Consumers get savvier, making agencies work harder
This is requiring agencies to get smarter about their campaigns and to offer higher-quality services, ad directors said. "I think creativity is higher on the agenda than it's ever been," said Charles Sampson, chief executive officer at Saatchi & Saatchi, who said the ad industry here is "maturing fast."
"Brand discrimination and giving your brand a point of importance is becoming increasingly more important," agreed Timothy Hennessy, deputy managing director of J. Walter Thompson-Parintex.
A few years back, the emphasis was more on brand building, but now it's not enough to simply get in front of consumers. The task is to make them pay attention.
"Consumers have become a little more sophisticated," said Joe Senft, managing director of advertising agency BrandStorm.
At the same time, advertisers have recognized the need to add more segmentation into how they approach the market. As a result, there is a growing focus on female consumers, particularly those with a higher education, higher income and urban residence.
Previously, women were the target audience primarily for fast-moving consumer goods companies. But now carmakers, mobile-telephone providers and financial services companies are all trying to tailor their message to reach this group.
"Polish women are diversifying in lifestyle and demographics," Senft said.
Of course, basic brand-building campaigns have not become extinct. Products such as pension funds and retail banking are still in the awareness stage and so continue to use campaigns with a wider reach.
These are helping to keep the country's high-flying ad market growing at a brisk clip. In 1998, the total ad market reached $1.5 billion, up 50% from the previous year, according to estimates by research firms. This year, total spending is expected to grow 26% to $1.9 billion. "Poland is probably one of the most exciting advertising markets in the world," Hennessy said. Excitement isn't without its problems, however.
"Like any child, (the industry) is going through growing pains," Sampson said.
One problem some agencies complained about was the lack of a certification system. Since anyone can establish themselves as an ad agency, some worry about customers getting burned by fly-by-night operations.
"There isn't here a sort of accreditation system for agencies," said Hennessy, who equated the best way of weeding out a bad agency to eating out. "It's like a restaurant that serves bad food," he said. A customer might go once or twice but stop at that.
Another problem is the inherent riskiness of an emerging market. Last year's Russian crisis caused jitters as companies wondered whether they should reduce their exposure to the region. "There were a lot of worries over this year's budget," said Marek Janicki, managing director at McCann Erickson. However, the budget has actually grown, although not as much as people were hoping because the economy itself has not expanded as quickly as expected, he added.
J. Walter Thompson - Parintex has seen a few budgets reduced partly because of a client's Russian commitment. But Hennessy sees this as a possible benefit to the Polish market as advertising budgets would likely seek to move west.
And even if there was a slight downturn because of worldwide factors, domestic events helped keep the growth engine chugging. In the first quarter of 1999, ad spending grew 33% compared to the same period last year and should be up 35% for the year as a whole, Janicki said. He added that while the media blitz surrounding the introduction of pension reform earlier this year helped, the ad market would have grown one way or another. "If it wasn't pension funds, it would be something else," Janicki said.
Television continues to be the main beneficiary of this growth and accounts for almost 58% of all ad spending. The remainder is split with 27% going to print, radio 7% and 8% to outdoor.
"Television is very affordable," Senft said. And unlike Western Europe, where consumers have more money for entertainment outside the home, for many Poles television remains the primary form of entertainment.
"It's vision, it's sound, nothing can replicate it," Hennessy said.
Rupert Slade, media planning director at media house Initiative Media, said the cost of television advertising in Poland is 16% of the cost of Western Europe. Radio and outdoor advertising are 25% and 50% respectively, but print is almost at par at 80% of cost.
Senft said that in the future Poles will have a growing list of entertainment options such as multi-functional complexes that house cinemas, entertainment centers and restaurants. But even the advent of these entertainment sources won't put a big dent in the television audience. "TV for the next few years will remain popular," Senft said.
Despite the higher cost of press advertising, Hennessy said it is still effective for reaching a more targeted audience. And that will become more important as consumer-spending power increases, he added.
"Press will definitely play a role," Senft said, particularly for high-profile products in upper-class homes.
While increased spending and more targeted campaigns translates into more business for agencies, new competitive forces are emerging to keep them on their toes. Media planning houses are proliferating and many agencies have separated this function from the rest of the business.
