And the top Malaysian brands are …

And the top Malaysian brands are …

Yvonne Chong

THE Association of Accredited Advertising Agents of Malaysia (4A’s) has never been so active, according to its president Datuk Vincent Lee.

Among others, 4A’s has successfully introduced a pitch fee to the industry, launched a brand valuation exercise to encourage brand- building among local companies, and jump-started the process of reintroducing the made-in-Malaysia (MiM) ruling for advertising content in the country.

Lee is all praise for the current 4A’s council members, most ranking among the who’s who in the advertising industry. Lee himself is the group executive chairman of Foetus International, which includes Naga DDB and Vizeum Media Services.

`All of them are big-time MDs and they are really intellectual, strategic and hardworking. They are legends themselves. And once you share the work with them, it becomes such a joy and work gets done fast and projects get moving,’ Lee tells Malaysian Business.

He says the 4A’s creative council, under BBDO managing director Jennifer Chan and J Walter Thompson MD Neal Estavillo, `had done a fantastic job’ in terms of further upgrading creative standards in Malaysia.

According to Lee, creativity standards in Malaysia have grown by leaps and bounds over the last few years and that the world is now looking at Malaysia in terms of creativity.

Lee says Tony Savarimuthu of McCann-Erickson is also one of the most active deputy presidents 4A’s has ever had. `Under him, 4A’s has had knowledge management seminars, brand talks and most excitingly, the forthcoming brand valuation exercise,’ he says.

Lee is understandably excited about the brand valuation exercise, an initiative aimed at recognising the top 30 Malaysian brands and thereof to spur more brand-building activities in the country and thus grow the advertising market.

`The top 30 Malaysian brands have been valued at RM56 billion. But prior to this, they had not been recognised,’ Lee reveals.

He says 4A’s acknowledges that the only way to build brands is to put a value to them, adding that `hopefully this would also be good for the stock market’.

The valuation, done by Interbrand, is completed but is yet to be announced, pending a gala event to celebrate the findings. The brand valuation cost more than RM400,000, and another RM900,000 or so has been earmarked for the event. The 30 companies know who they are, though they have yet to know the ranking and value of their brands.

Interbrand, whose valuation is recognised by the global industry, has for years collaborated with BusinessWeek to rank the top 100 brands in the world. 4A’s aims to make the local brand valuation exercise an annual event.

Lee notes that though there has been a lot of talk, both public and private, on the importance of building brands in Malaysia, not much has been done.

`The small and medium enterprises (SMEs) do not understand what branding is all about. They think spending money to build a brand is a cost when it is actually an investment. A brand is actually worth a lot of money,’ Lee says, drawing a correlation between the wealth in a country and its global brands, taking for example the United States.

`Brands give value as well as wealth. Branding actually is the engine of growth. 4A’s wants to recognise the value of brands in this country so that businesses in Malaysia build brands rather than just be OEM suppliers,’ Lee says.

However, the valuation exercise only involves public-listed companies that are either Malaysian-owned or originate from Malaysia.

How is this valuation different from what the stock analysts have been doing?

`The analysts do not give a value to the brands whereas we are only looking at the brand value,’ Lee says.

Meanwhile, the pitch fees, implemented less than two years ago and currently `adhered to by 99% of the clients’, had made the ad industry very professional, says Lee.

Pitches cost time and money, with some agencies spending easily up to RM50,000 and RM100,000 per pitch. A client can call many agencies to pitch and there’s only one winner. This had often translated to tremendous amount of money lost in the market.

`Reputable clients are okay but there are clients that go around to many agencies looking for ideas free of charge. They jump from one agency to another and never pay anything. But once we put in a pitch fee, the clients have to make sure they have their briefs tight and instead of calling 10 agencies, they would call two or three agencies,’ Lee says.

The pitch fee is RM5,000 for a contract below RM500,000, and RM10,000 for anything above.

Lee maintains that advertisers should be professional and not try to get free rides but work with the creative agency to grow their brand and business.

`Creative solutions grow businesses. It’s a worldwide trend – the big brands in the world have the same creative agency for decades. The clients in this country that keep changing agencies tend to be unsuccessful clients whose brands are not doing well,’ Lee notes.

On the MiM issue, Lee says though the actual rules and regulations are yet to be released, the previous MiM rule of 70% local content is slated to come back in force, possibly as early as over the next few weeks.

Lee reveals that bringing back the MiM was the first thing the current 4A’s council focused on.

`And on behalf of the advertising industry – creative agencies, production houses, universities and colleges – I want to thank the Culture, Arts and Heritage Minister Datuk Seri Dr Rais Yatim and Information Minister Datuk Seri Zainuddin Maidin for taking the lead to present the issue to the Cabinet,’ Lee says.

MiM had been a big issue, and still is, because some players, especially the multinational corporations (MNCs), have contended against it. Though not abolished, the MiM ruling had not been implemented for the past seven to 10 years, resulting in not a small number of agencies and production houses folding up and film and production students graduating with no jobs.

`We’re talking about some RM400 million-RM500 million wiped off the market, that’s a lot of money,’ Lee reminisces.

He says he does not understand why the MNCs were opposed to MiM so much as `it’s a small amount of marketing money to be spent here’ but it would boost the local economy, which in turn would boost their businesses.

`MiM is a good thing as it created jobs, intellectual property and talent. We have no big music or movie industry here but advertising firms are like mini-movie firms,’ he muses.

With the MiM coming back, Lee is looking forward to seeing the local movie and sound industries, as well as talent agencies, flourish once more.

Meanwhile, manpower continues to be a problem in the communication industries. `A lot of colleges and universities produce mass communication and marketing graduates but China is taking a lot of our employees,’ he says.

`To be in this industry, you have to be talented and hardworking – there is no two-way about it. We’re losing people by leaps and bounds. The brain drain is quite serious since the last three to four years. Malaysians, especially those conversant and literate in Chinese, are in high demand.’

Lee says agencies have no choice but to step up their training programmes. One of the short-term measures adopted by agencies is to hire Indian nationals.

`We try hard to stem the flow of people moving around. The pitch fee has resulted in less pitches and consequently less people moving around,’ Lee says.

But wouldn’t the agencies that provide the most training stand to lose the most as their staff would be the most sought-after?

`There is no choice. I always tell my people “do you not go to sleep just because you get nightmares?” We still have to train, that’s the name of the game. We can’t give up. Hopefully some good talents will remain,’ Lee says.

But then again, he notes that the churn rate has typically been high in the ad industry. And the technology and consulting industries fare even worse. `It is useless to complain because the problem will not go away.’

Malaysia’s gross advertising expenditure (adex), according to Nielsen Media Research, had grown 9% to RM2.4 billion in the first half of this year from 2006. Recognising that some of the media rates were published rates and not actual rates, Lee reckons there was still growth of at least 4%-5%.

`The second half will be better – more activities, the general election coming up, etc,’ he says.

He notes that the non-traditional media has grown faster than traditional media but Nielsen does not track that.

Copyright 2007

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