Global advertising to expand this year helped by World Cup

The world’s largest advertising groups such as Martin Sorrell’s WPP, second-place Omnicom and third-placed Publicis often post growth rates correlated with global gross domestic product. They are set to benefit this year as the United States – the largest ad market followed by Japan and China – is expected to grow steadily.

Zenith said the total amount of media spend will reach up to $524 billion at year end, driven by an improved global economic outlook and the rapid rise of mobile advertising.

The Publicis-owned forecasting unit shaved 0.1 percent off an earlier prediction for the year after political tumult in Ukraine damaged the local economy.

“Growth will continue to improve over the next two years, reaching 5.7 percent in 2015 and 6.1 percent in 2016, driven by continued economic recovery, including, at last, the Eurozone,” said Zenith Optimedia in a statement.

Despite an uptick during the World Cup in June and July, the forecasters also said that television’s share of global advertising spending would peak this year after rising steadily for decades from 29.9 percent in 1980 to 39.6 percent in 2013.

Behind the shift lies the rapid growth of Internet advertising, which is growing 16 percent a year compared to 4 percent for television. Major companies from auto makers to consumer products now see on-line ads as being suitable for brand building much as television once was.

Television’s share of ad spend will erode to 39.4 percent this year and 38.3 percent by 2016, according to Zenith.

Publicis shares are down 5.1 percent this year, while WPP’s and Omnicom’s are both down 5.6 percent.

(Reporting by Leila Abboud; Editing by Stephen Powell)

Managing in Asia-Pacific Countries

In an interview with several regional chief executive officers of international advertising agencies located in various Asia-Pacific countries, several attributes of successful managers of both diverse clients and employees in this region were cited:

  • recognizing and acknowledging local differences;
  • having a healthy respect for different opinions, views, and solutions;
  • being able to look for common factors;
  • being flexible, patient, and curious;
  • having a steadfast focus;
  • bringing down social and management hierarchy walls;
  • being prepared for long-term and valuable relationships that typically begin with short-term, low-value projects;
  • being consistent as a corporate culture builder;
  • having decency and integrity;
  • having stamina and being resilient;
  • having a sense of humor.

Do you have experience working in the Asia-Pacific? Share your knowledge on values and attitudes in the comment section below!

The Global Rise of Social Media

As the Internet gains momentum worldwide, firms are using social media to undertake international marketing campaigns. Because social media are cost-effective, even small firms can market offerings to market niches around the world.

Leveraging social networks can be especially effective in emerging markets and developing economies, where consumers may be less receptive to traditional Western forms of marketing communications, such as TV and print advertising.

Some cultures appear to lend themselves especially well to social media marketing approaches. For example, collectivist cultures characterized by a high need for social affiliation and respect for peers are likely to value the brand-oriented interaction available through social media. China is one of the top users of e-mail and social media worldwide, and the Chinese tend to exhibit a strong preference for online media that enhance social relationships. The market for credit cards in Russia is still emerging, and finding information on the credit worthiness of cardholders is challenging. Banks leverage social sites, such as Vkontakte and Odnoklassniki, to identify potential users with strong potential credit ratings.

Marketing communications using social media represent the new frontier in international marketing. Social networks are considered increasingly critical to any interactive marketing communications program. Marketers aim for brand engagement; that is, they want customers to develop a personal relationship with the brand. Social media represent perhaps the best means for achieving this closeness.

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Creating a Global Presence: It Begins With Exporting

Globalization reflects a belief that the world is becoming more homogeneous and that distinctions between national markets are not only fading but, for some products, will eventually disappear. As the inefficiencies of duplicating product development and manufacturing in each country become more apparent, the pressure to leverage resources and coordinate activities across borders becomes more urgent.

Typically, companies experiment with exporting before making direct investments in overseas markets. The decision to reach beyond exporting is usually based on market factors, barriers to trade, cost factors, and the investment climate, with market factors playing the biggest role. Global investments can vary in commitment and control and range from creating or purchasing wholly owned subsidiaries to joint ventures. While many organizations prefer full ownership because it comes with full control, government regulations sometimes make this option impossible. In some situations, it is not even desirable. A joint venture with partial ownership is sometimes the best alternative.

Other options include strategic alliances or partnerships that allow companies to align with businesses that have complementary technologies and skills. Strategic alliances, often encouraged by governments, are on the upswing. In addition, as countries develop service-based economies, some businesses expand through contractual arrangements in lieu of equity investments.

The global appliance industry is a good example of how and why manufacturers in that category embraced globalization. Facing increased competition in the U.S. from imports, American appliance manufacturers looked overseas for growth. In Europe, they found a market with rapid expansion, breakdowns in trade barriers within the European Union , and a less saturated market than in the U.S. Appliance giants that included General Electric, Whirlpool, Electrolux, and Bosch-Siemens took advantage of the opportunities by acquiring regional manufacturers or forming strategic alliances with them. Whirlpool bought the appliance arm of Dutch electronics concern N.V. Philips, acquiring ten European plants, popular regional brands, and a third-place market share ranking.

Regional preference in appliances show the challenges of implementing a global strategy for this industry. The French prefer top-loading washing machines while the British prefer front-loaders. When it comes to stoves, the french like cooking at high temperatures that cause grease splatters, making self-cleaning ovens popular. Because Germans cook with lower temperatures, the self-cleaning feature is not in such demand. While taking these variations into account, manufacturers have had to be careful not to create a one-size-fits-all product that simplifies manufacturing but, in the end, appeals to no one.

Companies in other industries face increasing global competition and challenges similar to those in the home appliance industry. Even large companies that dominate their domestic markets cannot survive on domestic business alone when they are in industries that are increasingly globalized.They must be in all major markets to survive shakeouts or risk being niche market specialists.

This is an excerpt from Dr. Czinkota’s book Global Business: Positioning Ventures Ahead, co-authored by Dr. Ilkka Ronkainen.

Michael R Czinkota and Ilkka A Ronkainen, Global Business: Positioning Ventures Ahead (New York: Routledge, 2011), pg. 88-89. 

Dove Campaign for Real Beauty Advertisement

Due to cultural and societal differences between countries, multinational corporations need to adjust their communication approach even when the product stays the same. Here are two examples of how Unilever gets the word out about its Dove product in Canada and in China.

Dove in Canada

Dove in China