In July 2015, Aaron Lau, CEO of Cheil Greater China, was tasked with additional duties as the president of international [operations]. He sits down with Communicate to discuss what’s next for Cheil Worldwide and how a company with Korean roots won’t soon forget its past, but has its eyes on a more global presence.
How has your role changed with your new appointment?
In my new role, I’m based between Hong Kong and London. The greatest thing about the new job is getting to work with talent from around the world. I’ve been involved in running Greater China [operations] for the past three and a half years. We’ve been lucky as China was growing in leaps and bounds, with a growth for Cheil of more than three to four times that of the market. We basically tripled our business in China, making it the single largest operating entity within Cheil Worldwide, a title formerly held by Seoul’s operations. China’s business contributes approximately 23 percent of the global profit. Now that we have got our Asia market – more or less – to where we would like to be, it’s time for us to take on the whole world.
How will Cheil need to evolve in order to have a successful global expansion?
One challenge we have as an agency network is being a new player in the contest of global agencies. The world does not need another advertising agency – there are far too many. We need to fine-tune and then justify our “reason for being” to clients and that has been extremely exciting. Our new value proposition is providing collaborative specialisms around client challenges. Currently, there are a lot of new challenges that our clients are facing, whether it is technology, social media, or creative and communication-based. Almost everyone is starting on a blank page with some aspects of these challenges. So, traditional agencies might have fantastic headquarters in New York or London; replicate that 200 times and that’s your global network. In the 21st century, where agility and technology are important, we need to build specialisms and then find a way to apply these specialisms around client challenges. There are five specialisms that we currently have that are as good as, if not better than, anyone else: communication, retail, social, design and innova- tion. Eventually, there will be more [specialisms] that we may need to acquire, like data analytics or content marketing. If you were to look at the big
four [networks], Publicis, Dentsu, Omnicom and WPP, [they] actually have all those specialisms, but they are siloed in their own respective operating units. What we’re talking about at Cheil is building each specialism within the agency with one bottom line, so we have a stronger chance of integrating. Since we will be integrated, each time we execute a certain specialism, it will inform our strategy and make us a better agency.
What else will Cheil focus on going forward?
Three types of collaborations are important to us. The first type of collaboration is internal, so the solutions we come up with are much more holistic. However, let’s be absolutely honest, clients aren’t going to ask you to be the holistic agency. While the idea might be holistic, the client won’t ask one agency to execute all aspects. Then, there is collaboration with clients, which has been around forever. This relationship has frayed globally, as client/agency relationships are at an all-time low in terms of tenure. But, great ideas invariably require courage and risk-taking and, unless you have that partnership, you’re not going to take that risk. And, lastly, no one has a monopoly on creativity anymore, so we need to collaborate with third parties. Clients are already collaborating with designers and brands. Agencies are at the back-end of that evolution. Our vision for the future is to collaborate with entertainment [people], architects, designers and, of course, brands. The new world is about forming these strategic alliances that allow us to provide effective solutions.
I don’t have a crystal ball, but the specialisms that we talked about are probably a lot more marketing- oriented and, therefore, the foundation of what we’re building. We did have some internal discussions about PR, but, at the moment, we’re not really in that business. PR’s nature is currently changing so rapidly… We won’t be the traditional PR firm, but we would want to have PR capabilities. Social [media] is changing the way we do business; it’s disrupting the existing world of advertising and marketing. The key for us is to have skill sets in many areas, but to really excel in certain things.
I spent a long time at Omnicom. I joined in its early years and was very lucky to work for very visionary leaders like Bruce Crawford, so the founders were there and it was fascinating to see how they built their agency and reputation. Now, it’s a very exciting time to be with Cheil because it’s an Asian enterprise that has done extremely well and is now going global. One might argue that Dentsu has done that already. [However], they did it with a holding-group strategy because they’ve been acquiring agencies. Dentsu is still very much a Japanese agency, whereas Cheil’s ambition is to be a truly global agency with roots in Seoul. In a way, this must have been how Sony, Samsung and Alibaba felt during their growth periods.
Our next move is probably not so much in terms of geography, but we obviously will grow geographically based upon client requests. The first one that comes to mind would be Africa. If it makes good business sense, we will move into that area. Within the 41 countries where we are currently represented, the next key growth areas are probably in roughly ten markets and the criteria for one of these areas to be considered is for it to have substantial operations and a big enough local market.
What are the next steps for global expansion?
The first ones that come to mind are China and the US. If we can build solid specialisms in these places, the local demand will be enough business to warrant sophisticated operations. Secondly, there are geographies that have a much higher ratio of global and regional clients, like New York, which is why most clients go there to source the global agencies. For this part of the world, these areas would be Dubai and Singapore. The actual market itself may be small. [For instance], Dubai, as a standalone market, might not be very big, but if you look at its influence across the region, it’s huge.
Then there are emerging markets, into which expansion is difficult to sort out because of current global turmoil. Intellectually, I know we need to be in these places, but from a pragmatic standpoint, I don’t know when and how. For now, the global hubs are the areas that we must get right. If we get the right specialisms and the right talent, the business will sort itself out. There are a lot of mediocre agencies, [but] there aren’t that many great agencies yet. We think we have a shot at it, like everybody else.
What’s the key to marketing today?
The key is to have your brands talked about by your target audience. In order to do this, the audience needs to be surrounded by a lot of talking points. Those might not come from the brand itself but from a celebrity influencer, like Kim Kardashian, for lack of a better example. Those are some of the skill sets you need in the new world, so the agency isn’t evolving as fast as we need [it] to be. The first place to start is to recognize that the world is going to get even more fragmented. We want to create a strategic thread around key consumer touchpoints, while expressing them in a way that is relevant on that channel to that consumer at a certain point in time. Particularly in this part of the world, there is so much happening because of social [media] and the way you communicate [on social media] is very different, because, if you say, “My brand is fantastic,” the chances of going viral are minimal, but if a consumer says, “I just found this amazing product,” then it might begin trending. Basically, we want the audience to share messages that mirror those that have been sent out by the brand.