Interview with Khalid Slaeem, CEO, RG Blue Communications.
AURORA: RG Blue started as a small creative ad agency in 2006. This positioning has changed considerably; what was the underlying thought behind this?
KHALID SALEEM: RG Blue grew out of a small design house that focused on corporate communications. Rizwan (Ahmad Malik) was working at Interflow, as well as doing freelance work. In 2006, he put together his freelance portfolio and formally started RG Blue. Rizwan is a qualified filmmaker. When I joined in 2011, he decided to focus on film production; documentaries, video and TV commercials and I took over RG Blue.**
A: What does RG Blue stand for?
KS: Red, Green, Blue. We have always been a very creative agency with extraordinary, out-of-the-box work. When I joined, I did not bring a lot of capital to the business; what I brought was the marketing understanding. The strategy was to make RG Blue sustainable first and then go for the type of work we wanted to do. Agencies were not honouring their financial obligations on time, be it to their suppliers or their employees and coming from the corporate sector, this was not acceptable to me. So, I focused on corporate videos, small design work, organising events and acquiring clients; basically making sure that we had a foundation whereby we could meet our financial obligations on time. The client base we had was not a high revenue generating one. The cash flows were disturbed because local clients usually defer payment and we needed to acquire clients who paid in advance. In 2014, we started working on media because if you don’t have a complete suite to offer, the bigger clients are not interested. When we obtained APNS (All Pakistan Newspaper Society) and PBA (Pakistan Broadcasters Association) accreditation in 2015, we started to develop our team and hired experienced people in advertising and marketing. Our first major venture was to re-launch DHA City in Karachi. It was a big project and we worked with DHA as an extended marketing team. The project was in bad shape when we took over, yet after two years, DHA were able to multiply their prices almost by three. We believe we cannot only be a creative house; we need to be involved in the marketing strategy and add value where we can. In Pakistan, especially the local clients don’t believe in paying for creative and they don’t pay anything at all for strategy.
A: Is media the way forward in terms of revenue generation?
KS: Media certainly plays a role, but I don’t believe this is a sustainable way for agencies to survive. We are not adding value by selling media and today, thanks to technology, all intermediaries who do not add value will soon be out of business. The travel agent industry is a prime example. A few years ago, one could not imagine travelling without a travel agent; today, airlines sell their tickets through their own and other websites. TripAdvisor, Hotel Compare and Expedia provide comprehensive information and people can get assistance from social media and put together their itinerary; as a result, travel agents have gone out of business. Now with technology and increasing competition, the media will be forced to take the intermediaries out of the picture and sell directly to the advertiser. Agencies that think that because they have extended 50 or 200 million rupees worth of credit to the media, and therefore they cannot function without them, are not thinking rationally. You can borrow at six or 10% from the bank and run a credit line rather than pay a commission of 15 to 20% to the media agencies. Media is not the answer. We earn our revenue by offering marketing services such as execution services – clients are spending significantly on events and road shows.
A: Is this the way forward?
KS: No, but initially, it enabled us to become financially sustainable. Our focus now is on strengthening our digital business. The dynamics of marketing and advertising have changed and the challenge is to reach the end consumer directly through digital by focusing on content and strategy. We have invested in developing strong alliances with Google and Facebook; they are training our people and we have access to latest technology before anyone else does.
A: What percentage of your overall revenue does digital account for?
KS: Forty percent.
A: That is a lot.
KS: It is, especially given that digital accounts for 10% to 15% of the market. Apart from digital media and digital PR, we are focusing on developing apps that can maximise content.
Alibaba have 260 million buyers and over two million online sellers. What we are looking at are the 400,000 manufacturers, traders and all entities that can potentially export from Pakistan to 190 countries. All these entities will need marketing services to enhance their visibility among international importers and we have access to these exporters.
A: You recently signed an agreement with Alibaba; what does this involve?
KS: We signed up with Alibaba as their business partners in Pakistan as part of our plan to expand into e-commerce. This agreement will enable us to play on two aspects; developing business for Alibaba in Pakistan and providing our marketing services to the businesses that join the platform.
A: In terms of developing business, who is your target market?
KS: Primarily exporters and SMEs from Pakistan; our job is to convince them to subscribe to the Alibaba platform.
A: What has been the response in terms of subscriptions?
KS: Phenomenal. TDAP (Trade Development Authority of Pakistan) have expressed their interest to join hands with us and so has the Ministry of Commerce. They want to endorse Alibaba because they believe it has done a significant job for many other countries; in fact North Korea and Turkey subsidise Alibaba membership for their potential exporters. We don’t want to burden the government with subscriptions, but their endorsement will certainly help. Finding people with the ability to pay $1,000 or $1,500 a year is not a problem.
A: To whom will you be offering your marketing services?
