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Tough & Inspiring Times

Brexit, European Parliament elections and a new set-up of the European Commission, as well as the emergence of new players on the market and data protection issues will impact on the work of agencies in 2019, while local ones will also have domestic challenges to deal with

We are going through a truly exceptional year,” says Tamara Daltroff, Director General at European Association of Communications Agencies (EACA), in this interview at the start of 2019. Topics such as ePrivacy, new approaches to marketing, and the tough political agenda in the EU all came up in this engrossing conversation.

What are the new sources of growth? What are the challenges of cross-device marketing?

– The new European Data Protection Rules (“GDPR”) are still impacting companies with business models based on processing the data of EU citizens. Some of these businesses had to change, or are still in the process of substantially changing, their business models and data collection processes. The result was another “cookie wave” requiring users (consumers) to give repeated, granular – and often annoying – consent.

One of the big challenges will be to improve the consumer experience during the browsing journey, which obviously will include seeing ads. Business models and data collection methods that respect consumer choices and privacy are likely to pay off, as consumers become increasingly knowledgeable and privacy-conscious. If consumers see that their choices are being respected regarding what type of ads they want to see, they are more likely to respond positively. This will become even more important as advertising increasingly happens across user’s devices.

The importance of the “duopoly” (Facebook and Google) now heralded to turn into the “triopoly”, with the rapid expansion of Amazon on the advertising market, is unlikely to change. As they fine-tune and innovate their ad services, there will also be more opportunities for agencies. However, the big platforms are increasingly under legislative scrutiny and are likely to continue being the targets of data protection agencies in 2019.

It remains to be seen which emerging technologies, such as augmented reality, artificial intelligence, and visual and voice search, will become a sensible basis for investment

Does the industry have an adequate talent pool for the new era? Which skills are in the highest demand?

– Ad agencies have to compete for talent with many of today’s richest, fastest-growing and high-profile companies. Brands such as Google, Facebook, Instagram and Snapchat are looking for people who can make sense of data and guide the development of marketing strategy and content – very similar to the skills required for a job in advertising. These companies are grabbing all the headlines, because of the high return on marketing investment their precision targeting can yield, and this helps them attract the best talent.

There is no shortage of advertising professionals who are passionate about the industry and the value it can provide. In the commercial sector, advertising at its best provides social value by creating experiences that people find emotionally powerful and that connect them with brands that have values and purposes in which they believe.

From an academic standpoint, we know that universities are constantly evolving their communications curricula so that students leave their courses well equipped for careers in advertising. If there is one skill that is more important for ad agency professionals to master than ever before, it’s the ability to collaborate well with people with different specialisations, personalities, working styles and agendas.

Does globalisation wipe out local advertising companies or give them the ability to find new niches?

– Local communications agencies are ideally placed to target local audiences, as they know their language and culture well. Even big international campaigns are often adjusted to the local context. This might be the result of market research into local specificities or, in some cases, also due to rules (e.g. on labelling or information requirements) that vary from market to market.

At the global level, we also perceive another trend, namely that of big management consultancies acquiring agencies and design studios. There are different views among agencies regarding whether this is a real threat to the industry or a phenomenon that can be dealt with. Agencies can usually rely on strong ties with advertisers and media, and they are the powerhouses of creativity – something that consultancies might lack. One important issue, however, is the potential conflict of interest among consultancies performing media audits now moving into the advertising space and providing the same type of services that they have audited – with all the inside knowledge that comes along with it.

What are the potential political changes in Europe and their impact on agencies?

– The year 2019 will be marked by a series of significant developments in Europe. Firstly, the UK is scheduled to leave the European Union on 29th March 2019. After nearly two years of negotiations, it appears that the separation is going to take the form of ‘Hard Brexit’, which means that the country will quit the EU Internal Market and Customs Union, and in the case of ‘no-deal Brexit’, this will happen very suddenly, overnight, potentially creating chaos.

Agencies on both sides of the Channel are currently perplexed regarding the possible consequences of the upcoming arrangement, what steps they should take and whether or not there could still be a transitional period.

We are going to see Brexit’s impacts on online advertising, namely, in cross-border data flows and the processing and storage of data. Agencies may have to conclude standard contractual clauses while waiting for the European Commission to declare that the UK provides adequate data protection. Impacts will also be seen in specific sectors that are relevant to agencies, such as travel, tourism, consumer goods, food and vehicles. The developments could have an impact on consumer confidence.

The success of local agencies is highly dependent on a healthy local media market. Agencies are likely to suffer as the region’s media companies struggle to set up new business models to adjust to the digital era

As a consequence of Brexit, UK-based agencies will have to re-evaluate work contracts with their employees of EU-origin and vice versa. Any business travel between the two may become more burdensome. We have already seen, and are likely to see more and more, UK-based offices relocating or registering in the EU in order to stay within its jurisdiction. Agencies will need to find ways to continue conducting their business.

Another upcoming political change will be the European Parliament elections of May 2019 and the new composition of the Parliament. At this point in time, it is difficult to predict the final outcome, but there is a fear of an increase in the number of populist politicians and the future guarantees of business-friendly legislation. In addition, there are a few legislative files that the current legislature will not have a chance to adopt and that will be passed on to the new Parliament, which will decide on their continuity. Among such files is the ePrivacy Regulation, a highly relevant piece of legislation for advertising agencies working on online campaigns, which will specify the General Data Protection Regulation. If it gets out of control, this regulation could have grave implications for targeted advertising.

Finally, the European elections will also mean a new set-up of the European Commission. It remains to be seen which direction it will take in terms of trade with the U.S., China and the U.K.; regulating new technology (artificial intelligence, connected driving, U.S. big tech) and of course the EU’s neighbourhood policy with countries like Serbia.

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