New Study Shows Market is Maturing, Following Trends in US, UK
SHANGHAI, March 31, 2014 /PRNewswire/ --
According to a new study, China marketers are becoming a more mature group. "More relationships are becoming fee-based and annual, and more are being linked to performance incentives," said Sabrina Lee, GM of R3 China.
China marketers are also doing more with less agencies. "Based on our analysis of more than 944 relationships, the average company now uses 8 agencies on average to execute their marketing work, down from 14 in 2012," she added.
R3 recently met with more than 400 senior decision makers in China to understand the process, perception and performance of the agencies they work with. This was the fifth time this study has been done, and the report covers more than 250 multinational and local agencies in China.
Longer Relationships, Less Project Based
According to the study, the average relationship across creative, media, digital and marketing services relationships increased by 15% to 3.2 years. "28% fewer marketers are paying their agencies on a project fee or commission, so agencies are able to better contribute the right resources behind Brand Building and more upstream strategy," says Ms Lee.
That said, Chinese agency relationships are still the world's shortest behind 6.1 years in the UK and 6.6 years in Brazil. "There's a lot of pressure on marketers and agencies for results, so changing agencies is sometimes to be expected," she added.
Procurement and Media Audits are now recognized as important
Procurement's role in the agency selection process has become more ingrained, with 64% of companies getting them involved, an increase over 2012 and 2010. More importantly, marketers have accepted the need to work collaboratively with procurement teams to resolve agency compensation, with 46% doing so now, a massive increase from the past. "Procurement now has a strong seat at the table in China, and the best agencies are helping educate and work with them for mutual benefit," said Ms Lee.
Likewise, media and financial audits, once very new to China, are now highly used by respondents. In a separate part of the study talking to thirty of China's procurement leaders, 93% of them mentioned the need for ongoing media audits of their agencies and 63% mentioned they would be conducting financial audits. "The government's drive for transparency and austerity is also being felt by the marketing sector -- with more and more companies adopting Best Practice to have independent specialists help validate their performance," added Ms Lee.
Digital now taking 18% of total marketing budget
In another sign of market maturity, digital is taking an increasingly large share of the marketing budget now at 18% , up 35% from two years ago. "With the explosion in social and mobile over recent years, there's been a major investment in bought, owned and earned online," said Ms Lee. "Many marketers have also taken the last two years to review and appoint specialist agencies to help them in the process," she added.
Coca-Cola, JiaDuoBao, Nike lead on peer votes
All marketers were also asked to vote on best campaigns and most respected marketing companies in China -- with beverage players Coca-Cola and JiaDuoBao leading the way, followed by Nike, BMW and Wrigley. "Coke has pushed hard to be a leader in digital and integration, and its clear other marketers are noticing," added Ms Lee. "And what JiaDuoBao did in rebranding and with Voice of China is one for the marketing textbooks," she added.
