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ISSUE 237 END-MAR2019

IT’S TIME FOR AIRPORT ADVERTISING TO SOAR! VGI AIRPORTS’ CHIEF OPERATING OFFICER JONATHAN GOLDSMID REVEALS VGI’S PLANS FOR A SECTOR THAT IS EXPERIENCING UNPRECEDENTED GROWTH ON THE GLOBAL STAGE.

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SEE YOU AT APPIES MARKETING AWARDS AND CONFERENCE ON 25 & 26 APRIL 2019 WWW.APPIES.COM.MY


ISSUE 237/// END-MAR2019 COVER STORY

07

EVENTS CALENDAR

VGI AIRPORTS:

18 & 19 APRIL 2019

ADVANCED MARKETING WORKSHOP: TRANSFORM YOUR MARKETING FOR THE DIGITAL WORLD

THE FIRST ADVERTISING GATEWAY TO MALAYSIA AND BEYOND

25 & 26 APRIL 2019

APPIES MALAYSIA MARKETING AWARDS 16 MAY 2019

STRATEGIC BRAND PLANNING WORKSHOP 24 JUNE 2019

MALAYSIAN MEDIA CONFERENCE 30 JULY 2019

BEST OF GLOBAL DIGITAL MARKETING CONFERENCE 07 OCTOBER 2019

DRAGONS OF MALAYSIA & ASIA AWARDS NIGHT 15 NOVEMBER 2019

CMO CONFERENCE & AWARDS NIGHT

Regional CEO Professor Harmandar Singh ham@adoimagazine.com Business Development Managers Jarrod Sunil Solomon jarrod@adoimagazine.com Sandesh Singh sandesh@adoimagazine.com

CONTENT INSIDER

TROUBLE IN NEWS

BRANDING AND MARKETING: WHERE TO NEXT?

04

I KNOW IT’S FAKE BUT I STILL CHOOSE TO SHARE IT Just imagine if we are all able to differentiate what is ‘fake’ news or news items that may not be as reliable. Imagine if every content that we consume have gone through this invisible filter that sifts and segregates what is real and what is fake.On March 14 2017, the New Straits Times (NST) reported that the Communications Ministry launched a new portal,..

Chief Content Officer Victor Yap victory@adoimagazine.com Art Director / Designer Chemical Ali ali@adoimagazine.com Designer Lilna Marlina

03

lilna@adoimagazine.com TECH TRENDS

Events & Workshops Ruby Lim ruby@adoimagazine.com

LAUGHING IN ADVERTISING

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4 WAYS GLOBAL CMOS BUILD BETTER AGENCY RELATIONSHIPS The rapid push toward integration and growing fragmentation of the marketing and media landscape has significantly altered the client-agency relationship working model. From the race to eliminate costs, to changing agency compensation models,...

INDUSTRY ISSUES

MARKETING IN THE ERA OF #FAKENEWS

IDEAS: THE OTHERS SANDERS STORY In Feb 2018, KFC UK ran out of chickens. The shortage was the result of ‘operational issues’ with their new delivery services provider. Many stores put up their ‘We’re closed’ sign even earlier than usual. Hangry diners wasted no time putting up their displeasure on social media. Some even made police reports only to be toldpresumably by constables trying not to roll their eyes- that the #KFCCrisis isn’t a police matter. The shortage made news worldwide- thanks in part to a full-page print ad- which featured the colonel’s...

I’m sorry to be the one who brings you the bad news, but I’m afraid I have to. Social media — the thing that killed everything else — is now itself officially dead. That’s right, I just read a piece entitled ‘Social Media Marketing is Dead’ by someone who modestly calls himself “The Millennial Marketing Guy.”...

15

16 Brands are more frequently finding themselves in the crosshairs on social media or in other media due to controversies; usually over their perceived mis-steps - mis-perceived or otherwise. Sometimes, it’s just because they’ve been caught in the wrong place at the wrong time. In those instances, it’s important for organisations to identify its values and have a plan in place. Peter Horst, Fortune 500 CMO and Founder of CMO Inc, shares his thoughts during the CMO Club Virtual Roundtable. The discussion’s topic is aptly named: Mareting in the Era of #FakeNews. “Consumers now expect brands to take a stand and make a difference,” Peter said. “That becomes a pretty tricky business...


ISSUE237END-MARCH2019

I KNOW IT’S FAKE

BUT I STILL CHOOSE TO SHARE IT JUST imagine if we are all able to differentiate what is ‘fake’ news or news items that may not be as reliable. Imagine if every content that we consume have gone through this invisible filter that sifts and segregates what is real and what is fake. On March 14 2017, the New Straits Times (NST) reported that the Communications Ministry launched a new portal, sebenarnya.my to quash all sorts of fake news. It is a portal where the public will be able to verify the authenticity of news items they received, either through social media, SMS, blogs, or websites. It has been subsequently reported in the NST on August 15 2017 that 227 cases involving the misuse of new media, including social media, websites, and blogs have been investigated from January 2016 to July 2017. “This year alone, action has been taken against 75% out of 2,000 fake accounts, including blocking and closing them while the rest are still being investigated,” said Dato’ Sri Jailani Johari, the previous Deputy Minister of Communications and Multimedia; a response to a question from Senator Datuk Zali Mat Yasin. “In March 2018, Communications and Multimedia Minister, Datuk Seri Dr Salleh Said Keruak said, analysis conducted by the Malaysian Communications Multimedia Commission (MCMC), showed the majority of Malaysians get fake or unverified news via WhatsApp (84%), Facebook (8%), ...” This issue of ‘fake’, ‘falsified’ or ‘unverified’ news and content is not something that will go away anytime soon. This is due to many trending factors present

within the existing and thriving information ecosystem. With the dominance of digital platforms and mobile, it has become easier and faster to disseminate information with a click of a button. On many occasions, news or content items are forwarded or shared without any verification or validation. While the Anti-Fake News Act and MCMC’s sebenarnya.my portal have been implemented, the current model operates primarily as a passive model with a post-verification approach. This however does not completely reduce or remove the issues and problems on the distribution of fake content. Just ask anyone within your circle of friends; how many of them actually do verification prior to sending or forwarding content that they have consumed on their mobile device or web. The current model, while acting on a deterrent methodology, still allow these problems to exists. With the ease of receiving and sending of news and content, the level of ‘trust’ – both official and unofficial news – content continue to erode. In a recent finding from Statisca 2018, the overall level of trust in media in Malaysia is still on a decline, from almost 60% in 2016 to below 50% in 2018. The question is, how to best address these issues? How can this growing concern and threat be reduced? How can it be better managed or even eliminated? The challenge is to establish a basis that ensures news can be managed, moderated, verified and authenticated from a holistic standpoint. This requires the powers and cooperation of many minds and talents from a wide cross-section of parties.

Who is willing to undertake such a gargantuan task? Is it worth the effort, time, and funding to eradicate ‘fake news’? What if we are able to make it easier for every recipient of content or news to easily validate, verify, or even acknowledge the news items to be borderline, un-verified, and possibly even ‘fake’. And should they share such content, they knowingly acknowledge their actions are risky… The current IT/IS and Internet ecosystem allows for a viable solution to be created and adopted. All it takes is the right movement, the right people, and suitable resources to enable it. And it is by no means a simple undertaking. Let us speculate that one fine day, Malaysia decides to introduce a ‘Digital Content Accreditation & Validation (DCAV)’ system. It would enable continuous and active validation of news and content, possibly even video and audio content. This would require the creation of a DCAV tag or key. DCAV tags all forms of content and media, and like a license key, it resides in every news or content; both official and unofficial. This includes blogs, social platforms, and etc. Each DCAV tag is multifunctional. It performs as both a validator and indicator. Through a comprehensive network of systems, it verifies, authenticates, and validates the content into a rating model. These DCAV keys can be obtained openly from the DCAV Framework. Every key that is issued goes through an algorithm to validate and verify the legitimacy of the content. In the DCAV blueprint framework, all sources of content

