Monday, June 13, 2011

How You'll Advertise in a Newly Capitalist Cuba

How You'll Advertise in a Newly Capitalist Cuba

When the Country Opens Its Doors, Companies Will Face Consumers
Unfamiliar With Modern Marketing
By: Matthew Creamer
Published: June 13, 2011

When the U.S. embargo of Cuba is lifted one day and American brands can
finally pour into that untapped market just 90 miles off Florida, one of
the hottest commodities may be the knowledge of Adam Armstrong, a
37-year-old ad exec little known outside Toronto.

Mr. Armstrong, now owner of Graymatter Design & Marketing, has an item
on his resume not many others can claim. For the better part of seven
years, he worked in marketing in Cuba, where for five decades no
marketing -- as we understand it -- has been allowed. Working for
Cerveceria Bucanero -- first at its agencies and then directly for the
company that was at the time a joint venture between the Cuban
government and the Canadian brewer Labatt -- he saw the Cuban people as
few others have: as consumers.

"The thing about Cuba and probably most communist states is that there's
always a craving for capitalism and capitalist ways and by no means is
Cuba an exception," he said. "There's a certain amount of advertising
and marketing that still goes on there even though it's frowned upon."

Mr. Armstrong found the consumer base was receptive but the system less
so. His biggest frustration -- and the thing that marketers will have to
get used to -- is the very slow pace of the market. Mr. Armstrong's
biggest annoyance during his time working in Cuba was the red tape and
bureaucracy he had to deal with, which most likely won't evaporate
overnight. "Getting anything done is a struggle," he said.

This experience is as good a forecast as any for what an open Cuba will
look like to the rest of the business world. Cuba has been mainly walled
off from the global economy since 1959, when Fidel Castro's communist
government took over the resort island where wealthy Americans flocked
for sun, sand and gambling. The resulting economic blackout by the U.S
outlasted the fall of the Soviet Union, the decline of Fidel and, so
far, the modest attempts at economic liberalization by his brother, Raul.

When the day comes, marketers will introduce themselves to a complex
group of consumers that, while far from hermetically sealed off from the
commercial world, haven't evolved to possess the marketing defenses that
ad-saturated folks elsewhere have.

In Cuba, there is no free media and no advertising. Billboards still
dictate communistic propaganda. Newspapers are state-controlled, as is
the broadcast media. Cuban officials try to jam broadcasts from the U.S.
(it's unclear how successful those are in reaching Cubans). Internet
penetration is under 3% and what access there is tends to be slow. Much
web surfing goes on in schools and the workplace, where government
monitoring is particularly easy. Mobile penetration is just as bad, with
only three subscribers for every 100 people signing up for the very
expensive and spotty service. Only six countries have worse mobile
penetration, among them North Korea and Myanmar.

But Cubans aren't blank slates when it comes to brands. In addition to
the black market, which is supported by the expat community and wins
recognition for foreign brands among the locals, there's an influx of
tourists from Canada, Europe and Latin America, all combining to create
a highly filtered flow of news and information -- enough gets to them
that iPhones are recognizable to Cubans. A website called Revolico has
become Cuba's version of Craigslist, facilitating some commerce. A
partial listing of brands for sale there includes Puma, Adidas, Wahl,
Apple, Zara, Reebok, Dolce & Gabbana, Samsung, Seiko, Calvin Klein,
Casio and Rolex. You can get what you want, provided you have the money
to spend -- which Cubans don't.

Here's how Juan Carlos Ortiz, president of DDB Latina and a native
Colombian who went to film school in Cuba, put it in his book "Cortos":
"In Cuba, marketing flows in an inversely proportional manner to the
rest of the planet. People all over the world are constantly
interconnected, and move forward as a group, opening up a space that is
ever more interactive. In Cuba, disconnection, silence and individual
isolation take priority, ensuring that the island is evermore shut."
The right approach: Adam Armstrong (bottom) found that Cuban consumers,
like those elsewhere, preferred aspirational ads, rather than those that
reflected reality.
The right approach: Adam Armstrong (bottom) found that Cuban consumers,
like those elsewhere, preferred aspirational ads, rather than those that
reflected reality.
Adam Armstrong: Cubans are 'excited to see pictures of people smiling
and pretty people having a great time.'
Adam Armstrong: Cubans are 'excited to see pictures of people smiling
and pretty people having a great time.'

Which may prove an advantage for marketers, at the outset at any rate.

To put it in automotive terms, the state of Cuban consumerism is much
like the MacGyvered Detroit classics from the 1950s wheezing down
Havana's boulevards. Mr. Armstrong even compared his experience to the
show "Mad Men."

"It's like advertising in the '50s and '60s when everything was just
brand new and the consumers weren't nearly as sophisticated.The
messaging doesn't need to be quite as sophisticated. You see the ads
that they produce on that show and it's kind of laughable. Cubans
haven't been exposed to as much of that type of advertising as we have.
They're almost at that beginner level. You just needed to be pretty
basic and straight up the pipe," he said.

Legal restriction on advertising meant that much of Mr. Armstrong's work
was at the point of sale, creating banners and posters. As part of an
effort to reverse declining share and to keep the brand top-of-mind with
Cubans, he worked with beer brand Cristal to create a national battle of
the bands in 2005. That project involved logo development and created
Cuba's first branded beer carton. He learned about the power of the
simple ad sensibility the hard way. In some of his first work, he tried
to use what makes Cuba special, specifically focusing on its rustic
qualities. It fell flat.

"I quickly found out that that's not what they want to see," Mr.
Armstrong said of Cuban consumers. "They're excited to see pictures of
people smiling and pretty people having a great time, and they very much
don't want to be reminded that they are potentially a second-world or
third-world country. They wanted to see images of what the country could
be vs. what it is."

So then Cubans are not that different from consumers elsewhere: open to
idealizations and fantasies. The difference is that in the absence of
much product choice and media fragmentation, they're not as sophisticated.

I asked Mr. Armstrong for brand qualities that might stall growth in
Cuba for the foreign brands sure to flood in post-embargo. There's
little doubt that a wide swath of tourism and packaged-goods marketers
will rush in. The one hindrance he focused on is a heavy reliance on
American-ness, perhaps the best example of which is Budweiser. "It
really presses the American dream, and everything about it is American.
I think that there could be some resentment toward that sort of brand

It'll also be slow going for tech brands, given the horrid
infrastructure situation, which will have to change rapidly.

For many brands, there will be the fundamental question of whether Cuba
is worth entering in the first place. A GDP of a little more than $60
billion and a population of about 11 million (roughly the size of
Ecuador) isn't a base that will make Cuba a central focus of the global
business community. There's limited upside in the relatively small
market to balance out the hassles. But Cuba's location and history will
set it apart, at least for a time focusing attention there.

In an interview, David Radlo, who in 2002 became the first American egg
producer to export to Cuba, said in the best-case scenario "a new
Jerusalem" will materialize in Havana in a few years.

"The staunch political issues may die out of natural causes," he said.
"There will be free elections, or a Chinese-style capitalist
dictatorship emerges. We will embark on a Marshall Plan of sorts in
Cuba, building up infrastructure and economic property. The great
opportunity of commercialism and advertising will emerge with a strongly
literate nation that will be free to create, succeed and spend capital."

Which all sounds good for brands, but what about the people?

Along the way there will be a moral choice of sorts for American
marketers responsible for overrunning the country with hotels, soft
drinks and chips.

Mr. Armstrong dealt with it. Friends would ask him if he felt at all bad
about what he was doing. But, of course, that was in Canada.

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