The bought media model is dead: Michael Karg, CEO, International, Razorfish

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Published: June 2, 2015 12:19:40 AM

We need traditional agencies to stop pretending that they can do digital. They are unable to do anything beyond interruption based advertising on digital.”

Razorfish is not like any other digital agency that focuses on creating digital campaigns. Rather, it believes in bringing about a change in the business  and that is what sets its apart from the rest, says Michael Karg, CEO, International, Razorfish, who was in India recently. Under Karg, Razorfish today focuses on collaborative marketing programmes driven by social and content apart from creating pioneering consumer experiences on mobile devices, in-store as well as television besides ensuring that e-commerce forms an essential part of the business plan. In a conversation with FE BrandWagon’s Anushree Bhattacharyya, Karg talks about the changing advertising landscape in India and the road ahead. Edited excerpts:

How do you see Indian companies handling the digital media?

Although we haven’t seen too many digital campaigns coming from India in the past, it has changed in the last one year. Both talent and investment is moving to India now. Today we are having many more conversations about incremental budgets that do not even come from advertising budgets. These discussions are with owners, CIOs and CEOs around topics such as the need for a digital transformation as it impacts the value chain. Once you start to talk about digital as a means to transform your relation with consumers, that is the true conversation. India has reached a stage where big companies are now looking at digital as a medium to transform or evolve their business. Omni-channel, digital in-store and e-commerce are some of the big subjects discussed today. Despite a keen interest in the topic today, there is a big need to catch up with the West.

What are the challenges that you face in India?

We realise that the marketplace is very confusing for our clients. I think 99% of the agencies cannot provide complete digital services yet because it requires investment in technology. We need traditional agencies to stop pretending that they can do digital. They are unable to do anything beyond interruption based advertising on digital.
What traditional agencies can do well is story telling. We have no aspirations to do that.

What is the correct model for mobile advertising?

The basic premise of interruption based advertising model is not correct. Everybody is replicating the advertising model followed on the web. I think that is a dead-end. We stopped doing that two years ago. We have a slightly different approach to mobile advertising. The approach to mobile is focusing on service and utility. Our mission at Razorfish is to help look at consumer journeys, identify potential friction points and then work on overcoming those friction points by using technology to make it as seamless as possible. In this context, anything that interrupts a consumer’s journey is pointless. I think it was published in the US about two years ago that every year about $160 billion of display advertising is not being clicked on. If this is not a wake-up call, then I don’t know what is, because this proves that interruption based advertising is not working.

Instead, everyone should focus on collaborative marketing programmes driven by social and content. The other area of focus should be about  creating pioneering consumer experiences on mobile devices, in-store and on television.

The third element is including e-commerce everywhere.

What are the changes we can expect in advertising?

As devices get more personal and screen size shrinks, the current advertising model will become redundant. In fact, there will be no advertising model. In the future we will see the more sophisticated marketers move away from advertising all together.

For example, companies such as Uber do not believe in advertising. Uber just focuses on its services which is extremely compelling. The company’s focus is to better its services so that people speak about it.

Another example of how brands are built in the 21st century is Red Bull. If you look at it, the brand was never built on the back of traditional advertising, rather it has been all about content. So, in a way, it owned consumer experience. That’s the new advertising model or brand creation model. This is a trend we have observed globally. The bought media model is dead. If not now, five years from now it will be dead, except in case of prime time events such as the Olympics where people will tune into television or their devices to watch the games.

Are you saying that we need to look at the subscription model given that the space for interruption based advertising is increasingly shrinking?

I read an interview of an economist about advertising versus subscription, which was very interesting. The economist said that he believes the ad model is dead. While companies like the fact that advertising helps get them  revenue, it will soon change. Millennials do not read newspapers nor watch television. They skip advertising by using ad blocking software.

In urban markets people are ready to pay for premium content on sites such as  Spotify, Netflix, Financial Times, The Wall Street Journal. The interesting dynamic is that the same section of consumers who can afford a trade-off form the higher value target audience. Over a period of time, more and more people will go to publishers asking them to get rid of advertising. Advertising will only come into play for those set of consumers who are not willing to pay for content. So that will create two sets of consumers. But is that the place where advertisers would like to advertise, as this set of consumers are not crème de la crème? So it is a Catch-22 situation  at the moment.

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