...WITH THE DOMINANCE OF DIGITAL PLATFORMS AND MOBILE, IT HAS BECOME EASIER AND FASTER TO DISSEMINATE INFORMATION WITH A CLICK OF A BUTTON. ON MANY OCCASIONS, NEWS OR CONTENT ITEMS ARE FORWARDED OR SHARED WITHOUT ANY KIND OF VERIFICATION OR VALIDATION... passes through the system for active validation, a system that adheres to the following criteria: - Situational Relevance - Cognitive/Affective - Information Use and other factors for validation Within the DCAV algorithm, even a public review component could exist, enabling consumer reviews. Now imagine what additional data and analytics that would uncover. The objective is to enable a system that drives towards ‘active validation’ rather than a passive post validation. However, like all systems or solution, it needs to be done in phases. Additionally, such a solution should include official mainstream media and publishers. They too should be within the scope of DCAV. This provides for active monitoring

3

TROUBLE IN NEWS

and tracking. In actual fact, this lends further credibility to them. Imagine the value in data intelligence here enabling media publishers to acknowledge the level of trust and its reputation among their audiences. Let us just speculate how a solution such as DCAV could be realised. It would require the cooperation and implementation of a nationwide framework collaborating across all media platforms, all Internet content-based services, and an IT architecture integrating a multitude of systems. Key authorities, from government to the private sector, will have to engage and come to an agreement when executing this masterplan. Additionally, there will be a need to revisit certain legislation, especially in Security and Privacy Policies. The final question that everyone needs to ask: does society really need such a colossal and complex system to manage a simple rudimentary problem? After all, it’s only to stop circulating fake and unverified news’. Unfortunately, human nature and the maturity of audiences say otherwise. Today, the click is king. With a simple gesture of pressing a share button, the ruthless cycle begins again. So maybe such a behemoth solution is needed.

Gary Tay Digital Evangelist & CEO, Amphibia Digital


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ISSUE237END-MAR2019

CONTENT INSIDER

INNOVATION COMES “FROM HAVING A DEEP SENSE OF EMPATHY. ” MICROSOFT CEO SATYA NADELLA AT ADOBE SUMMIT 2019 IN LAS VEGAS

WINDS MAY HAVE “BLOWN TOWARDS

THE DIRECTION OF THE SCHOOL BRINGING WITH IT AN ODOUR THAT CAUSED THE PUPILS TO EXPERIENCE SYMPTOMS.

MOHD ASRI ABDUL KADIR, HEADMASTER OF SK TANJUNG PUTERI RESORT IN PASIR GUDANG, JOHOR DURING THE RECENT DUMPING OF CHEMICAL WASTE INTO SG KIM KIM.

SUPERMARKET “WILLNEWSELL GOODS 10% CHEAPER ” HIS ROYAL HIGHNESS THE SULTAN OF JOHOR ANNOUNCING PLANS TO COOPERATE WITH A MAJOR SUPERMARKET IN JOHOR.

Branding and Marketing:

Where to Next? WHEN the Professor (I really wanted to say it that way, like in the X-Men comics!) asked me to pen this up, I knew instinctively how I will approach this opportunity. While I’m excited, it is also tempered with a truckload of caution. This is a hallowed and well-respected section of MARKETING – something that only Professor H has ever called his own. What I plan to put down here will be my first and last – so it has to count. The temptation to wax lyrical on what I’ve seen and learnt from THE industry stalwart and his peers is high. However, this persistent back-of-my-mind thought has always bothered me; even from before I signed on for this stint. Here it comes: for all the hustle and bustle this industry offers and rides on, why is it contracting financially? Throughout my career as a journalist, all I ever read or hear from advertising veterans and marketing experts are about budgets slashes. I’d bet good money that there never was a time any marketer or advertising team ever would be told: Here’s a bigger pool of cash to play with! And don’t worry, there’s more!!

More pertinent is how the entire marketplace still plays up to the whims of the big brands. Nearly three months spent at MARKETING and it’s always about chasing after the big prize. The fastest horse in the race or the hardest-hitter in the squared ring, so to speak. Consideration to go play with the little guys or nurture better understanding amongst them are never brought up. It’s understandable, there is little to be made there; worse, small- and medium-enterprises (SMEs) that are flushed with funds don’t care too much about marketing or branding. Personally, that is a major concern and it’s not being addressed at any level. SMEs that bother to experiment with branding will question the logic behind their investment too. Highflying entrepreneurs, the ones who did spend a fair bit, are now back-pedalling on their OPEX and CAPEX. As for those relying on organic expansion and high return-on-investments, they aren’t even playing ball. If anything, this is undoubtedly the final frontier for marketers. Or should it be called the new frontier? It’s odd that the biggest economy drivers for Malaysia does not even consider marketing

as critical. In the Malaysia Budget 2019 blueprint, SMEs are said to represent 98.5% of total businesses for this country. It’s not surprising that our government wants to increase GDP contribution from SMEs to 41% by 2020, up from 37.1% for 2018. While the potential to grow is apparent, most will not consider approaching SMEs and help them grow their market presence. As much as I hope to see this change soon, I have my doubts. Here’s to hoping I’m wrong about this, as I believe there is so much potential to tap onto within this industry. Signing off (for now)! Victor Yap

... SMES ARE SAID TO REPRESENT 98.5% OF TOTAL BUSINESSES FOR THIS COUNTRY. IT’S NOT SURPRISING THAT OUR GOVERNMENT WANTS TO INCREASE GDP CONTRIBUTION FROM SMES TO 41% BY 2020...


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ISSUE237END-MARCH2019

7

COVER STORY

VGI AIRPORTS:

VGI AIRPORTS SENIOR MANAGEMENT TEAM. FROM LEFT TO RIGHT, IGNACIO PEREZ, PAM KAUR, JONATHAN GOLDSMID, CERINA TAN, CHANDRAN RAVI

THE FIRST ADVERTISING GATEWAY TO MALAYSIA AND BEYOND

AS THE FASTEST GROWING AIRLINE PASSENGER MARKET IN THE WORLD, ASIA PACIFIC WILL SOON ACCOUNT FOR ALMOST 40% OF TOTAL GLOBAL PASSENGERS SO WHILST TRADITIONAL MEDIA CHANNELS FOR REACHING CORPORATE DECISION MAKERS AND PREMIUM CONSUMER SEGMENTS STRUGGLE TO RETAIN THEIR CORE AUDIENCES, THE NUMBER OF BUSINESS DECISION MAKERS, HIGH NET WORTH INDIVIDUALS AND MILLENNIALS TAKING TO THE SKIES HAS NEVER BEEN GREATER. As a result, demand for airport advertising has never been higher or the competition greater between brands for the most premium advertising locations inside and outside airports where these exclusive but increasingly elusive audience profiles can be engaged. It’s no wonder then that VGI Global Media, who already operate a number of highly prestigious transit advertising contracts across the region including KLIA, KLIA2, and Senai Airport here in Malaysia, want to be the captain of this flight.


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ISSUE237END-MARCH2019

COVER STORY

KLIA AIRPORTS (KLIA 1 + KLIA2)

PASSENGER

MOVEMENT

2014

48.930 MILLION 2015

48.938 MILLION 2016

52.6 58.5 59.9 MILLION

2017

MILLION

2018

MILLION

So Jonathan, what brings you to this part of the world?

It was actually a call out of the blue. For the past seven years I have been living in Italy working for Clear Channel International where I was responsible for developing and managing an extensive airport advertising business there covering Rome Fiumicino, Venice, Bologna and two airports in Southern Italy whilst also overseeing the development of the groups’ airport business across the region. One afternoon I received a call from an old business acquaintance of mine in Thailand asking me if I’d be interested in a move to Malaysia to spearhead the development of their airport advertising business across the region. Having fallen in love with this part of the world as a result of traveling throughout the region for both business and pleasure, I previously ran an office in Singapore whilst CEO of Aviator, part of Kinetic Worldwide, it was enough for me to find out more. After a couple of market visits and getting to meet the shareholders of VGI, it was clear to me that there was a meeting of minds in terms of the potential for the business and what it would take to realize this. Add to this the fact that the aviation business in Asia Pacific is the fastest growing market in the world and the business opportunities that exist are significant for a company such as ours and the rest is history – arrivederci Italy!!

Why Malaysia and why airports?

