Don’t throw the baby out with the bath­wa­ter

For an in­creas­ing num­ber of ad­ver­tis­ers, a phys­i­cal pres­ence in mar­kets has be­come a lux­ury that can no longer be sus­tained, with re­gional-based mod­els of op­er­a­tion be­ing re­vived. Will such a shift in pol­icy come back to haunt brands, asks chief ex­ec­u­tive

ArabAd - - COVER STORY - BY: ERIC HANNA, CHIEF EX­EC­U­TIVE OF GREY GROUP MENA

Here’s the truth. There are con­cerns about the strength of the global and re­gional economies, en­vi­ron­men­tal and po­lit­i­cal un­cer­tain­ties, the shift of power from West to East, the dig­i­tal­iza­tion of life, and the total un­re­lent­ing speed of it all. The world is in a per­pet­ual state of change and it seems that life has be­come more about ex­haust­ing the old and re­veal­ing the new, al­ways in search of new pos­si­bil­i­ties.

In this con­text, there was a time when mar­keters be­lieved the ideal way to fur­ther build busi­ness was to drive brand pref­er­ence by get­ting as close as pos­si­ble to those cus­tomers and con­sumers on the ground in what­ever mar­ket they were in. It was all about get­ting gran­u­lar with a view to un­cov­er­ing those nuggets that would stim­u­late affin­ity for the brand and, con­se­quently, busi­ness results. While the prin­ci­ple still holds true to­day, the need to con­tin­u­ously im­prove bot­tom lines is en­cour­ag­ing a cul­ture change in favour of those con­sol­i­dated re­gional man­age­ment mod­els dis­carded a decade or so ago.

Guided by the be­lief that less is more, many mar­keters are in­creas­ingly choos­ing fewer cen­tres of ex­cel­lence to cover larger ge­ogra­phies. The view seems to be that phys­i­cal pres­ence in mar­kets has be­come a lux­ury that can no longer be sus­tained. As a re­sult, re­gional-based mod­els of op­er­a­tion are be­ing re­vived and grad­u­ally rolled out to fur­ther squeeze value out of the sys­tem.

Guided by the be­lief that less is more, many mar­keters are in­creas­ingly choos­ing fewer cen­tres of ex­cel­lence to cover larger ge­ogra­phies.

The chal­lenge many have had to deal with is the ex­tent of the change, or evo­lu­tion, to­wards more hub-based prac­tices with­out di­lut­ing brand sup­port on the ground and – most im­por­tantly – rel­e­vance amongst those peo­ple of in­ter­est in a re­gion or a spe­cific coun­try. It’s in that spirit that un­ac­cept­able com­pro­mises are now be­ing rat­i­fied as an in­te­gral part of this new world of man­ag­ing brands and busi­nesses, with risks of­ten down­played by faith in the trans­for­ma­tional role dig­i­tal is con­tin­u­ing to usher in.

Yes, the dig­i­tal rev­o­lu­tion has re­de­fined the way we go about our lives on a daily ba­sis. From the in­ter­net to mo­bile, so­cial me­dia and other, th­ese so­lu­tions have en­cour­aged ev­ery­one to re­think the goal­posts – dis­cover the new or sim­ply stay in touch. And along the way, it seems the bound­aries be­tween the real and the vir­tual have faded, to the ex­tent that there is lit­tle or no limit to what could be achieved. Sud­denly ev­ery­thing is pos­si­ble, in­clud­ing the suc­cess­ful man­age­ment of more ter­ri­to­ries from just a few con­ve­niently (or strate­gi­cally) lo­cated cen­tres of ex­cel­lence ... as was the case in the past and sub­se­quently ruled out, un­til now. And be­cause it only takes one to quickly drag oth­ers down the same path, the over­ar­ch­ing sen­ti­ment is that this ap­proach is the new order in the fu­ture of man­ag­ing brands.

Ir­re­spec­tive of the new re­gional man­age­ment for­mu­las adopted, the re­al­ity is that brands are phys­i­cally step­ping away from their con­stituen­cies in many mar­kets. And whilst the cost sav­ings of do­ing so have prob­a­bly had the de­sired im­pact on prof­itabil­ity, I be­lieve those who went all out will be forced to re­visit their strat­egy as and when their top line growth comes to a halt or re­gresses. Af­ter all, wasn’t profit the main rea­son for brands and busi­nesses to de­cen­tral­ize and ex­pand pres­ence in mar­kets in the first place?

To­day, the view that one size can (po­ten­tially) fit all is sud­denly grow­ing in pop­u­lar­ity. And with great results on bal­ance sheets, mar­keters are go­ing about re­shap­ing the man­age­ment of brands, pulling fur­ther away from cus­tomers and con­sumers in mar­kets along the way. On the ground, teams are made to be­lieve in this new order and, sub­se­quently, in­structed to im­ple­ment the tran­si­tion. And the word from the top of ev­ery chain is to make it all work by lever­ag­ing dig­i­tal as a so­lu­tion to iron out any of the re­sult­ing com­pli­ca­tions.

Far from ad­vo­cat­ing a re­liance on the old ways, I feel strik­ing the right bal­ance be­tween busi­ness re­quire­ments and those brand re­la­tion­ships in in­di­vid­ual mar­kets or re­gions is para­mount. I for one ap­pre­ci­ate the wis­dom be­hind the ex­pres­sion ‘Don’t throw the baby out with the bath­wa­ter’. This is to say that, whilst I strongly be­lieve there is and will al­ways be room for im­prove­ment, I am con­vinced there is of­ten merit in the learn­ings from pre­vi­ous ef­forts vested to keep the fin­ger on the pulse of those in spe­cific mar­kets of in­ter­est. And har­ness­ing the power of dig­i­tal to sit at the heart of any sug­gested way for­ward should help com­ple­ment – not erad­i­cate – past in­vest­ments to build and strengthen re­la­tion­ships with in­di­vid­ual con­sumers and cus­tomers.

Ir­re­spec­tive of the new re­gional man­age­ment for­mu­las adopted, the re­al­ity is that brands are phys­i­cally step­ping away from their con­stituen­cies in many mar­kets.

Eric Hanna

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