CARAT Media Services (M) Sdn Bhds newly appointed chief executive officer (CEO) Mike Langton sees a goldmine to be tapped in the form of frustrated advertisers.
And luring them should help make 2003 a jewel of a year for Carat, which specialises in booking advertising space/airtime and developing communication strategies for advertisers.
My dream is to more than double our billings this year, Langton tells BizWeek in an interview.
Carat Malaysia's parent company Carat Worldwide by far Europes largest media specialist and one of the top five globally has a formidable list of clients (see table), but the Malaysian office need not rely much on handouts from overseas. Locally, there are lots and lots of opportunities and lots of frustrated clients (of other media agencies), says the South African.
Langton, who joined Carat Malaysia in December, has an advertising career that spans two decades (11 years at Bates where he headed Bates Indochina and below-the-line unit 141 Worldwide Asia Pacific). But prior to becoming Carat Singapore chief executive officer and Carat Asia-Pacific regional business director in January last year, he had never (except for a four-week training stint) been on the media planning side.
Nevertheless, Langton exudes confidence and optimism when talking about Carat, and does not mince his words when sizing up the media planning industry.
Asked why he thinks advertisers are frustrated with media agencies, Langton replies: Sloppy service, service that is indistinguishable between one agency and another.
Theres a very nasty scenario when you have that, he goes on. If the potential client has to choose between three agencies and he thinks theyre all the same, he would choose the agency which drops the price (to) the lowest.
The problem with any industry which gets into a vicious circle where no one adds value, where no one has a distinguished positioning and where the work they actually do is no different from their next-door neighbours, is you will get into a downward cost spiral. Whoever cuts their price the most would get the clients business.
And to survive at that cut price, theyll cut their staffing or put cheap staffing on, and by the time youve been down the path about three years, youd end up in a situation thats happening to Singapore right now.
According to Langton, Singapore-based media agencies operate on razor-thin margins. The agencies are not adding enough value, and when they try to, the clients wont pay for it.
Most of the media agencies in the republic, he adds, are lucky to break even but they will never admit it.
Langton says Carat Malaysia will not slash its rates to get business. Weve declined a lot of business during the last six months because were not prepared to do those cheap rates. Were not a cheap and cheerful type of outfit. We are an outfit with high professional standards and high quality delivery, and that is very, very important to what we do, he stresses.
Apparently, Carats claim is convincing enough for many advertisers. In the last four months it netted about RM45 million worth of new businesses from clients such as KFC/Pizza Hut, Nivea, Unza, Wyeth and Kelloggs. This, Langston says, makes Carat unquestionably the fastest growing media specialist in Malaysia.
He has set his sights on steering Carat, which currently ranks about the fifth largest media agency in the country, into the top three within two years.
So, what does Carat see as its competitive edge?
One is its first-mover advantage. Langton takes pride in Carat Worldwide, established in France in 1965, being the worlds first media specialist. Media was never really invested in as a specialist area. Carat spotted that in 1965 and said, If we made this a specialist area, we would be able to create an entire category with specialist services. Wed be able to charge a premium for them and wed lead the field. And they have.
He argues that Carats proprietary analytical systems are way ahead of anybody elses. We can go head-to-head on any test with any of our competitors and well beat them hands down. We know this because weve challenged them to it in key business pitches.
Another advantage is in its vast storehouse of knowledge. We have been doing this since 1965. We have a lot of background on this stuff. Essentially, the rest of the guys dont have that much history, he says.
Incidentally, Carat Malaysia is also a pioneer, being the first media specialist in Malaysia. It started operation in 1991 as MediaBase Services Sdn Bhd, headed by the well-respected ad industry veteran Margaret Lim (now its chairman). Carat plc came into the picture in 1998 when its unit Carat Asia-Pacific bought a 60 per cent stake in MediaBase.
Carat, Langton continues, has a far deeper training programme compared to its competitors. In Europe, all its rivals try to poach Carats staff because of their high calibre, he says.
Besides being an innovator, Carat also has the advantage of being independent meaning it is not owned by or linked to a particular advertising group, unlike other global media specialists such as MindShare, Starcom, Zenith, Initiative Media and OMD. (Carat Malaysia does have a 49 per cent stake in classified/recruitment advertising agency MediaBase Advertising, but this was inherited when Carat Asia-Pacific took over the local operation.
Langton says that owing to its independence, Carat can work with any ad agency smoothly, without the latter seeing it as a threat. We dont have a sister ad agency that may make the creative agency think were trying to take away its business and give it to our associate creative agency, he explains.
He opines that because media specialists owned by ad agencies tend to be less aggressive and shallower because they can automatically get the media planning business from clients secured by the latter.
We (Carat) have to be a lot deeper, a lot slicker, because we live and die by the one thing that we do, which is being a media specialist, he adds.
Carat is very much research driven, according to Langton. It even has a sister company involved in research, Synovate (previously AMI), which has an office in Kuala Lumpur.
Carat's approach is called Carat Sphere whereby it looks at all communication avenues, from the traditional advertising media to more unconventional areas such as sponsorship activities. We set communication objectives, not media or advertising objectives; and then we define an overall communication strategy, he says.
He says even a computer can write a media plan that is conventional, adding that it is the quality of the people, tools and the thinking that make the difference between one media agency and another.
Carat also has expertise in econometric modelling to determine how various scenarios affect a company, says Langton, who is an econometrician by training.
In Australia, for example, the agency used econometrics to upgrade Pizza Huts home delivery system. We looked at about 15 variables, including the weather, time of day and presence of TV programmes advertising the pizzas.
We wanted to see how they could optimise the way they were advertising pizzas to trigger demand for people to call in and order. If they had a big spike in demand, it would cause havoc as they couldnt produce the pizzas fast enough or deliver them hot due to not enough motorcycles available, he says.
On his plans for Malaysia, Langton says there will be a very aggressive new business drive this year and a very aggressive expansion in terms of information technology (IT).
As a result, the Petaling Jaya-based operation is expected to move to a new office by mid-year, closer to Kuala Lumpur. We need to be in a more mainstream area. It comes down to a lot of things such as how easy is it for the client to reach us and how good is the IT support we can get, he says.
Langton notes that Carats three-year-old Singapore office, which was a bit messy when he took over as CEO in Jan 2002, has come a long way since. Its probably eighth in terms of size, but its right up there in terms of thinking, and humility aside, Ive made a pretty good impact on it financially, pulling the team together and raising the morale, and getting the clients to believe strongly in the company.
From there, to be able to come here (to Malaysia) and work on this company, which is a great company doing extremely well, and take this forward ... basically my bosses said, Wow, if you can do that with Singapore, lets see what you can do for Malaysia.