"Many of those media houses are spin-offs of the advertising agency," Janicki said. While they are competitors, there narrow focus on media buying and planning means they won't cut too much out of the revenue pie the agencies dig into. "If you look at the billings of standalone media houses, they are nothing to compare here," Janicki said.
"Brand discrimination and giving your brand a point of importance is becoming increasingly more important," agreed Timothy Hennessy, deputy managing director of J. Walter Thompson-Parintex.
A few years back, the emphasis was more on brand building, but now it's not enough to simply get in front of consumers. The task is to make them pay attention.
"Consumers have become a little more sophisticated," said Joe Senft, managing director of advertising agency BrandStorm.
At the same time, advertisers have recognized the need to add more segmentation into how they approach the market. As a result, there is a growing focus on female consumers, particularly those with a higher education, higher income and urban residence.
Previously, women were the target audience primarily for fast-moving consumer goods companies. But now carmakers, mobile-telephone providers and financial services companies are all trying to tailor their message to reach this group.
"Polish women are diversifying in lifestyle and demographics," Senft said.
Of course, basic brand-building campaigns have not become extinct. Products such as pension funds and retail banking are still in the awareness stage and so continue to use campaigns with a wider reach.
These are helping to keep the country's high-flying ad market growing at a brisk clip. In 1998, the total ad market reached $1.5 billion, up 50% from the previous year, according to estimates by research firms. This year, total spending is expected to grow 26% to $1.9 billion. "Poland is probably one of the most exciting advertising markets in the world," Hennessy said. Excitement isn't without its problems, however.
"Like any child, (the industry) is going through growing pains," Sampson said.
One problem some agencies complained about was the lack of a certification system. Since anyone can establish themselves as an ad agency, some worry about customers getting burned by fly-by-night operations.
"There isn't here a sort of accreditation system for agencies," said Hennessy, who equated the best way of weeding out a bad agency to eating out. "It's like a restaurant that serves bad food," he said. A customer might go once or twice but stop at that.
Another problem is the inherent riskiness of an emerging market. Last year's Russian crisis caused jitters as companies wondered whether they should reduce their exposure to the region. "There were a lot of worries over this year's budget," said Marek Janicki, managing director at McCann Erickson. However, the budget has actually grown, although not as much as people were hoping because the economy itself has not expanded as quickly as expected, he added.
J. Walter Thompson - Parintex has seen a few budgets reduced partly because of a client's Russian commitment. But Hennessy sees this as a possible benefit to the Polish market as advertising budgets would likely seek to move west.
And even if there was a slight downturn because of worldwide factors, domestic events helped keep the growth engine chugging. In the first quarter of 1999, ad spending grew 33% compared to the same period last year and should be up 35% for the year as a whole, Janicki said. He added that while the media blitz surrounding the introduction of pension reform earlier this year helped, the ad market would have grown one way or another. "If it wasn't pension funds, it would be something else," Janicki said.
Television continues to be the main beneficiary of this growth and accounts for almost 58% of all ad spending. The remainder is split with 27% going to print, radio 7% and 8% to outdoor.
"Television is very affordable," Senft said. And unlike Western Europe, where consumers have more money for entertainment outside the home, for many Poles television remains the primary form of entertainment.
"It's vision, it's sound, nothing can replicate it," Hennessy said.
Rupert Slade, media planning director at media house Initiative Media, said the cost of television advertising in Poland is 16% of the cost of Western Europe. Radio and outdoor advertising are 25% and 50% respectively, but print is almost at par at 80% of cost.
Senft said that in the future Poles will have a growing list of entertainment options such as multi-functional complexes that house cinemas, entertainment centers and restaurants. But even the advent of these entertainment sources won't put a big dent in the television audience. "TV for the next few years will remain popular," Senft said.
Despite the higher cost of press advertising, Hennessy said it is still effective for reaching a more targeted audience. And that will become more important as consumer-spending power increases, he added.
"Press will definitely play a role," Senft said, particularly for high-profile products in upper-class homes.
While increased spending and more targeted campaigns translates into more business for agencies, new competitive forces are emerging to keep them on their toes. Media planning houses are proliferating and many agencies have separated this function from the rest of the business.
"Many of those media houses are spin-offs of the advertising agency," Janicki said. While they are competitors, there narrow focus on media buying and planning means they won't cut too much out of the revenue pie the agencies dig into. "If you look at the billings of standalone media houses, they are nothing to compare here," Janicki said.
