Tan Kien Eng, CEO of dentsu Malaysia, told StarBiz there is danger for agencies with a single client or a handful of clients, noting that some industries are more prone to the impact of recession.
PETALING JAYA: Diversity is key for agencies. Not only will it help agencies sustain their businesses in the wake of the tough business climate, but it will also improve their bottom line going forward.
Diversity is broad-based and encompasses areas in client portfolio, agency offerings, cost structure and talent.
Tan Kien Eng, CEO of dentsu Malaysia, told StarBiz there is danger for agencies with a single client or a handful of clients, noting that some industries are more prone to the impact of recession.
“For example, the housing and the construction industry, due to its high investment and longer term commitment of ownership. During tough economic times, people are in a worried state where they cannot foresee the near future and this results in consumers tightening their belts to conserve their funds.
“On the other hand, the take-up rate of lower cost and essential products like food and hygiene products would continue as it is perceived as a necessity,” he said.
In essence, Tan said it was risky when agencies over-relied on particular clients, especially when the client contributes more than 20% or 40% of the agency’s revenue. In this instance, the impact is greater when their client reduces their spend.
Diversity in the portfolio would help to even-out the risk in the short and middle term, he noted. He pointed out that traditional agencies that were less agile and slow to diversify their offerings would suffer.
At dentsu, for example, he said it had in place key service lines across creative, media and customer experience management.
“We continue to invest in talents required to build new specialisation to ensure fresh diverse revenue streams. The agency invests to keep its existing rising stars and future leaders. We are also investing to ensure a better work-life balance for mental health,” Tan said.
Havas Immerse Malaysia group managing director Andrew Lee said the time was ripe for building brand equity amid the challenging economic environment. This is the right time to build brand equity since it is an opportunity to separate the winners from the losers and grow.
“Brands must make a meaningful difference in the lives of the people and the community as consumers have now become very conscious of the kinds of products they buy.
“Brands that do not have a strong brand purpose or have not made any meaningful difference in people’s lives will eventually cease to exist,” Lee said.
Similarly, he said agencies had to take advantage to invest in their talents and enhance the way they create meaningful connections with clients.
“For us at Havas, our focus is on creating a more entrepreneurial workplace, equipping our employees with the necessary skill sets through learning and development programmes and maintaining a positive work environment,” he noted.
While the climate remains tough, Mediabrands Malaysia CEO Bala Pomaleh said the agency’s predictive approach had ensured it remained relevant to its clients.
“We have always been ready for situations like this and take a turnkey approach to offer integrated solutions. These include a full suite of services across eCommerce, dynamic and audience-led content, performance marketing, data management platforms and apps, and planning with future technologies in mind,” he said.
He said different clients had different marketing communication needs, adding that the agency’s 500 strong team was able to offer almost all solutions.
“Planning our approach with talents in mind means we invest a lot in new and bespoke training, creating agility for any bumps ahead,” Bala said.
He said at the same time, Mediabrands took a very proactive approach on diversity, equity and inclusion. “This gives us a more holistic approach when it comes to how we look at talents and their needs,” Bala added.
