What’s On

#mavericksindigital: How China’s Black Monday is impacting our industry

We’ve seen a massively volatile market the past two weeks with all major indexes making significant slides. Markets were already in the red last two week, but the carnage began again last week on August 24 in China with an 8.5 per cent drop in their benchmark Shanghai Composite Index, in what the Chinese state media are calling ‘Black Monday’.

This 8.5 per cent selloff had ripple effects throughout the world, with Japan down 4.6 per cent, India down 5.9 per cent and Dow in the US dropping 1,000 points just in the first few minutes alone.

Media and ad tech related stocks were certainly not immune to the selloff. Both Facebook and Google stocks took nasty hits on August 24, but have seemed to recover nicely in the ensuing four days of trading. Same story goes for Yahoo, where their stock dipped to the lowest levels in over two years, but also quickly recovered ground by August 27. And programmatic players like Rocket Fuel also taking steep hits in the day but also recovering to previous levels.

So why now and how is this impacting our industry?

I believe most of red we’ve seen in the markets as of late started on August 11th when the Chinese central bank, in a sudden move, devalued the Yuan by a whopping two per cent. The markets interpreted this as a weakness in the Chinese economy, which further fueled its decline. This sent ripples through the global markets, which continued and finally hit its peak on Black Monday.

Many are pointing to the slowdown in China as their export-orientated economy is finding it difficult to maintain the growth figures we’ve all become accustomed used to. And as China’s living standards rise, it is becoming harder for them to compete with other low-wage countries.

Shifting gears back to the media and advertising fields, I believe there are some clear takeaways that emphasise where the industry is at currently.

    • Seeking for continued efficiencies: Our industry will continue to be driven by a large degree through procurement choices and their push to drive efficiencies. The evolution of programmatic has been a beneficiary of this. More advertisers will continue to shift budgets into programmatic to take advantage of real-time targeting while minimising spend wastage. As a whole, programmatic is still small in APAC but is growing at a fast clip and will very soon become a mainstream media choice for all brands at all levels.

 

  • The push to data: Another key theme will be the shift from big data to smart and usable data. Advertisers are becoming more acute with data and all the activities they could (should) be doing through the application of smart data. Areas like MMM (media mix modeling), effectiveness and analytics and the use of linear and time decay attribution techniques will become mainstream practices on the brand side which will lead to smarter marketing and better content.
  • Diversification is key: Just as it is good practice to have a balanced and diversified stock portfolio, equally it may be good to have a diversified roster of agencies and media choices. We are started to see advertisers opting out of a single agency does all strategy and instead selecting a handful of the very best agencies to work on their business. And some of these agencies may be head-to-head competitors. But this ensures the advertiser gets the best work out of their agencies while also fostering a healthy competitive practice.

It is inevitable that volatility will continue. Volatility in the stock market as we’ve recently seen and volatility in our industry as it continues to grow and change. But I believe this is healthy and it forces us to think creative about how we should continually reinvent our business.

Andy Radovic

Andy Radovic is the APAC Client Partner at Essence Digital, a GroupM company. He is a strategic digital marketer with 13+ years experience working in the digital media space across a variety of agencies, spanning stints in the U.S., Japan, Korea, and now Singapore. Before Essence, he was working for Maxus Asia Pacific, part of the GroupM network, the world’s largest media investment management organisation, and media communications and planning arm of parent company WPP. At Maxus, Andy led regional digital duties for Asia Pacific with a focus on building out the Maxus digital product offering across Asia Pacific focusing on search, social, mobile, digital analytics and e-commerce.
Search