Through what was originally a joint venture to manage the

advertising contract for the MRT in Kuala Lumpur, VGI agreed to also take on the management of the advertising contract for KLIA, KLIA2 & Senai airports. Airport advertising is a very specialist and niche business that requires specific knowledge & expertise to run effectively, something VGI knows how to do through a combination of the people who work at VGI and the contracts it manages in airports in Thailand & Myanmar through another of its companies. My joining VGI was one of the final pieces of the jigsaw and as you are starting to see from the digital transformation project already being implemented at KLIA, whilst early days, I believe we are at the start of something very important and special. KLIA itself is an extremely important airport both within the region and on the world stage and I can’t think of a better place for us to demonstrate our commitment to the business. We have already kicked off a “reset plan” that will see us transform the advertising program at KLIA making it a regional and international benchmark in terms of technology, innovation and quality and through this eclipse what has been done at other airports in the region including Changi and Jakarta. On a broader scale, Malaysia is a very natural market for VGI and presents a number of important business opportunities. Add to that the exceptional airline network operating from KLIA and klia2, thanks to the work done by MAHB, and you have a perfect base from which to manage our regional expansion plans. As a specialist transit advertising operator, we see airports as one of the most

exciting areas of the business. More people are taking to the skies than ever before and by 2040 Asia Pacific will command almost 50% of total global passengers. Against a backdrop of audience declines across traditional media and you can understand the attraction of airports to a company such as ours.

How does VGI airports’ plan to differentiate itself from the competition?

People, mindset and the innovative application of technology. Having worked for the two companies that have sought to establish themselves as global players in the airport advertising business, one French, the other American, I believe what is missing today is a more collaborative approach and mindset rather than a silo mentality to managing the advertising business inside airports. Whilst revenues from advertising contribute an increasingly important part of airports ‘non-aeronautical revenue streams, in most cases worldwide, its contribution % towards total airport revenues rarely goes beyond single digit, even for the largest international airports. Whilst it’s our core focus, advertising is just one of many different concession businesses operating inside the airport so I believe its incumbent upon us to forge more of a genuine partnership type mindset and approach to working with airport operators, an approach that creates a new level of trust and collaboration that not only

allows us to focus on delivering a great advertising business but sees us supporting the broader strategic goals of the airport and working more closely with other concessionaires. Just as an example, as the advertising guys, we generally have most of the very best located advertising units around the airport so why not under a different and more collaborative model, allow the airport and other concessionaires to utilize our media assets to help improve their businesses rather than it being a straight forward “paid for” transaction. Whether that is through utilizing our new digital screens to help create a sense of place as we have already done in KLIA, to drive footfall to f&b outlets or to update passengers on important flight changes, digitalization of our media now means all of this can be implemented with ease, it just requires a different mindset and approach. But to do this we have to start with our people. We need people that are not only the best at designing, developing and implementing spectacular advertising programs and then great teams to market these solutions but people who understand airports in general, who understand the challenges of our partners the airport operators and who, using our expertise can help them to solve these challenges. Without people like this we are no more than a media sales company. Fortunately at VGI I have been given the necessary support to build a world class team that is practically unrivalled not only in the region but worldwide. Here is SE Asia we now have a team with more industry experience than


ISSUE237END-MARCH2019

9

COVER STORY

PART OF VGI GLOBAL MEDIA, THE AIRPORT TEAM ARE PRIMED AND READY FOR TAKE OFF

VGI AIRPORTS

GOES BIG ON CHANGE AT KLIA 1

any other company operating in this field in the region. Between myself, the CEO of VGI Malaysia and our new Chief Digital Officer, Ignacio Perez, a long-time colleague with more experience in digital technologies than anyone I know, we have amassed over seventy years of experience in the airport advertising business which has included either directly managing or being involved in the management of some of the world’s best known airports. This focus on bringing in expertise runs throughout the entire VGI Airports organization. Our Marketing Director Chandran Ravi brings extensive aviation related experience with stints at both Air Asia & Malindo whilst our Sales Director Cerina Tan comes from the premium consumer print industry where she ran sales at Malaysia Tatler and Prestige magazines, an audience and advertiser base that is very much aligned with the premium environment and audience of airports today. The third critical ingredient is technology. Airports by the mere fact that they involve getting millions of people into the sky every day, are one of the most technologically advanced and high-profile environments you could operate in. As a result, airports have always been a magnet for brands seeking to benefit from the association with this type of environment and technology, build trust with the airport audience and been seen as pioneers and innovators in their fields. Long recognized as a prime platform for brand building, as a result of the smart application of technology, we can now do so much more be it through specialist activation projects utilizing digital technologies,

the use of beacons and facial recognition technologies to help advertisers target specific audience demographics or bespoke programming that allows us to link flight information to our screens so when baggage from Turkish Airlines is coming out onto carousel 5, the advertising communication on the screens on that carousel are in Turkish as well as the local language.

Why such a specialist focus on airports? What makes them different from other OOH formats and other media platforms in general?

If you are referring to our strategy to treat airports almost as a stand-alone business you are correct. Whilst we are extremely fortunate to be part of a much larger media company, which in turn provides us with important support both in terms of capital, an essential ingredient when developing airports, we have a set of shareholders who understand that airports are different to other OOH platforms and require a highly specialist approach. The simple reason for this is that whilst airport advertising largely shares the same advertising format as OOH, be that large format backlit advertising units or more commonly nowadays, digital screens in different sizes and formats, this is often where the commonalities stop. OOH has often been talked about as the last true broadcast medium and whilst technology is now playing a big role in enabling ooh media owners to provide advertisers with more targeted solutions, airports on the other hand have always thrived on their

... AGAINST A BACKDROP OF AUDIENCE DECLINES ACROSS TRADITIONAL MEDIA AND YOU CAN UNDERSTAND THE ATTRACTION OF AIRPORTS TO A COMPANY SUCH AS OURS... ability to provide advertisers with access to an extremely niche audience, an audience of high net worth individuals traveling for business and leisure purposes. In that sense the airport audience is often more aligned with premium B2B and B2C platforms. That’s the reasons you will often see the same advertisers in airports as you will see at an international level in Financial Times or the Economist printed and online versions or at a national level here in Malaysia in The Edge or Malaysia Tatler magazine. The one difference being that the airport audience is one of the few audiences that continues to grow exponentially versus traditional media platforms that continue to experience audience decline. So by large we are talking about a very different audience to other OOH formats and with it very different sales cycles, pricing models, advertiser needs and contract terms. What this means is we need a completely different approach to the business, from the core client base we are engaging with, to the type of conversations we are having with these clients to the solutions we are developing inside the airport itself. Over the years I’ve witnessed too many companies who have decided to make a foray into the airport advertising business only to very quickly make an exit

as they understand the level of investment and expertise requires to manage this business successfully.

Will 2019 strategies and beyond be applied regionally?

Without divulging too much detail, I think it’s clear for all to see that our vision and aspirations are regional, possibly even further afield. At the same time, we know from experience that stretching out too thin, too fast is a very dangerous game. As such, we continue to explore interesting new opportunities in the region; of course, through measured and selective processes. Our objective remains clear: to enter into partnerships that add value and deliver strong shareholder performance. There are also plans to expand the understanding of airport advertising; this is so marketers and creatives will quickly realise the value proposition. More importantly, we want to encourage them to leverage on what this platform has to offer. This way, they can be a part of the transformative process to improve and augment the airport and passenger experience. It’s a fine line but that’s why we have invested in developing a leadership team that has huge experiences in this area.

Despite having only been here a few months, VGI Airports has kicked off its plan to transform KLIA 1. Firstly, it has revamped and updated the International Arrivals Hall digital screens. Passengers arriving into the main air terminal will now be greeted with four giant digital advertising screens, each unit measuring over 150m2. From a pure advertising perspective, this installation is bringing in incredible advertiser demand. To-date, three of the four advertising spots are sold on long-term even before VGI Airports completed the installation. According to Jonathan Goldsmid, COO of VGI Airports, equally as important is how these nextgen platforms still adhere to the principle of partnering with airports; specifically, to create a sense of place and enhance the passenger experience. “This has been done by combining advertising messaging with a giant welcome message that is beamed to passengers in multiple languages. We are currently working with our tech partners locally so that, in the very near future, the welcome message will be sent in the language of the passengers who are moving into the Arrivals Hall,” he shared. “For VGI, technology also plays a very important part. Our Chief Digital Officer is currently working with local and international technology partners on a number of back-end and front-end systems; most of which will not only allow us to better understand our audience in terms of who they are, but also how they move through the airport. That way, we can learn how they interact with our advertising.” Being able to gather such intrinsic data will allow VGI Airports to better engage with passengers or specific selected audience profiles. As Jonathan puts it: “Marketing done in a more targeted manner.” What VGI Airports intend to do is to not reinvent the wheel. After all, these are projects and technologies that have been in use globally within airports and transit environments.


