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Recession, how smart agencies can make money in a recession
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Recession, how smart agencies can make money in a recession

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How clients pick agencies and what you can do to make sure you're inside the tent at decision time

How clients pick agencies and what you can do to make sure you're inside the tent at decision time

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  • 1. Recession…the big opportunity for smart people…. Paul Birkett Global Intelligence Director PepsiCo
  • 2. Agenda
    • A view from the client side…
    • The Market
    • The Consumer
    • The Implication for you
    • What you should be doing now
    • What that will mean for your clients
    • What that will mean for your agency
  • 3. What is Global Intelligence? PepsiCo is a $35Bn Global Corporation - employing 183,000 people - in 100+ countries
  • 4.
    • ..a $35Bn Corporation…one dollar at a time…
    Revenue: $11bn $10bn $13bn $2bn
  • 5. … similar consumers…in similar channels
  • 6. What is Global Intelligence?
    • 183,000 people across 4 Divisions…
    • Selling Products for about $1…
    • To similar consumers…in similar channels.
    • Global Intelligence partners with the PepsiCo divisions to commercialise business opportunities
    • Roll-out global initiatives
    • Long-term NPD
    • Multi-country projects with global applicability
    … business just got a lot tougher…
  • 7. Dow Jones Industrial Average….crashes to 2003 levels…
  • 8. US House prices falling faster than in the Great Depression…
  • 9. Overextended consumers…fight to remain solvent….
  • 10. Brand owners slash budgets to deliver profit commitments…. … and the creative world is seeing fundamental change… Financial Times London Edition October 10th
  • 11. A brief history of marketing… First Era: 1960’s: The Category Benefit A new product to fundamentally change the way you do things Third Era: 1990’s: Celebrity…fame by association Consume this and be part of the “in crowd” Second Era: 1980’s: The Comparative Benefit A new product that offers a significant benefit over the competition Fourth Era: 2007+: Hothouse Commercialisation Lo-cost, lo-risk, high-potential public experimentation
  • 12. Production costs $40 The Fourth Phase: Hothouse Commercialisation: The Super Bowl's Most-Liked, Most Recalled Commercials IAG Research: Consumers Most Liked Doritos' Consumer-Created Ad NEW YORK (AdAge.com) -- Doritos' "Live the Flavor," a consumer-created commercial , was the Super Bowl ad most liked by viewers across the country, according to IAG Research's post-game survey.
  • 13. Production costs $40
  • 14. … and the speed of change will continue to increase … “… the processing power of a chip doubles every 24 months…” – while prices remain flat Gordon Moore Intel Founder ‘65 Moore’s Law … two things changed our world forever… 80: 20
  • 15. … the democratisation of everything! … get whatever you want…fast! Knowledge Research Speciality Romance Travel Communication
  • 16. “ I am not always sure I know what I want” “ in a world of infinite choice, I am overwhelmed…”
    • the “Capitalist” Dream
    • Health Concerns
    • Cash rich – time poor
    • World-awareness
    … but I still haven’t found what I’m looking for…
  • 17. … so what can we conclude?
    • The consumer has been forced to change
      • - no more easy credit….no more low rates
    • Its getting harder to create and sustain competitive advantage
      • - many similar products with similar claims
    • Knowledge is power…the silent revolution.
      • - any kid with a laptop can start an agency
    All bets are off….
  • 18. … is it the end of the world….?
  • 19. Recession is a golden opportunity…
    • Nothing worse than a strong economy
      • Incremental growth….incremental thinking
      • Risk averse clients
      • More of the same….
      • Inertia…rely on the data
    • The phases are predictable…so you can prepare
      • Slash the A&M to preserve the P&L…short-tem ouch!!
      • The old strategy has stopped working…we need a new one
    • The moment of discontinuity…..
    • So how can you leverage it?
    … think of your client…
  • 20. … I need to figure out a new model…
    • Exposed…
    • Lonely..
    • Need Help…
    So, what should you do?
  • 21. … get up there with him… … be there at the moment of discontinuity
  • 22.
    • Smart Agency CEO’s will see the opportunity….
    Practical Intellectual Short Term Effect Long Term Effect Strategy Operations Manufacturing Sales Marketing PR Promotions Research Media Client: Production Agency: Consumer Advertising … in the normal course of events…
  • 23. Practical Intellectual Short Term Effect Long Term Effect Strategy Operations Manufacturing Sales Marketing & Insights Advertising Promotions PR Research … to increase their sphere of influence… Finance Media Client: Production Agency: Consumer … stepchange the visible value you provide..
  • 24. Innovate to grow… consumers demand better products…. you’ve got to stay ahead to win Invest ahead of the curve… You have got to market through the downturn… … all true…but not much use right now…
  • 25. I need someone who.. Understands the customer Understands the market Understands my business Can help sell to the board I am still working on my crisis plan…hitting my profit target
  • 26. … help me interpret and sell the available data…
    • What are the most productive insights/ads/promos….?
    • Which will have the largest commercial impact?
    • Which are the most “executable”?
    • Which are the most “saleable” internally?
    … we know your business cold….we are your partner…
  • 27. Sales: Understand the competitive pressures…
  • 28. Production: How do they make it?...in theory…
  • 29. … and in practice…
  • 30. Finance: Where do they make money….
  • 31.
    • Learn your clients business like never before…
    • 1. How is the recession impacting them?
      • Sales which lines, how much, what’s the impact..?
      • Net Revenue overall or by customer, what regions…?
      • Costs where and why…?
    • 2. Help solve the greater business problems
      • “ Here’s a way to rework your plans to save a little”
      • “ Consumers loved this old activity…lets re-run it”
      • “ Here’s a product idea that would work in your factories”
    CEO Action Plan
    • Take a long-term approach…but be very realistic…
      • What you do next sets the tone for your agency
      • The 2010 case study starts today….
  • 32.
    • Longer-term relationships
    • Competitive advantage
    • Lower costs…ultimately
    • Better briefs…More robust work.. Lower Frustration
    • Better staff morale
    • Lower risk
    • More appropriate output
    • Lower costs
    • Total management buy-in
    Transform your commercial and personal relationship Agency CEO Client Your agency is seen an integral author of the turnaround … Success!
  • 33.
    • Learn your clients business like never before…
    • 1. How is the recession impacting them?
      • Sales which lines, how much, what’s the impact..?
      • Net Revenue overall or by customer, what regions…?
      • Costs where and why…?
    • 2. Help solve the greater business problems
      • Understand the detail of their business…think 80:20
      • Position yourself as an expert who can help the CEO sell
    CEO Action Plan
    • Take a long-term approach…but be very realistic…
      • What you do next sets the tone for your agency
      • We are all in for a tough year…or maybe two…
  • 34. … you decide how it ends