KS: Alibaba have 260 million buyers and over two million online sellers. What we are looking at are the 400,000 manufacturers, traders and all entities that can potentially export from Pakistan to 190 countries. All these entities will need marketing services to enhance their visibility among international importers and we have access to these exporters. Through our alliance with Alibaba, we will be able to target an entirely new client base. Once they join the platform, our team will provide them with the expertise on how they can use the platform in the most efficient way. Once we establish a relationship with them, we will be in a position to provide them with services no one else can because we know the portal and how it is utilised. We will be able to scale up their presence by developing mini websites within Alibaba. Because we understand the portal better than anyone else, we can do this in half a day, whereas someone else may take two weeks to do the same job as they will have to go through a learning curve. So if my development cost is for example Rs 5,000, someone else may turn this around for Rs 50,000. Even if I charge a premium, I will always be the most effective service provider. The per client revenue maybe smaller but the number of clients is huge. And once we have acquired the expertise on the e-commerce side, we can extend our own marketing services to a wider platform. This is going to grow over the next two to three years and I see a significant portion of our advertising coming from these non-conventional marketing-based clients.
A: When you speak of extending your services to a wider platform, do you mean beyond Alibaba?
KS: Part of our vision is to provide creative services worldwide and we want to do this through technology. Working with Alibaba will be a trial phase. We are learning how to provide cheap marketing solutions to a wider customer base. This involves acquiring the software to understand what is needed, and then coming up with a solution. With Alibaba, we are catering to our clients digitally; we would not want them to walk in and have a one-on-one interaction. We will rely on system-driven solutions and this will be a learning curve. Pakistan is one of the cheapest countries in the world in terms of HR. We did a lot of work for Unilever in Dubai and whenever there was something out of their scope, they sent it to us and the minimum they paid for a key visual was $5,000. In Pakistan, for $5,000, the client expects a complete campaign. Because we want to restrict ourselves to the creative aspect and not go into media, we have to expand our market beyond our geographical boundaries.
A: What is the potential there?
KS: We can pick any market because we have a big advantage in terms of pricing. We can do a very good job when it comes to creative digital campaigns, especially because with digital, you have access to consumer insights from the digital platforms and you don’t need to go for secondary research, so it is easy to develop a campaign in Pakistan for any market internationally. The only barrier would be language.
A: What led RG Blue to handle PIA’s in-flight magazine Humsafar?
KS: We are one of PIA’s three main agencies and they outsourced Humsafar to us completely. Initially, it was a tough call for them, because we were charging a fee and we requested that they forego their existing printing arrangements. However, we gave them the surety that after a year, the magazine would start earning a profit and I think we achieved this even before. We came up with quality content and design and the advertising started coming in. This is one way of adding value to a client’s product. We want to specialise in local clients. We have people on our team from marketing backgrounds as well as from local businesses and we believe we understand the Pakistani business mindset well.
Our vision is that by June 2020, we will be a digital-driven agency and 100% of our people will be digitally savvy. We will continue to work on conventional media, but our ideas will be driven from the digital platform and executed on the conventional side. The difference between conventional and digital media is that conventional media relies on static content and digital on dynamic content, and with dynamic content, there is no end to it. Every day something new happens. We need youngsters who spend all their time on digital, keeping track of what is happening and coming up with new stuff.
A: Given the predominance of technology and RG Blue’s digital orientation, to what extent have you had to change the agency’s skill profile?
KS: The people who are busy churning out conventional work will become obsolete and they won’t even realise what they have done to themselves. We have to inculcate change and provide our teams with the skills to cope in a changing world. We have fortnightly training sessions and 70% of the sessions are on digital and it is mandatory, especially for the senior people, to attend. Many times they feel under pressure when asked to work on digital because they have to work out-of-the-box. But I can safely say that 90% of our people are now comfortable with digital. Our younger creative people develop videos in-house because digital does not command the same budgets as TV does. Our vision is that by June 2020, we will be a digital-driven agency and 100% of our people will be digitally savvy. We will continue to work on conventional media, but our ideas will be driven from the digital platform and executed on the conventional side. The difference between conventional and digital media is that conventional media relies on static content and digital on dynamic content, and with dynamic content, there is no end to it. Every day something new happens. We need youngsters who spend all their time on digital, keeping track of what is happening and coming up with new stuff. We have a young man who interned with us while studying at Iqra University. As we wanted to retain him, we are sponsoring his studies and we have asked him to explore what is happening on digital in his free time and share it with us. This is his only assignment. We have combined our digital and conventional strategy teams and we did the same for our client services team. Everyone is talking the same language and their learning curve has increased. We have an in-house IT developer whose job is to train the team on anything new that comes up. He is not supposed to develop anything himself; his job is to make sure it is developed by the team.
A: Are you looking at an affiliation or is this becoming irrelevant?
KS: Given the direction we are headed, I don’t think an affiliation is the way forward. Affiliations help in terms of learning and strategy, but we are connected with digital giants such as Facebook and Google and we learn from them.
A: The advantage of affiliations is that they bring in a larger client base.
KS: Our focus is on Pakistani clients. They want quick results. They are not so interested in what services you can offer as much as they are in real value addition. They want results and this puts pressure on us to come up with strategies that work. Coming up with a TV media plan worth Rs 100 million is easier to do than spending five million rupees on generating results, when every day the seth is sitting on your head and asking what has happened to this and to that. It is irritating, but it keeps us on our toes. You are always efficient; you have to come up with cost driven solutions that are smart.
Khalid Saleem was in conversation with Mariam Ali Baig. For feedback: email@example.com