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VP, Mass Market Marketing Operations TM Berhad

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GM - Strategic Communications & Branding Tenaga Nasional Berhad 

PROF HARMANDAR SINGH President APPIES Malaysia

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Channel Communication Manager Malaysia, Singapore, Myanmar, Cambodia & Laos Unilever (Malaysia) Holdings Sdn Bhd 

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AI TRENDS IN CONSUMER-FACING PRODUCTS AND APPLICATIONS CONSUMER-GRADE AI APPLICATIONS

A BIGGER ROLE FOR AMBIENT INTERFACES

We’re now seeing a shift from highly technical artificial intelligence (AI) applications that professional researchers use; they are now more lightweight, user-friendly apps intended for tech savvy consumers. New automated machine learning platforms, such as DataRobot, make it possible for non-experts to build and deploy predictive models. Many hope that in the near future, we’ll use various AI applications as part of our everyday work, just as we do Microsoft Office or Google Docs today. (See also: AutoML trend)

UBIQUITOUS DIGITAL ASSISTANTS

Digital Assistants (DAs) — like Siri, Alexa, and their Chinese counterpart, Tiān Māo — use semantic and natural language processing, along with our data, in order to anticipate what we want or need to do next; sometimes before we even know to ask. There are now thousands of applications and gadgets that track and respond to DAs. One example: Amazon Alexa powers 4,000 gadgets in 2018 — there are now more than 28,000 devices that integrate with Amazon’s DA. You can expect to find DAs everywhere in 2018 as their prices fall (look for entry-level speakers that cost less than US$20) and as systems get better at interacting with us. Watch for new collaborations between device manufacturers and DA platforms — soon users can speak to Alexa in their car and during the morning jog, while Siri will soon be accessible during work meetings and at the desk. You’ll also start to notice DAs hidden throughout other connected devices, such as your home thermostat, refrigerator and smartphones. DA’s don’t just listen to our voices — they’re being trained to watch users too. Researchers at Amazon, Facebook, Google, MIT, Stanford, and the University of Texas at Austin are building infrastructure so that our devices track the places we go to, the people we interact with, and even our habits, tastes and preferences. Then they’ll use this data to anticipate our needs. Marketers, credit card companies, banks, local government agencies (police, highway administration), and political campaigns can harness DAs to deliver critical information.

... THE VALUE OF A NETWORK IS THE SQUARE OF THE TOTAL NUMBER OF PEOPLE USING IT. AS MORE PEOPLE BECOME PART OF AMBIENT NETWORKS OF INFORMATION, THE MORE USE CASES WE’LL SEE IN THE FUTURE...

Also known as “zero-UIs,” our modern interfaces are becoming more and more like ambient music — able to do more for us with fewer direct actions, yet still able to captivate our attention. DAs, figuratively and literally, automatically deliver to you the information you need to know, just as you need to know it. Rather than relying on a single input screen, or even a series of screens, we’ll instead interact with computers with less friction. In our modern age of information, the average adult now makes more than 20,000 decisions a day. Some big, like whether or not to invest in the stock market, and smaller points like whether to glance at your mobile phone when you see the screen light up. New DAs promise to prioritise those decisions, delegate them on our behalf and even autonomously answer for us, depending on the circumstance. Much of this invisible decision-making will happen without your direct supervision or input. What makes ambient design so tantalising is that it should require us to make fewer and fewer decisions in the near future. Think of it as a sort of autocomplete for intention. We will interact both actively and passively with our DAs, found in our wearables, thermostats, cars, and pockets. They will listen and observe in the background, sometimes asking questions — other times offering up text, audio, or haptic notifications as needed. Even those will be decided by algorithm. The real promise of ambient interfaces is explained by Metcalfe’s Law: the value of a network is the square of the total number of people using it. As more people become part of ambient networks of information, the more use cases we’ll see in the future.

DEEP LINKING EVERYWHERE

Deep mobile linking has been around since the beginning of smartphones and it makes it easier to find and share data across all of the apps in your device. There are three kinds of deep links: traditional, deferred, and contextual. Traditional deep links re-route you from one app or site: if you click on a Wall Street Journal link someone posts on


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Twitter, it will automatically open in the WSJ app, as long as you have it installed. Deferred deep links either connect straight to the target content, if the app is installed, or to an app store for you to download the app first. Contextual deep links offer much more robust information — they take you from site to app, app to site, or app to app, and they can also offer personalized information. For example, when you land at the airport, you might discover how your airline app sends you a link to Uber. With advancements in machine learning, app-to-app experiences that are tailored to the habits of individual users will become more ubiquitous.

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COVER STORY TECH TRENDS

NEW ROLES FOR DATA SCIENTISTS

Companies that rely on data will soon need staff with specialised skill-sets. Rather than general ‘data scientist’, new roles — including data curators and governance strategists — will be required to help tackle the challenges and opportunities offered. Especially those that come from consumers and organisations alike.

GLOBAL DATA SCIENTIST SHORTAGES

‘Data scientist’ used to be a job that no one wanted, yet now it’s one of the most sought-after positions. There just aren’t enough skilled talents to fulfill all the work available — some estimates show a 50% gap between upcoming supply and demand. Industries, including pharmaceuticals, finance, insurance, aerospace, foundations, government, and travel are all in need of employees who know how to work with the troves of data they’re collecting. As a result, we’re facing a data scientist shortage. As the needs for data scientists spike, we’re going to either have to retrain wide swaths of workers or wait for the next generation of skilled workers to graduate from college. Some universities, understand how the workforce needs changing, will launch new graduate programs and centres with focus on data science. Ethics and diversity will hopefully be a mandatory part of those programmes, so that our future data scientists are aware of possible algorithmic discrimination and problematic data training sets.

OWNING, MAINTAINING, AND ENCRYPTING OUR BIOMETRIC DATA

DATA

Consumers use their fingerprints and faces to unlock systems and devices.

KEY INSIGHT

One of the biggest buzzwords of the 2000s — Big Data — will continue to make headlines in 2019. Mining, refining, productising, and monetising data is big business, and a vital part of our digital ecosystem. Businesses will want access to analytics tools in order to make important business decisions, while government agencies will rely on data to determine funding for various programmes. Consumers have become more aware of how much personal data they’re creating — and who has access to it. Here are a few data-related trends worth tracking in 2019.

DATA GOVERNANCE AND RETENTION POLICIES

Many organisations — from financial institutions to universities, hospitals, veterinarians, churches, Fortune 500 companies, and beyond — store data for compliance, business or customer convenience. In the year ahead, every organisation will need to address best practices in data retention, with an eye towards security. You would be surprised to know how few have responsive data retention policies that are updated according to security issues — and for that matter, how many don’t even have policies at all.

STRATEGIC ENCRYPTION MANAGEMENT

We’ve seen dozens of big attacks in the past 24 months, and yet many organisations we entrust with our data are either not using encryption or are using tools that are out of date. Hackers know this, so we should expect more attacks in the coming year. While encrypting data makes it harder to crack, the same defences also make it harder for staff or consumers to make legitimate use out of the data. In the near-future, companies will need to devote serious resources into shoring up their digital security or risk losing millions of dollars cleaning up after a breach.

DATA LAKES OFFER INSIGHTS

For the past several years, organisations with huge amounts of data have created data lakes — massive platforms that store all the managed data in various native formats. The idea has come about from the need to create a single repository for all of a company’s data, rather than keeping it siloed in different places. This also helps a company realise greater data efficiencies. While data lakes have worked to store data, so far all of those cross-lane efficiencies and actionable insights haven’t been realised. 2019 could be the year when AI systems help analyse and glean better informatio

...WHILE DATA LAKES HAVE WORKED TO STORE DATA, SO FAR ALL OF THOSE CROSSLANE EFFICIENCIES AND ACTIONABLE INSIGHTS HAVEN’T BEEN REALISED. 2019 COULD BE THE YEAR WHEN AI SYSTEMS HELP ANALYSE AND GLEAN BETTER INFORMATION...

Consumers use their fingerprints and faces to unlock their phones. They share their heartbeats and steps with their fitness trackers. As our devices become smarter, they’ll start collecting even more personal biometric data. Companies should already be thinking about encrypting that data, but they may have added impetus to shore up their security. It’s likely that new regulatory frameworks governing biometric data will be introduced in countries around the world in 2019 and beyond.

ETHICAL MANUFACTURING KEY INSIGHT

Could robots bring the end of forced labour and lead a new era of ethical manufacturing?

