SHANGHAI (AdAgeChina.com) -- Two years ago, the head of marketing consultancy R3, Greg Paull, had good news and bad news for Carat. The Aegis media agency had the highest satisfaction rating of any agency in an image survey conducted by R3 in China. The bad news? More than half of the advertisers interviewed for the study had never heard of Carat.
"Those were very disturbing statistics for us," recalled Seth Grossman, a Carat veteran in Shanghai who succeeded Michelle Lau as managing director, China, in January 2010. "We made a decision after that, that we wanted to no longer wanted be the best-kept secret in China. it became a mantra."
The agency started an aggressive campaign to reach out to marketers, get invited to pitches and raise its profile. That strategy paid off last year for Carat, Ad Age China's 2009 Media Agency of the Year.
Phenomenal year for new business
The agency has cemented its reputation among advertisers in China over the past year through stunning success at winning new business, savvy use of both traditional and new media, and strong research skills.
The Aegis-owned media agency had a "phenomenal year" picking up new business in 2009, said Mr. Paull. "The 'big two' of Zenith Media and GroupM have now become the 'big four,'" due to the growth of Carat and Omnicom.
The results of R3's next image study, carried out every two years, will be announced in early February, Mr. Paull said, but Carat "made great strides in the last two years. Their awareness has almost doubled, and they've significantly improved their perception in a number of areas."
Big wins include Nokia's global media business, worth up to $500 million, which Carat won largely because of a strong presentation by the agency's team in China, Nokia's single biggest market and the largest mobile-phone market in the world.
Beiersdorf gave Carat additional brands like Nivea and C-Bons worth $487 million, focused on branded content and sponsorship.
The agency also won business from Bayer Group, Procter & Gamble Co., China's Bank of Communications, American International Assurance (AIA), Perfetti Van Melle and Pernod Ricard. Carat also works with Adidas, Kangshifu Beverage Co., Philips Electronics and Kraft Foods.
Only one Carat clients, personal care giant Beiersdorf, called a pitch last year. That was due to the C-Bons acquisition, which greatly increased the scale of company's business in China, and Carat won.
China Telecom win in 2010
Carat is already off to a strong start in 2010, with a $200 million win in January from China Telecom to handle all media buying except China Central Television (CCTV) and digital media.
Carat's China operation is based in Shanghai, where 195 of the company's 350 employees work. Other offices are in Beijing, Guangzhou, Wuhan, Dalian and Chengdu.
In 2008, Carat's billings in China totaled $1.356 billion, according to Recma. Last year, billings grew nearly 20%, according to the agency.
Insights, accountability and innovation
The network attributes its success in China to three key areas: strong insights in a country undergoing immense and rapid change, accountability in a media industry rife with corruption and unsubstantiated ROI performance, and innovation, particularly in digital media, events and branded content.
Carat's digital media revenue, for example, grew over 100% last year, and the number of digital media specialists rose from zero to a 12-person team led by VP of interactive media, Sophia Ong.
The agency's insights team oversees a proprietary Consumer Connection Study (CCS), China's largest lifestyle, brand, and media habits survey of more than 15,000 respondents in 15 cities.
For advertisers such as Pernod Ricard and Beiersdorf, for instance, "[Carat] has gone far beyond simple demographic analysis to identify the audience most likely to purchase, the moments they are most receptive and the mediums that are most relevant to the communications task at hand," Mr. Grossman said. "Insight has been a key to our new business success as a way to differentiate beyond billings size."
Making chivalry relevant to Chinese
After Pernod Ricard rolled out its global "Live with Chivalry" campaign last year, for instance, the spirits marketer used Carat's insights to help make the platform relevant for Chinese consumers. It was a tough sell, because the concept of chivalry dates back to the medieval institution of knighthood originating in the Middle Ages -- in Europe, not mainland China.
Pernod Ricard needed to understand "how the Chinese man is changing. We went through a period where conspicuous consumption and being extravagant was considered the epitome of a successful Chinese man," Mr. Grossman said. "There's recognition that a successful man is also a man of substance and culture, not just a man of wealth and financial success."
The agency is "quite creative," said Julien Hemard, VP of marketing for Pernod Ricard brands in China. "Sometimes they bring us fantastic ideas about integrated communication, not just media, because they look at the bigger picture rather than purely the technical aspects of media buying.
Pernod Ricard recently tested one of those ideas for its Ballantine's brand. To illustrate the brand's tagline, "Leave an impression," the spirits marketer projected 3-D photos of consumers it recruited through the internet on Shanghai's largest outdoor LED screen.
Tracking consumers from familiarity to trial
Carat has also pioneered a new form of qualitative media receptivity research it calls "media chemistry" that follows consumers along the path to purchase from familiarity to trial to discover the most compelling touch points specific to that product and its brand objectives.
Increasingly in China, that path steers clear of traditional media altogether, or uses it to supplement a program focused on engagement.
Last year's tour by NBA stars Dwight Howard and Derrick Rose tour, for example, "was amplified by Carat though a holistic integrated media plan which engaged consumers with the brand more than any other athlete tour of China," said Shanghai-based Paul Pi, VP of marketing for Adidas in Greater China.
Last summer, Kraft Foods launched strawberry-flavored Oreo cookies in China with a digital campaign that connected online marketing with offline sampling for the first time in that market.
On Kraft's local-language Oreo web site, www.onlyoreo.com.cn, web surfers can plant a cookie tree and send a digital cookie with messages to friends. The campaign is linked to Taobao.com, China's leading e-commerce web site, run by Alibaba Corp.
When Philips wants to promote its consumer products, communicating and weaving its brand proposition of "Sense and Simplicity" into a campaign is relatively easy.
Branded hospital terminals save time
But getting that message to work in a campaign for its health-care division was a bit more challenging. So Carat created a new medium in Chinese hospitals that saved consumers time. It persuaded 10 major hospitals in Shanghai to let Philips install a terminal that let patients input their mobile phone number instead of waiting in line. Patients got a text message when the queue reached five numbers ahead of theirs, saving each user about two hours of waiting in line.
The whole process, from registration to the receipt of the SMS message. And eight more hospitals have adopted the system.
While Carat has raised its profile and revenue in China, the agency is still looking for new opportunities.
"We have achieved our objectives and turned our image around," Mr. Grossman said. "[But] we still have to continue to stand for something different," Mr. Grossman said.
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