The West may be heading into a double-dip recession, but global advertising spend is still forecast to rise by nearly five percent to $465.5bn in 2012. International Advertising Association president Alan Rutherford says the best is yet to come for the industry.
Spending an hour in the company of Alan Rutherford can be a life-changing experience.
It makes you realise that whatever you have done, it probably isn’t very much compared to him. The biggest agencies, the biggest brands, and the giants of the digital advertising world are all notches on his belt. He even once fancied a stint in the Royal Air Force.
“You could say I like to move around a bit. Keeps me fresh, keeps me interested,” says the current president of the International Advertising Association (IAA). He can say that again — apart from the IAA, Rutherford is involved in a string of other media operations, including acting as advisory chairman to UAE-based agency Face to Face. With thirty years experience at the sharp end of media, he has become the go-to guy for problem solving. You want growth? You want to sell your company? You want to expand in digital? You want to monetise social media? Rutherford has developed a reputation for having the answers to most of the above.
“There’s a real buzz around the media world today; everywhere I go there seems to be an explosion of activity. And the great thing is, this is a fast-moving industry so the challenges are changing by the minute,” says Rutherford.
It certainly is a good time to be running the International Advertising Association. Originally founded in 1938 it has grown into a global network of 4,000 members, with 56 chapters in 76 countries. Following 3.8 percent growth in 2011, global advertising spending is expected to grow by 4.9 percent in 2012 to $465.5bn, according to the latest Global Advertising Forecast from Strategy Analytics. Global TV advertising is expected to grow by five percent in 2012 to $188.5bn, equivalent to 40 percent of all global spending. Global print advertising is expected to grow by half a percent, accounting for a 26.4 percent share. Other traditional formats including cinema and radio will grow by approximately four percent.
In contrast, global online advertising is expected to grow 12.8 percent to $83.2bn in 2012, accounting for eighteen percent of global ad spending.
There may be a double-dip recession in the West, but try telling that to advertisers. Ed Barton, Strategy Analytics’ director of Digital Media Strategies, explains, “Major global-impact events led by the Olympics, the US presidential elections and the European football championships, as well as Japan’s continuing recovery from the earthquake, combine to paint a brighter picture globally in 2012 for advertising spending overall. Furthermore, we expect that total ad spend will surpass half a trillion dollars in 2014.”
So where does Rutherford see the action happening? Not surprisingly, he points to the digital world, and the rapid growth of social media. “The challenge is how to monetise it,” he says. “Social media is great but people are struggling to monetise it. The interesting issue is when it becomes more commercial, what impact will it have on the consumer? When you think of social media at the moment, people feel relatively happy they have their own space. But look at MySpace; it died overnight when it became commercial. The trick is to make money but keep consumers happy. I think, I hope, the social media owners will find a way,” he says.
According to Strategy Analytics, US online advertising is expected to grow by 6.7 percent this year to $27.4bn compared to 3.7 percent for TV and 2.9 percent for other traditional formats. Print is expected to decline by 1.5 percent. In comparison, online advertising across Europe is expected to grow by 11.7 percent this year compared to 3.4 percent for TV and 2.4 percent for ‘other traditional’ advertising. Print is expected to decline by 0.1 percent.
But what about the Middle East? The jury is not just still out, but still split. Media barons such as Omnicom Media Group’s MENA CEO Elie Khouri have for the past two years been insisting the industry needs to “wake up” to the rise of digital advertising, suggesting not enough is being done. Rutherford says: “I don’t think all of the existing big agencies haven’t reinvested into digital. I think it is an issue in the Middle East, that many of the bigger names out there haven’t properly developed their digital capability.”
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Rutherford is not surprised either that global spend on television advertising is still rising. He points out that for premium programmes, such as the X Factor and Champions League football, advertisers will still pay top dollar — regardless of how much cheaper social media is. “It’s also about what the consumer wants. When you have a signature programme like the X Factor, it doesn’t matter that there is a huge amount of advertising involved. And people don’t mind that. They can put up with that, the consumer understands these are big shows that need big funding. Where television goes wrong is when you have endless advertising for very low-rated shows. That can be an issue more in the Middle East, where I think in places like Dubai at one stage, around 22 minutes of every hour were devoted to advertising.”
However, Rutherford says the real growth in the coming years could also come from branded entertainment. The James Bond movies have already gained a reputation of product placement, while the likes of Etihad and Emirates Airline have between them forked out over $300m to take the naming rights for football stadiums in the UK.
“That sort of medium is working very well, because it is a fixed placement for a period of years. I can see that growing more. You already see a lot of it in the Premier League. I wouldn’t be surprised if in five years time, every single Premier League stadium in England was renamed. That is the road we are going down at the moment,” he says.
Rutherford’s own personal road in the coming years will involve a lot more trips to this region, having taken over as advisory chairman of UAE-based Face To Face, the independent advertising company working with giants such as Emirates Airline, Aujan Industries and Unilever. He is hoping to help develop the company on a global level, and from what he has seen so far, has pretty high hopes of succeeding. “I’ve known the guys who run the company for a number of years and I think they have a good outfit there, an independent one with very creative values. I think the market in Dubai needs a more independent approach. Dubai is still one of the fast-growing markets, and companies like Face To Face can have a real impact in the years ahead,” he says.
Raising the bar in creative standards is another area Rutherford will be looking at. Saatchi & Saatchi global boss Kevin Roberts caused a storm in the region when he labelled the standard of creative advertising as “crap”. Rutherford says that Roberts’ approach “is to be inflammatory”, but he concedes: “He has a point in that the current big agencies haven’t really invested in talent and some of the latest techniques, because they haven’t needed to. That has held the industry back a bit. He is right that it isn’t up to the standard it should be, but it’s not crap, I certainly don’t agree with him on that.”
He adds: “There is actually a lot to be proud of especially in emerging markets, when you look at creativity. London is no longer the centre of the world when it comes to creative advertising. Anyone who thinks that should think again. Take Brazil; it has become one of the more mature markets and some of the world’s best creative work comes out of there. There is great stuff coming out of many places in Latin America, and other countries like Holland are really making an impact on the global stage — there is no reason why Dubai can’t do it.”
If anyone can succeed in taking places like Dubai to the next level, it is certainly Rutherford. His career started 30 years ago with Ogilvy & Mather, where he personally set up Ogilvy Media, an operation which took off all over Europe. Rutherford had a huge hand in working with the likes of Guinness and Bugatti. By 1998, having created advertising for the biggest brands on the planet, he decided to switch sides and work for them by joining Unilever, where he rose to become global head of media. Another big change came in 2006 when he became chief executive for Publicis Groupe’s Digitas, where he stayed until 2009.
“I am one of these people who likes being involved in a lot of different things at the same time,” he says. “There were opportunities to work for just one company at a high level, but I like the excitement of juggling many balls. That’s just me, the way I am.”
Given Rutherford’s track record, the chances are he will be juggling many more balls in the years ahead.
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