EXAMPLES

Look for a number of new advancements in robotics that further reduce the need for human labour, such as the Sewbo. The concept is similar to a traditional sewing machine but also has a smart robotic arm, allowing it to both sew and assemble an item of clothing. While this certainly means that people will be out of certain kinds of work, it does imply the end of bonded, forced and child labour — not to mention slavery — an unfortunate issue that has become commonplace in places like China, the Philippines and Bangladesh. In October 2016, a Canadian court allowed a lawsuit that saw Eritrean workers go against Nevsun Resources, a mining company: it’s the first time in history that a tort claim for modern slavery went ahead in Canada. Meanwhile, in September, the Associated Press published a searing account of foreign fishing workers, confined and forced to work on US fishing boats. The AP’s investigation revealed a disturbing present-day reality: fishermen being forced to use buckets instead of toilets, suffered sores from bed bugs, and didn’t have enough food.

WHAT’S NEXT

While robots may help ease forced labour, what about the rights of robots? Do robots need worker rights, too? This is a question now being raised by researchers, especially as robots are predicted to take on more meaningful roles within the workplace and in society. The EU is already discussing whether there ought to be a special legal status of ‘electronic persons’ to protect sophisticated robots.

WATCHLIST

National Association of Manufacturers; Alliance For American Manufacturing; Tesla; Sewbo; Carnegie Mellon University; MIT’s Interactive Robotics Group; Alphabet (Google); Amazon; ABB Robotics; Aethon Inc.; ULC Robotics


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CREATIVE SURGE

IDEAS: THE OTHERS SANDERS STORY IN Feb 2018, KFC UK ran out of chickens. The shortage was the result of ‘operational issues’ with their new delivery services provider. Many stores put up their ‘We’re closed’ sign even earlier than usual. Hangry diners wasted no time putting up their displeasure on social media. Some even made police reports only to be told- presumably by constables trying not to roll their eyes- that the #KFCCrisis isn’t a police matter. The shortage made news worldwide- thanks in part to a full-page print ad- which featured the colonel’s famous bucket with the brand name rearranged to spell ‘FCK’, and the headline ‘We’re sorry’. When he saw the work, Keven Le, ECD of Reprise Malaysia, started thinking, “Hey, it’s ok to talk about brand ‘secrets’”,

CREATIVE SHOWCASE

Goodjob Model Branding Country

Turkey Advertising Agency

KAF, Ankara, Turkey Creative Director / Art Director

Aziz YAYLA Copywriter

Hüseyin Kaim

ie it’s ok to be transparent about operational issues that affect the public. With March 8, International Women’s Day, around the corner, he wondered if their client, KFC Malaysia, would be open to doing similar work. Never one to miss an opportunity, Ange (Angelina) Villanueva, KFC’s CMO, immediately said yes. OBJECTIVE 57% of people working for KFC Malaysia are women. “A diverse workforce is good for business,” said Merrill Pereyra, Chief Executive Officer – Restaurant Division of QSR Brands. “Women are committed, they possess a unique flair and finesse. And it’s a fact that they play extraordinary roles for the business.”

Ange felt that the work should highlight the contributions of women in business and society. Even before he knew what he was going to present, Kevin knew he had found an ally- somebody who would champion great ideas all the way. CHALLENGE Ads celebrating the contributions of women or highlighting gender equality issues are nothing new. In 2017, Burger King China became Burger Queen for Women’s Day. And in Feb 2018, Johnnie Walker introduced Jane Walker, and featured the striding woman on special editions of the Black Label brand. “It’s easy enough to pay lip service. Or court controversy for the sake of it. We didn’t want that. We wanted to take our

campaign a step further.” said Kevin. “Together with the client, we developed a campaign with legs- literally.” And so, a team from KFC went to Segambut and Cheras to provide support to single mothers. The ‘Add Hope’ campaign brought food, drinks and other essentials to needy families. The team also unearthed and highlighted inspirational stories of KFC staff who, in spite of disabilities or personal struggles, have been successful in their own right. Finally, on March 8, 2018, they told Malaysians about the 12th ingredient in the Colonel’s 11 secret herbs and spices. TRUTH “The story of Mrs Sanders is not an advertising gimmick,” said Kevin. “Not something we plucked out of thin air. Claudia Sanders was a real person, and part of KFC history.” “Mrs Sanders helped shape the KFC we know and love today,” said Ange. “She mixed the secret blend of herbs and spices, she took orders at the restaurant. And she made sure customers got their chickens on time- by bringing the orders to the train station for delivery, sometimes late at night.” Armed with this information, and rare photographs from the KFC archive, the team went to work. ANSWER A logo was created featuring Claudia Sanders instead of the colonel. The other Sanders story was expanded into digital, print and on-ground activation. The temporary logo went up on online touchpoints. Were people confused whether it was a new restaurant?

“Not at all,” said Kevin. “The campaign grained a lot traction online- with many positive reactions. I like to think women who came to the restaurant were pleasantly surprised and delighted.” Somewhere along the way, somebody associated with Ellen DeGeneres show discovered the campaign and brought it to the producers’ attention. Claudia Sanders was featured on show, introduced by none other than Ellen herself. “We liked the work of course, but never expected it to go viral around the world,” said Kevin. “The idea received a lot of media attention but getting on the talk show was totally unexpected. It was only discovered by a friend of our illustrator, who caught it on TV in the UK.” The Claudia Sanders story went from Kentucky to Kuala Lumpur to the film studios of California and back again to Kuala Lumpur. At the 2018 Kancil Awards, an annual show celebrating Malaysian creativity, QSR Stores Sdn Bhd was named the Advertiser of the Year, while Reprise took home the Golden Kancil for their ‘The Other Sanders’ campaign.

Edward Ong is on a quest to discover and create Malaysia’s best ideas. He is an award-winning Writer and Creative Director, and can be found at IdeasAreBorderless.com


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LAUGHING IN ADVERTISING

THE DAY THE CONVERSATION

DIED I’M sorry to be the one who brings you the bad news, but I’m afraid I have to. Social media — the thing that killed everything else — is now itself officially dead. That’s right, I just read a piece entitled ‘Social Media Marketing is Dead’ by someone who modestly calls himself “The Millennial Marketing Guy.” Apparently, social media died peacefully at home, after a long battle with nitwits. It is survived by its twin brother, Content. That’s right, content is the new marketing mass murderer. As regular readers know, we here at The Ad Contrarian have spent a good deal of time on the marketing death watch, helping you understand how

social media killed everything that came before it: advertising, broadcasting, marketing, copywriting, television, Frosted Flakes, and more. And just when we thought the period of grieving is now over, it is with a heavy heart that we have to report that Content killed the thing that killed everything else. Speaking of killing, if you are committed to non-violence I strongly suggest that you don’t read that article. It is likely to have the same effect on you that it had on me. I am currently restrained and in the back of a patrol car. I’ll give you just a little taste of the wisdom from this enlightening lump of literature.

THE rapid push toward integration and growing fragmentation of the marketing and media landscape has significantly altered the clientagency relationship working model. From the race to eliminate costs, to changing agency compensation models, and building in-house agencies, marketers are taking different approaches to address inefficiencies that affect their overall bottomlines. Even amongst all the change and uncertainty, there are many global players who are getting it right. In our work with global CMOs, four methods for best practice stand out — a willingness to explore new models, ensuring face time between agency and client, investment in digital platforms and services, and ensuring that benchmarks are set and evaluations are scheduled. These practices impact both day-to-day interactions and longterm strategies, both of which must be in any CMO’s playbook.

to manage others and drive business, with some resulting in very long relationships. There is no silver bullet for finding the right agency model. It comes along with trying new things to see what works and what doesn’t. The answer will be different for every CMO, and even successful agency models will still have major challenges for both parties.

Look to New Models

Successful global marketers like P&G, Coca-Cola, and Unilever share one thing in common: they continue to evolve. They still keep their client-agency marriages fresh. Whether it’s outcome-based compensation, IMC innovation, or the brand agency leader model, the best brands trust their lead agency

Face Time Matters

The best global relationships are not conducted solely through email and PowerPoint. Whether it’s through the use of technology or through physical presence, getting people together can make all the difference in the world. Some marketers fix these times quarterly, others on a key project basis. Raja Rajamannar of Mastercard revealed that he includes the brand’s agency partners in all strategy meetings. Each CMO needs to find the right cadence and make it work. In the best global relationships, both sides spend time to become immersed in the other. For an agency, this could be joining the sales team for a supermarket run, or it could mean working in the store, or even just becoming an active consumer of the client’s products and/or services. For a client, this also needs to happen; attending the agency’s office to listen to work, understanding new

Here we go … “What drives social media activation for Millennials; however, is content excellence.” What drives people to put semi-colons in the middle of sentences; however, is illiteracy.

