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In emerging markets, hot economies generate cool ideas

People laughed, but it wasn't actually a joke. During an onstage discussion at the Cannes Lions advertising festival last week, Maurice Lévy, the chairman and CEO of the ad agency holding company Publicis Groupe, asked his client Paul Bulcke, the CEO of Nestlé SA, to outline the most important difference within the emerging markets over the last few decades.

"The emerging markets are emerging," said Mr. Bulcke.

That's what prompted the laughs, so he added: "Let me explain. Thirty or 40 years ago, 'developing' meant other countries lagging behind Western countries, trying to get in the footsteps of the developed world, and trying to catch up. They never did."

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"We actually contained, to a certain extent, these markets [to benefit the developed world] The raw material price was low, we kept that low, because that was financing and that was fuelling our foods, to a certain extent. I'm being very cruel here, but just to give a perspective. What you see now is that the developing markets, the emerging markets, are [building]their own future with an amount of confidence that is really refreshing."

The Cannes advertising festival, which wrapped up last Saturday night, is many things: a petri dish of creative cross-pollination, a back-slapping confab that quickly turns slap-happy, and a place where tens of thousands of litres of mediocre rosé go to their final rest. And as an annual opportunity to take the temperature of a rapidly changing industry, this year's edition illustrated that most of the exciting developments are coming from the emerging markets.

Not just economically: At Cannes, they flexed their creative muscle, too. Agencies from China, Romania and South Korea each won grand prix awards, marking the first time a top prize had gone to any of those countries.

"There's an extraordinary shift that has been going on," said James Murdoch, the chairman and CEO of News Corporation's international division, during an onstage chat moderated by Martin Sorrell, the chief executive of WPP Group plc. "We see our Asian business growing very strongly."

Sitting across from him, the CEO of DreamWorks Animation, Jeffrey Katzenberg, said he'd just been on a trip through a number of territories where his company markets and distributes its films, and the differences were stark: "Certainly when you're in Asia, Australia, things are pretty charged up, with a very enthusiastic business and consumer," he said. "Here in Europe, there's a great deal of uncertainty."

Putting aside the momentary situation, Paul Polman, CEO of the world's number-two consumer products company, Unilever, said during another discussion that the "shift of economic power to the East and the South" was forcing his company to make extraordinary changes.

"Today, about 56 per cent of Unilever's revenue comes from outside North America and Europe," he explained. "By 2020, we expect this to be 70 to 75 per cent of our business. So in some sense, we are the emerging markets company." In the last year, he added, Unilever had rolled out about 100 of its brands into emerging markets, and is currently in the midst of introducing Dove to China - all of which is requiring heavy investment in local marketing. "We have to shift our thinking to New Delhi, not New York," he said.

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To that end, Unilever last week announced that an executive who had started with the company 35 years ago in its Indian operations was being appointed to the new position of chief operating officer. Harish Manwani was most recently the head of Unilever's Asian, African and central and eastern Europe unit.

During the Cannes proceedings, a number of the emerging players displayed an inclination for experimental marketing that is utterly foreign to the more conservative West. The head office of the Seoul-based Cheil Worldwide won the country's first grand prix, taking the top award in the media category for a HomePlus grocery store campaign that would hardly be recognized by most people as advertising.

Realizing that South Koreans are terribly pressed for time and don't generally enjoy going to grocery stores, last November Cheil installed posters in out-of-home locations such as subway stations showing shop displays that looked exactly like the fully-stocked shelves of the HomePlus chain. The displays included QR codes - those abstract graphical squares which, when photographed on a cellphone, point the user's browser to a particular web page.

In this case, the QR codes enabled online shopping. So, while commuters were waiting for the subway, they could pick out and pay for groceries that would be delivered directly to their homes later in the day.

China, meanwhile, won its first grand prix with an elaborate Samsonite print ad by JWT's Shanghai operation, and the Romanian office of McCann Erickson took home a pair of grand prix prizes in the direct and promo/activation categories for a single chocolate bar campaign.

The rise of emerging markets may be good for more than just those economies. Unilever's Mr. Polman hinted it might also benefit the world's strained resources.

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"Latin America has the highest proportion of people saying that reducing their energy use, their water use and their petrol use are extremely important to them," he said. "In China, 77 per cent of consumers say they're more likely to recommend a brand that supports a cause than one that that doesn't."

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About the Author
Senior Media Writer

Simon Houpt is the Globe and Mail's senior media writer, charged with covering the industry's transformation. He began his career with The Globe in 1999 as the paper's New York arts correspondent, covering the cultural life of that city through Canadian eyes. More

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