The affable and always polite senior vice president and managing director of the Interpublic Group Terry Peigh was instrumental in setting ?New Realities?, a unique study that puts the spotlight on today?s volatile marketing world. The study spells out IPG?s views on how best to meet new challenges, especially in the area of digital media. India has just been included in the ?New Realities? programme, which comprises other countries such as China, USA, Russia, Germany and Brazil. In a conversation with Anushree Chandran of Brand Wagon, Peigh talks about the burgeoning Indian middle class and the importance of trust in swinging brand decisions. He also reflects on global IPG companies that may enter into India and the future of print media. Peigh is not an active proponent of native advertising as he feels it is akin to pulling a fast one on the consumer. He first joined IPG in early 2003, and served as senior vice-president, director of corporate services and worked on a range of corporate strategy issues. Prior to joining Interpublic, he was executive vice-president of Foote, Cone and Belding Worldwide, and a member of their board. He is also co-author of two books on communications for social marketing. Edited excerpts:
What is the New Realities study about and where did the idea come from?
This project started five years back. We felt the need of better communication with our clients, on how consumers are making decisions on products and categories. And this is particularly true of new media. To what extent are people confused and frustrated with regard to buying decisions? We started out as a bit of a test in the United States and China. We talked to 600 people in each of these countries and the project met with tremendous success. I went to China a couple of times. We added countries that are critical to the world economy. We added Brazil and then we added India, Russia and the UK. We have six countries and we can do a comparison. This is the second wave of research done in India. We did the previous wave about two years ago. Actually in China we have done three waves, so we can look at it over five years. It?s fascinating to see how consumer decision-making is changing, over a short period of time. A couple of themes come out. As part of the questionnaire, we asked people, if their expectations from products was higher than ever before? Some 87% of people in India said that they have greater expectations from products than ever before. In various countries around the world, its the same story. I want a better product, better value, better access to channels and better experience. We think that a lot of it can be attributed to the growth of the middle class in developing economies. The middle class is growing significantly in this country. As far as India goes, I was referencing data from McKinsey which said that from 2005 to 2025, they expect purchasing power of middle class to grow in India, by the
effect of four which is spectacular. By 2025, there will be over 580 million people in the middle class. And the
World Bank says that there could be a billion people in the middle class. The middle class has really emerged in places like China and Brazil and India. Demand for premium products is therefore increasing.
What are some of the key learning?s of this study?
What we are finding more recently is the growing importance of trust. This means that people are placing greater value in information sources that they can trust. And those would be products used by experts that can be found online. Friends and family continue to be the most valued source of communication in terms of making a product decision. In India, there is a dramatic increase in the percentage of people valuing independent sources of information. Recommendations from friends and families have gone up from 43% to 53%. In India, we posed the question to what extent are you putting greater reliance on trusted brands? India scored the highest in the world – as much as 60%. People are looking at brands that communicate trust. What that means for us, and our clients is that we need to take actions that help communicate trust through the product experience. That is more than making a good quality product. Its projecting the right image in advertising. Putting across the right social values- corporate social responsibility (CSR). Unilever is doing a lot these days, where they are talking about their Green programme and they had a big story recently on their commitment to human rights. Companies today want suppliers who have a strong human rights orientation. We are encouraging clients and ourselves to be very transparent with information. It takes the brand away from propaganda. What you are really doing is being the sherpa and helping people make the right decision. Fifteen years ago, everyone saw their job ending at the cash register. If I am selling Samsung phones and I convince you to buy a phone, you give me the money and I give you the phone. The transaction is done. Today, people want constant communication. We need to shift to managing CRM processes, where we are constantly feeding them information.
Do joy and fulfillment also figure in consumer purchase decisions?
The country where having great product knowledge on self esteem is India. Increasingly, we are finding people who derive a lot of joy and fulfillment in their lives, by being experts in a product category. I am a car guy, and I like sharing things with my friends about cars. We are finding an increasing number of people, getting a lot of personal satisfaction from brands. These ?experts? are fairly easy to find because of chat rooms, websites, blog posts etc. If I am a Samsung fan, Samsung people can easily find me. We and our clients can create an army of people out there, to tell our brand story, in essence for free and they go out and tell their family and others. It?s a coming together of forces. So different from the marketing campaign of the previous years – let?s make a television or print ad and go for lunch. The mad men days are over and they have been over for a long time.
Which are the global companies under IPG that may come into India?
Regardless of which country – if it is a significant country, we continue to plus up our digital capability. We continue to be in the front of running, on best in class offerings on digital. The strategy is to build it up, internally within agency brands or to acquire. We are not averse to bringing in digital talent inside agency brands. Sometimes, we find an acquisition candidate which sits outside of our agencies, because they have a specialized service. Like a company in the United States called the RGA, which is a premier digital creative agency. Or a company called Huge which does digital strategy and implementation. We keep them outside of traditional advertising models, because of their expertise. They tend to specialize in certain things. Some of them could explore opportunities here. RGA for instance is scouting for other growth opportunities in Asia, and this part of Asia specifically. I am not in the know of their exact plans, but these are successful companies and their clients are saying – Can you help me out in this part of the world? And the answer is yes.
What is your view of print advertising given the predictions of imminent death for the print industry?
Many people thought advertising was dead 10 years ago. Today, people are saying – print is dead. In India, you have so many newspapers. There is still future here. In the states, a lot of newspapers have had significant financial challenges and they have had to shift on to an online delivery model. I think that time will tell, if people want to still buy a newspaper in physical form. My son is 22 years old and he never buys a newspaper. That said, he is very well read.
He reads content on his phone, or on his computer. But magazines are an interesting area. There are many magazines out here that are doing very well. There is a market for fashion. There is something to be said, for people to be spending time with a high quality, beautiful, coloured print ad. Truth is that people still enjoy physical interaction with a magazine, for certain product categories. For instance, I am a fan of Esquire or GQ. You will find that a certain segment of magazines will do just fine.