ALL have super powers!

“We are currently living in a ‘Millennial-inspired Participation Economy’” Not me. I’m living in a Vodkainspired stupor.

“Think of content as an opportunity for your brand voice living everwhere you are not.” Cool. I’m thinking of my brand voice living in Vegas, at one of those townhouses where all the super-hot ‘hostesses’ live. Either there or in Tyler’s mom basement where the “Millennialinspired Participation Economy” is headquartered.

“Which is most powerful: a like, share, retweet, favorite?” Gosh, they’re all so powerful, it’s like asking who’s stronger: Invincible ron Man, The Incredible Hulk, or Barney the Dinosaur. Let’s get real — they

“Uniqueness will be a proxy for brand pricing authority and meaningfulness will be a proxy for sales volume potential.” And typing will be a proxy for writing and insufferable bullshit will be a proxy for thinking.

Bob Hoffman has been called “The most provocative man in advertising”. In his book, Laughing@Advertising, he is out to disrupt the disruptors - those sombre, imperious souls who’ve made marketing and advertising such an earnest and humourless endeavour. It is on sale now at Amazon and only available in paperback. There’s no ebook, he says, because pixels aren’t funny.

4 WAYS GLOBAL CMOS BUILD BETTER AGENCY RELATIONSHIPS BY GREG PAULL, CO-FOUNDER & PRINCIPAL, R3

developments, and becoming an advocate for them. The result will be a stronger foundation.

Take Digital Seriously

The technology available to today’s marketing teams is expansive, sometimes convoluted, and advancing to new heights every day. From the increasingly fragmented (and growing) landscapes of martech and adtech, to the rise of previously exotic scifi technologies, like artificial intelligence (AI) and gamification, there are a vast number of tools available to all. Digital relationships can be a minefield of challenges. Too many marketers hire digital agencies by the yard, not by the year. As a result, digital agencies, for the most part, usually don’t see the need to invest in strategic planning or analytics since neither side knows how long the relationship will last.

Benchmark and Evaluate

Marketers and agencies should be using external

measures, whether it’s tracking research, media audits, 360-degree performance evaluations, or other controls to benchmark where they are in an ever-changing marketplace. It doesn’t have to just be through a pitch. In R3’s consulting experience, we have seen one client that audits their agency every year — and seven years

later, there’s still been no pitch. While the relationship is not totally perfect, there’s a lot of continuity and consistency. There will always be problems that need solving and coming across new pain-points along the way. However, to ensure that each stakeholder is getting the most from the relationship, there needs to be a framework put in place to measure success. It’s safe to say that the rapid speed of digital transformation, coupled with the rise of crowdsourcing networks and questions about transparency, will have an effect on clientagency relationships going forward. Managing a global agency relationship does not come without its challenges. When integrating a large number of stakeholders across business units and geographies, sometimes things can get complicated. One thing that is certain: agencies are still an integral part of the marketing structure and even with the recent upheaval, that likely won’t change any time soon.


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MARKETING IN #FAKENEWS INDUSTRY COVER STORY ISSUES

It’s time to look at what drives fake news and figure out how brands can approach this problematic issue BY ALAN HART, CMO CLUB

BRANDS are more frequently finding themselves in the crosshairs on social media or in other media due to controversies; usually over their perceived mis-steps - mis-perceived or otherwise. Sometimes, it’s just because they’ve been caught in the wrong place at the wrong time. In those instances, it’s important for organisations to identify its values and have a plan in place. Peter Horst, Fortune 500 CMO and Founder of CMO Inc, shares his thoughts during the CMO Club Virtual Roundtable. The discussion’s topic is aptly named: Mareting in the Era of #FakeNews. “Consumers now expect brands to take a stand and make a difference,” Peter said. “That becomes a pretty tricky business – if you weigh in, you may make a lot of people happy but at the same time, you may make a lot of people unhappy.” Oddly, at the same time, consumers can view silence as complicity. “(Consumers think that) if we don’t hear from you, we can assume you have no values. (Worse,) you become an empty vessel that is whatever we say you are,” Peter said. “Life is pretty tricky for those of us that manage brand and reputation.” However, he argued there is a spectrum of positions that a brand can adopt to ensure they are not on polar extremes with brand values. On what he called the ‘brand risk-relevance curve’, Peter identified four spots that organisations can consider; specifically, when weighing the risks of negative reaction and responses against their relevance to consumer concerns.

THEY ARE AS FOLLOWS: Values

At the least risky end of the spectrum, an organisation can identify its own values internally. Perhaps it doesn’t want to weigh in publicly for a variety of reasons. However, it can go through the process and introspection to identify what its operations stands for and what are its values. This is key, Peter shared, because “even if you don’t want to comment publicly, something can happen and it’s important to have a response ready.”


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N THE ERA OF COVER INDUSTRY STORY ISSUES

public view as negative. “Especially those that are more likely to generate a mix of feelings and have more urgency,” Peter added,

Position

“(CONSUMERS THINK THAT) IF WE DON’T HEAR FROM YOU, WE CAN ASSUME YOU HAVE NO VALUES. (WORSE,) YOU BECOME AN EMPTY VESSEL THAT IS WHATEVER WE SAY YOU ARE,” PETER SAID. “LIFE IS PRETTY TRICKY FOR THOSE OF US THAT MANAGE BRAND AND REPUTATION.” Purpose

Slightly higher in terms of risk, but still maintaining some neutrality, an organisation can define a few aspects in how it creates a purpose. This mostly focuses on universal, evergreen, and positive issues that it wishes to embrace. For example, Peter cited Dove’s Real Beauty campaign. “Purpose is characterised by not being terribly controversial — people aren’t going to rise up against it,” he shared.

Issues

“(With this aspect), you’re moving into spikey, current, timely, and tension-filled topics,” Peter added. These still may not be “for and against” issues, but an organisation can take a standpoint on any topic that is has concerns with; even align with what the general

In this posture, you choose to stake out a position — “you’re saying you are for “X” and against “Y,” Peter added. Nike did this with Colin Kaepernick by deciding to come down on the sportsman’s side. “There has been some lively debate afterwards,” he noted. “I thought the move as bold and (believe it’s) a long-term smart bet; but others feel it looks like, and can be seen as, brand suicide.” Brands don’t need to stay in one place on this curve. An example that Peter pointed to revealed how Patagonia has been very devoted to its brand purpose. The company cherished the national wilderness. However, when an executive order abolished millions of acres of national park, just overnight Patagonia moved from purpose to taking a strong position — a stand of softs. According to Peter, it took-to-task in the moment, without focus groups or round tables, because it has been very clear on its values. “To do anything except step in would have been to abdicate those values,” he said. No one right answer exists for all brands, but they must at least get to the heart of their values. “As we’ve seen over and over, it’s a world where there’s almost no position that everyone can agree on. However, when it’s clear why you believe what you do, then people will respect you for it,” Peter added. If businesses are going to step into the arena and engage in a topic, it they must choose their focus issues carefully. This can be a spot where companies go wrong. “It’s easy, even with the best of intentions, to engage in a topic that they are not welcomed in,” Peter pointed out. For him. these three considerations may help: • Is this an important issue to society? Does it matter? It is worth the time and energy? • Is there some brand truth that relates to this issue? There must be an authentic connection between brand and issue • And finally, is there brand permission? It may be an important issue and the brand may have a connection, but it’s not enough just to have a valid connection. There needs to be some openness among folks who are closest to the issue Whatever the brand chooses, it’s important to start internally – from leadership to board to employees. “Don’t steam roll over objections: either respect or turn them around and get them on board. Any time you embark on any of this, it really needs to be a thorough process that ensures alignment across the system. That way, you have buy-in, consensus, and real skin in the game,” Peter said. “Because whether you weigh-in or not, but especially if you do so publicly, your hot-seat odds go up. The last thing you want is to be out there under fire and have people pointing fingers; specifically, at each other and second guessing all their decisions.”


