
weaknesses of the industry in the region?
One of the things I noticed,
particularly in Argentina, is that the evolution of digital is
slower than what I have seen in other markets. To put that in
context, today on average 19 percent of global ad spending is on
online platforms; however in Argentina the online investment is
between 7 and 8 percent. This cannot be right, because if we look
at how people consume media, we see a consistent growth in the use
of laptops, mobile devices and other screens. People spend more and
more time online and less watching TV, but the TV still accounts
for about 40 percent of television ads.
You do not need to be a scientist to
see that this is not going very well. In other markets, for example
in the UK, a few years ago online overtook television. Today 30
percent of the investment is online. Even we have customers who
invest 50 or 60 percent of their budgets into digital. This trend
is similar in other markets in Europe and North America. I do not
think that is a weakness of the market but it is a distinctive
Why are we in this
It is an interesting topic. As I see
it, while in other markets internet use is growing rapidly and
affecting mainly print media, in Argentina we still having
the same share of the advertising investment we had three years
ago. There has not been the same dynamic we have seen in other
countries. One of the factors involved in this trend is that
Argentina's market is a very reader-friendly market. Argentinians
like to read and if you look at the circulation of publications,
the major newspapers on Sundays still sell over 600,000 copies.
The impact of Internet and digital
advertising never ends, with a growing importance in electronic
commerce. So I think it's a matter of rhythm (pace), and that at
some point the situation in Argentina will be adapted to the global
trend. In addition, there is the infrastructure issue. If there is
a lower adoption of mobile devices this is due to weakness in
access to broadband connections in this country.
What are the main factors in
Latin America that MediaCom is paying more attention
I think some of the factors that
affect us are those of our company internally and others are in the
advertising industry in general. MediaCom is a slightly less mature
agency than other competitor agencies; there is still a lot of room
to grow. We have a very strong network and we are very focused on
sharing best practices and experiences among the different offices.
The challenge in Latin America is to ensure that we are truly
working as a network, providing the best service locally and
sharing and reapplying our experiences to continue strengthening
our service. Another important factor in South America is the
compensation and negotiating guidelines for agencies.
How do you see the issue of
compensation of the agencies?
In some places the calculation is
simpler than in Latin America. The cost of labor and the number of
people required for a project define the fee. In Latin America
customers often see this situation differently and often a fair
margin for agencies it is not contemplated. We always want to offer
customers the best job with the best people, which come at a cost.
If the best people are not paid fairly in our industry they leave
to work at Google or somewhere else.
We want to be competitive to keep the
best, and somehow the customers have to pay that. There are
agencies that work with a fee of 0 percent with some clients. I do
not know how they keep their teams. This is not the way we want to
work with our clients. We want to be transparent with the clients,
show them our costs, our investments and agree an adequate level of
remuneration. In addition, inflation is a crucial issue, which
makes compensation to agencies more difficult because it creates
mismatches between costs and revenues.
First published here on Adlatina.com 10th April, 2013