Stephan Loercke, Leader of the Global Association of Advertisers, talks about the challenges of the communications industry and the need to rescue creative effectiveness
The communication market has been impacted by several events over the last few years, from external factors, such as the pandemic and the War in Ukraine, to internal factors, such as the lack of representation and connection with society’s agendas and the loss of talent.
For Stephan Loercke, CEO of the leader of the WFA (Global Association of Advertisers), an entity that brings together more than 100 major global brands, responsible for handling 90% of the world’s marketing investments, this scenario has brought new challenges as the paper of brands is re-signified and people expect more from companies.
A central concern of the entity to deal with this new configuration is to deal with ‘creative effectiveness’, which is falling in several markets. For Loercke, rescuing this characteristic in communication can be the way to make gains in brand building, in attracting and retaining new talent, as well as in representation.
Below, the main excerpts from the interview with the executive.
How do you analyze the year 2022, which for many would be the “year of recovery”?
I wouldn’t call 2022 the “year of recovery”, which is what we thought in late 2021 and early 2022. It’s better to compare it to a roller coaster. I think what we are seeing is an accumulation of uncertainties with little visibility. There are many experts who have opinions about what will happen in the future, but there are as many experts as there are scenarios. I think it is fair to say that there is little visibility and in many ways it is almost a “Terra Incognita”. We have the repercussions of the pandemic, which has not yet disappeared from the globe, and which creates a huge impact on supply chains. You think about the Ukraine war and the uncertainty it creates, so Russia is a huge market. In addition to all the implications for prices of raw materials, oil and energy, which are at the ceiling. There are also question marks around geopolitics, with some experts speaking of a turning point where there is a gradual separation from what has so far been the global market. So there are big issues that have long-term implications for our societies, the economy and brands.
And what is the role of brands in this scenario of uncertainty?
I don’t want to exaggerate the role of brands when it comes to famine, the war and the potential crisis we are going to face because of the disruption of Ukraine’s exports. All of this puts the role of brands in perspective. I think it’s important to be humble as brand owners in terms of our relative importance. But I think it’s also fair to say that there’s a gradual shift in people’s expectations of brands, because this great uncertainty that we’re talking about goes hand in hand with a gradual waning of trust in established institutions like the media and governments. More and more people are skeptical that institutions will be able to handle these seismic changes. Edelman’s latest trust barometer shows, again, that the vast majority of people expect brands to be a force for good in our society. In addition to offering good quality products and services, they need to be guided by values that help society deal with its challenges. We can think about climate change, inclusion and diversity and a series of issues that today represent major social problems. Brands need to be exemplary in the way they operate and behave.
During this period, the market also began to live with a multi-sector issue, “the great resignation”, with people resigning and looking for new paths. How has the WFA followed this movement?
I think it’s a very important shift that we’re seeing in the job market right now, when we suddenly realize that qualified talent is in short supply and it’s creating criteria for choosing your employer that are very strict and very demanding. We are seeing a talent shortage across the economy, in many well-known markets in Europe and the US, but also specifically in the advertising industry, which has additional challenges and has lost in terms of attractiveness in recent years. We’ve lost professionals to investment banks, Silicon Valley startups, platforms, and some of the brightest talent has chosen to go elsewhere. I think this tells us that we need to look in the mirror as an industry, in terms of how we can make ourselves more attractive again to young talent and understand the criteria on which these professionals will make their choices.
How to do this?
Engaging sustainability, diversity and inclusion, the climate, data, ethics and other issues that are fundamental to the future of societies. Being able to make a difference on these issues as an industry will make us more attractive employers in the future. If we apply to ourselves the causes we defend, as a more diverse and inclusive society, we will be increasing the quality and effectiveness of our work. In 2021, we conducted the first global census of our industry and one conclusion was that one in seven marketers was considering leaving our industry because they felt the workplace was not diverse and inclusive enough. Which shows that we also need to practice what we preach to others to become more attractive employers.
Where is the WFA looking today?
We want to lead marketers to embrace societal issues to drive growth. There’s one specific area that we’re going to look at and that is creative effectiveness because our industry depends on creativity to get people to adopt our brands. When you look at creativity over the last few years, you find that it has gradually declined in most markets for a variety of reasons, but mainly because more and more advertising is not about building a brand, it’s about performance, it’s about promoting short-term sales. This is also linked to the fact that the evolution of media spending towards digital has increased the shorter-term promotional nature of advertising. We want to see what we can do as brands to once again increase the creative effectiveness of advertising. How we can become better brand leaders and encourage creatives to build brands more effectively over time. This is a big agenda and we believe that creative effectiveness can be increased by encouraging more diversity in our teams. And this is linked to our industry’s societal agenda.
Today we have a complex economic situation in several parts of the world and, normally, brands invest more promotional actions in this scenario. How to implement this agenda?
That’s the short-term reaction for a lot of companies because they have to because they need to deliver quarterly results, but we know short-term reactions aren’t the smartest decision in the long run. Therefore, we want marketers to better appreciate the need to balance brand building and short-term performance marketing. We think this is indispensable to reclaiming the magic of our industry, because part of the reason our industry is becoming less attractive is also that a lot of short-term creative work isn’t all that attractive anymore. It’s a win-win-win. First, you want to make sure that, in the long run, you will be most effective as an industry; second, you will be creating more attractive ads for consumers and therefore they will not want to block your ads; and third, you will want to do it in a way that is more sustainable in the long term, more diverse and inclusive.