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COVER STORY NEWS

of Consumer Insights, Nielsen Malaysia. “With shoppers increasingly rationalising their spend, in-store execution and shopper activation must take centre stage. It is essential that brands understand in-store shopper behaviour and their priorities in order to attract shoppers with the right offering.”

NIELSEN LAUNCHES SMARTSTORE IN MALAYSIA

Nielsen has launched Nielsen SmartStore, an ‘immersive reality’ shopper solution that helps retailers and manufacturers better understand shopper behaviour and measure how they react at the moment of truth in any storefront format. SmartStore, which has been designed to radically transform how the industry conducts shopper research today, creates a remarkably realistic and immersive simulation of a 3D, 360 degree total store environment. Immersive store testing within a virtual environment eliminates the unnecessary risk of trialand-error execution, allowing companies to perfect aisles and point-of-sale materials before implementing changes in stores. The solution gives Nielsen’s clients the flexibility to test future scenarios quickly, away from competitors’ eyes and without disrupting the store’s operations.  Dolly Jitani, Nielsen Global Shopper Leader, says this solution has been put together using the latest gamification and virtual reality technology available. All these are used to create a unique, fully immersive shopper research and merchandising solution.   Malaysia is the third market in Southeast Asia to offer its clients the Nielsen SmartStore technology and capabilities. Now, Malaysian retailers and manufacturers can measure, evaluate, and optimise a range of retail concepts on sales and shopper metrics, based on how target shoppers react at the moment of truth, in any store format, aisle, category, or shelf. It also helps advertisers measure the effectiveness of point-of-sale merchandise based on what shoppers “see, think and do”. Media agencies can also test what marketing messages resonate in a variety of environments and see what causes brand uplift.  “The challenging market environment has spurred changes to consumer shopping mindset and behaviour,” said Anil Antony, Executive Director

ASTRO POSTS FY19 REVENUE OF RM5.5BN

Tun Zaki Azmi, Chairman of ASTRO, announced, “In a competitive media landscape, Astro continues to be cash generative, cost disciplined, and proactive in its capital management. The Board has declared a fourth interim dividend of 1.50 sen per share.” Henry Tan, Chief Executive Officer of ASTRO added, “Given the challenging operating environment, ASTRO is reviewing its business so that we remain efficient and agile to serve our customers better. Our focus will remain on serving our 5.7 million Malaysian homes and 23 million individuals via our Pay TV and NJOI platforms with differentiated and compelling content. By leveraging on our customer base and our ability to reach and engage on television, radio and digital platforms, revenue adjacencies, such as Commerce, Adex, content licensing, and theatrical sales are now showing promising growth trajectory.”  ASTRO and NJOI are in 77% of Malaysian households, garnering TV viewership share of 75%. Total video views are now increasing, with the number of connected set-top-boxes increasing by 25% y-o-y to surpass the one million mark, driving On Demand downloads by 135% to 54 million videos in a year. More ASTRO customers are also watching content on their mobile devices, with registered Astro GO users growing by 32% to 2.2 million.  ASTRO’s 2018 blockbuster releases, including Paskal The Movie, Hantu Kak Limah, Polis Evo 2, and Dukun have achieved commercial success by grossing over RM100 million. Profit After Tax And Minority Interest (PATAMI) dropped -40% y-o-y to RM463 millionn; resulting from higher sports content cost, one-off employee separation scheme costs, and unrealised forex losses

on finance lease liabilities. This exclude one-off employee separation scheme costs and unrealised forex losses on finance lease liabilities. In a digital world where competition is borderless, ASTRO anticipates FY20 to be a challenging year and recognises the urgency to strengthen its customer value proposition through initiatives, such as broadband bundles, seamless viewing across all screens, better customer service, and deeper engagement with fans. The Group also intends to ride on its key differentiator – its content, by deepening its strength in local vernacular and Asian originals. This will be done through strategic partnerships to address local and regional audience. As part of the Group’s revenue diversification, it continues to leverage on its customer base to offer targeted marketing and advertising solutions, all of which are enabled by data and analytics, to drive overall advertising and commerce revenue.

YASMIN IS NOW CHAIRPERSON OF POS MALAYSIA

Datuk Yasmin Mahmood, former CEO of Malaysia Digital Economy Corporation (MDEC) for almost 15 years, has been appointed as Pos Malaysia Bhd’s Independent Non-Executive Chairman, effective April 1 2019. She replaces Datuk Mohammad Zainal Shaari who is resigning to focus on the ongoing rationalisation within the DRB-HICOM Group. Mohammad Zainal became chairman of DRB-HICOM the parent company of Pos Malaysia on April 13 last year. Currently, Yasmin is Managing Director of FutureReady Consulting Sdn Bhd. Pos Malaysia also announced the resignation of Tan Sri Zamzamzairani Mohd Isa as an independent non-executive director with effect from April 1.  Prior to MDEC, Yasmin has served various technology giants; starting with being General Manager of Hewlett Packard Malaysia’s Commercial Channels Organisation (1995 – 1999), taking on a dual-role of General Manager and Regional Corporate Director of Dell Malaysia (1999 – 2006), before moving on to become Microsoft Malaysia’s Managing Director (2006 – 2009).

She had also represented Malaysia and Asean at major international events which include the World Economic Forum (WEF), International Telecommunication Union (ITU), and the World Islamic Economic Forum (WIFE).

WAI CREATIVE CHIEF OF ENTROPIA

Consulting agency Entropia has appointed award-winning Director, Wai Khuen Yee, as its Executive Creative Director recently. In this role, he will lead a team of 10 creative directors, ranging across creative disciplines such as Campaign, Content, CRM, UX, Experiential design, and personalisation among others. He will be reporting to Prashant Kumar, Founder and Senior Partner of Entropia. Prior to the appointment, Yee spent two years as the Executive Creative Director for Y&R Hong Kong.  Across the years, Yee has won several accolades for leading brands ranging from Gold Cannes Lions, D&AD, LIA, The One Show, Clio, Spikes, Adfest, A+M Marketing Awards, Effies and Mob-EX Awards. His campaign for Mattel’s ‘Pictionary’ campaign has been the most awarded campaign of 2012, based on Gunn Report.  Before Y&R Hong Kong, Yee earned nearly two decades of experience in creative roles – online and offline – in agencies such as M&C Saatchi, BBDO/ Proximity, Ogilvy and Naga DDB across Hong Kong, Singapore and Malaysia.

M&C SAATCHI GETS INTO CONSUMER RESEARCH AND PRODUCTION In conjunction with its 15th year in business, M&C Saatchi Malaysia has expanded by venturing into the fields of

consumer research and production. First up, the Source Asia is the latest one-stop qualitative/ quantitative research agency in town, where clients can obtain the most detailed and rich view of their customers. The agency is an independently run business under the M&C Saatchi Group based in London, and Kuala Lumpur has been chosen as its first Asian branch to serve the needs of key Malaysian clients and the Southeast Asia region. “The Source will be the first in Asia and we’re proud that Malaysia will be its launchpad into this region. Meanwhile, we envisioned Watermelon, the first of its kind for an agency, as a hub to represent and connect fresh young talents with established brands,” said Datin Sri Sharifah Menyalara Hussein, CEO & Founding Partner of M&C Saatchi Malaysia. Properly called Watermelon Productions – this brainchild is an audio-visual hub replete with its own stable of film directors, editors, content creators, vloggers and producers. Watermelon Productions is slated to open in April 2019.

MINISTER AND STARS GRACE APPIES THIS YEAR!

The APPIES Marketing Awards & Festival 2019 will feature an Opening Keynote by YB Tuan Gobind Singh Deo, Minister of Communications and Multimedia Malaysia. Slated for April 25 and 26 at the Eastin Hotel, the 4th APPIES Malaysia event will see 35 of the finest marketing campaigns in Malaysia presented LIVE on stage. 25 esteemed judges representing leading brands will set the pace for the judging process. Adam Wee Abdullah, Group Chief Marketing Officer & Group Chief Customer Experience Officer for CIMB Group presides this year’s panel. The APPIES is a unique platform for marketers and partners to share and learn best practices. It is almost like a condensed marketing MBA packed cleverly into a two-day schedule and attendees are free to pick which campaign presentations they want to attend, based on their industry and interests.  Some people say The APPIES is like the TED of Marketing. 


