Varis Lazo, Adell Saatchi & Saatchi Latvia: Banner advertising will die soon!

Varis Lazo

“It used to be so simple just 10 years ago – TV, outdoor, press – and you could reach the entire population. Now you cannot catch the attention of young people in the old ways,” says Varis Lazo, partner at Adell Saatchi & Saatchi agency and board member of Latvian Advertising Association (LRA).

Adell Saatchi & Saatchi Latvia employs 15 people plus some freelancers. Their top clients are Aldaris, Neste, Lattelecom and Alfa shopping center.

What are the main trends in the Latvian advertising market?

Latvian advertising association LRA recently published the media market results from last year. It shows that the market is very stable, the increase was just 2%. But internet marketing expenditure is increasing rapidly. And we do not know how much money goes to Facebook and Google, so probably the growth is even bigger.

Though internet marketing is ruling now, I think in the next few years the growth will stop. 200 Million people worldwide already use adblocking services. I believe that banner advertising will disappear in the next few years. Only 4-5 years ago it was such a big thing!

40% of people in Latvia are over 50 years old. Their media habits are traditional, they watch TV and that is why we see so many different magazines in Latvian shops and kiosks. Old generation still has old media habits.

The media market is very polarized, it has two extremes. Young people live in a completely diferent media space. They use their phones as their only media channel, they do not watch TV any more nor do they read print.

It used to be so simple just 10 years ago – TV, outdoor, press – and you could reach the entire population. Now you cannot catch the attention of young people in the old ways. The fact that they are on mobile all the time does not mean that you can put banner on mobile website and it will work.

In Latvia you see that increasing number of small companies are doing digital marketing. They can do marketing with a few hundred euros on Google and Facebook. There is a long tail effect – the budgets are small, but thousands of companies are doing digital marketing and in total it is a big money.

What keeps you busy, what is the most important thing your agency must focus on?

Creativity. It is the same as 5 years ago, nothing has changed. You have to find new, creative ways to get attention of the consumers.

With the shift to digital agencies have lost money. TV production used to be expensive and agencies had high mark-ups. Digital budgets are smaller and mark-ups are smaller too.

Our agency has always charged for the hours, for work. We have not been dependent on mark- ups and kick-backs. We sell our work, hours. So, it is not a problem for us.

The golden days for the agencies seem to be over in the Baltics. In the 2000-s there were many epic launches of new brands, new players entered the market. Now it is very quiet and stable.

Baltic countries are small markets. Companies do their math very carefully and some international players are leaving the region. In the 90-s many International companies entered and in the early stages they invested a lot in marketing to gain the market share and build the brand awareness. They maybe even over-invested. Now they are holding the market share and do mostly tactical marketing and try to maximize the return on their marketing investments.

Interviewed by Hando Sinisalu, Best Marketing International