COMPARISON OF RETAIL SALES WITH OTHER ECONOMIC INDICATORS For the fourth quarter of 2018, Malaysia national economy recorded a sustainable growth rate of 4.7% (Table 2, at constant prices), as compared to 2.7% for retail sales (at current prices). Export and private consumption registered the highest growth rates during this period. The average inflation rate during the fourth quarter of 2018 slowed down further to 0.3%. The growth rates during October, November and December were merely 0.6%, 0.2% and 0.2% respectively. The declining prices of fashion and fashion accessories as well as petrol contributed to the much slower growth rates. Private consumption slowed down slightly to 8.5% during the fourth quarter of 2018. During the latest quarter, the Consumer Sentiment Index (by MIER) felt below the 100-point confidence threshold. Malaysian consumers remained cautious in their monthly purchases while dealing with rising cost of living. They were also concerned on their future income and job prospects.

Unemployment rate during the fourth quarter of 2018 improved slightly to 3.3%.

TABLE 1

Retail Group Malaysia

YEAR ON YEAR PERCENTAGE CHANGE IN RETAIL SALES (WEIGHTED), 2017/18 TYPE

PERIOD

Retail sales

Oct-Dec 2017

3.1

Jan-Mar 2018

2.6

Apr-Jun 2018

2.1

Jul-Sep 2018

6.7

Jan-Sep 2018

4.3

Oct-Dec 2018

2.7

Jan-Dec 2018

3.9

% GROWTH

TABLE 2

Source: MRA/ Retail Group Malaysia

COMPARISON OF RETAIL SALES WITH OTHER ECONOMIC INDICATORS, 2018 ECONOMIC INDICATOR

1ST QTR

2ND QTR

3RD QTR

4TH QTR

GDP (%)

5.4

4.5

4.4

4.7

Inflation rate (%)

1.8

1.3

0.5

0.3

Private consumption (%)

6.9

8.0

9.0

8.5

Retail sales (%)

2.6

2.1

6.7

2.7

Consumer Sentiment Index

91.0

132.9

107.5

96.8

Unemployment rate (%)

3.3

3.3

3.4

3.3

TABLE 3

Source: Bank Negara/ Department of Statistics/ MIER/ Retail Group Malaysia

YEAR ON YEAR PERCENTAGE CHANGE IN RETAIL SALES BY RETAIL SUB-SECTOR, 2018 RETAIL SUB-SECTOR

1ST QTR

2ND QTR

3RD QTR

4TH QTR 3.2

Department store cum supermarket

2.6

3.8

8.9

Department store

4.6

-4.2

2.5

1.0

Supermarket and hypermarket

-3.8

-7.9

-4.1

-4.0

Fashion and fashion accessories

2.8

3.2

6.4

1.2

Pharmacy and personal care

9.2

5.9

11.8

8.7

Other specialty retail stores

3.3

11.5

18.3

5.2

Source: MRA/Retail Group Malaysia

3-MONTH RETAIL SALES FORECAST BY RETAIL SUB-SECTOR, JANUARY-MARCH 2019 RETAIL SUB-SECTOR

% GROWTH RATE

Overall (weighted)

3.1

Department store cum supermarket

4.4

Department store

7.6

Supermarket and hypermarket

-7.6

Fashion and fashion accessories

0.1

Pharmacy and personal care

12.7

Other specialty retail stores

5.8

Source: MRA/Retail Group Malaysia

MALAYSIA RETAIL INDUSTRY QUATERLY GROWTH RATE 2019 QUARTER

% GROWTH RATE

First

(e) 3.1

Second

(e) 4.8

Third

(e) 3.9

Fourth

(e) 5.8

Whole year

(e) 4.5

(e) - estimate Source: Retail Group Malaysia

19

RETAIL COVER STORY MARKET REPORT

MARCH 2019 Compiled and written by

TABLE 4

LATEST RETAIL PERFORMANCE For the fourth quarter of 2018, Malaysia retail industry reported a disappointing growth rate of only 2.7%, as compared to the same period in 2017 (Table 1). This latest quarterly result did not meet market expectation. Members of MRA projected the fourth quarter growth rate in November 2018 at 4.7%. Year-end festival and school holiday did not contribute to better growth rate during this quarter. This latest quarterly result is consistent with Consumer Sentiment Index during the same period published by MIER. Rising cost of living and stagnant take-home pay continued to deteriorate the purchasing power of Malaysian consumers. For the whole of 2018, the retail sale growth rate was 3.9% (or RM 103.7 billion) as compared to the same period a year ago. Despite the 3-month tax holiday, it failed to lift the sluggish retail industry. For the 6th consecutive year, retail industry performance lagged behind GDP growth rate.

MALAYSIA RETAIL INDUSTRY REPORT

TABLE 5

MEMBERS of Malaysia Retailers Association (MRA) were interviewed on their retail sale performances for the entire year of 2018 and the first quarter of 2019. Last year was an interesting year due to change in government ruling party and the reintroduction of SST. Hopefully, this new year will bring more cheer to Malaysian retailers.

ISSUE237END-MARCH2019

RETAIL SUB-SECTORS’ SALES COMPARISON During the fourth quarter of 2018, the performances of all retail sub-sectors were mixed (Table 3). Supermarket and hypermarket sub-sector was the worst performer. After it enjoyed a strong growth in the previous quarter, Department Store cum Supermarket sub-sector expanded by only 3.2% during the last 3 months of 2018. For the entire year, it recorded a moderate growth rate of 4.5%. Department Store sub-sector continued to experience slower quarterly growth this year. It recorded a growth rate of 1.0% during the fourth quarter. For the whole year, it achieved a nearzero growth rate of 0.5%. The Supermarket and Hypermarket sub-sector reported yet another poor result during the last quarter. For the fourth quarter of 2018, retail sale of this sub-sector declined by 4.0%. It is the worst performer during the quarter. For the whole year, its sale dropped by 5.0%. The business of Fashion and Fashion Accessories sub-sector slowed down significantly during the last 3 months of 2018. As compared to the same period a year ago, fashion retailers reported a growth rate of 1.2% during this latest quarter. For the entire year of 2018, the Fashion and Fashion Accessories sub-sector achieved a growth of 3.3%. Pharmacy and Personal Care sub-sector was the best performer during this latest quarter. During the last 3-month period of 2018, this sub-sector recorded a sustainable growth rate of 8.7%, as compared to the same period a year ago. For the year of 2018, this sub-sector expanded by 10.2%. The Other Specialty Stores sub-sector (including photo shop, second-hand goods’ store, fitness equipment store, toys shop, optical store, baking ingredients’ store as well as TV shopping channel) reported a moderate growth rate of 5.2% during the fourth quarter of 2018, as compared to the same period last year. For the entire year, it achieved a growth of 11.0%. NEXT 3 MONTHS’ FORECAST Members of the retailers’

association are hopeful that their businesses will stabilise in 2019. They estimate an average growth rate of 3.1% during the first quarter of 2019 (Table 4). The department store cum supermarket operators are expecting the growth rate of their businesses to maintain at 4.4% during the first quarter of this year. After a dismay performance last year, the department store operators look forward to bounce back strongly with a growth rate of 7.6% for the first 3-month period of this year. Supermarket and hypermarket operators do not expect their businesses to return to black during the first quarter of 2019. They anticipate their businesses to record another negative growth of 7.6% during this period. The business of retailers in the Fashion and Fashion Accessories sub-sector is expected to continue with a weak growth rate of 0.1% during the first quarter of 2019. Retailers in the Pharmacy and Personal Care sub-sector are expecting their businesses to maintain with a strong growth rate of 12.7% during the first quarter of 2019. Retailers in Other Specialty Stores sub-sector (including photo shop, second-hand goods’ store, fitness equipment store, toys shop, optical store, baking ingredients’ store as well as TV shopping channel) expect a moderate growth of 5.8% during the first 3-month period of 2019. THE YEAR 2019 Based on our first quarterly projections of retail sales for 2019 (Table 5), Retail Group Malaysia estimates 4.5% growth rate in retail sale for this year (or RM 108.3 billion). For the first 2 months of 2019, retail sale was lackluster despite Chinese New Year festival celebration. First quarter retail sale is estimated at 3.1%. Malaysia retail industry is expected to recover during the second quarter (estimate at 4.8%) with Hari Raya festival taking place during this period. During the third quarter of this year, retail sale is expected to expand by 3.9%. More economic activities during the second half of this year should boast retail sale during the final quarter of this year. During the year-end period, retail sale should rise by 5.8%.


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Issue 237  

Issue 237