What used to be considered the developing countries of the Third World are quickly becoming the emerging economies of the next world. BRIC: Brazil, Russia, India and China are four markets with unique characteristics, but are nonetheless tied together by the potential created after changes in their political systems unleashed the consumer demand of 43 percent of the world's population. Already, five of the planet's top 10 cities -- centers of wealth generation for consumers climbing the economic ladder -- are located in the burgeoning BRIC.

The term entered into business parlance in 2003 after Goldman Sachs global economist Jim O'Neill outlined his future worldview. He believed BRIC possessed the economic potential to become the world's four most dominant economies by 2050, which could be larger than that of the U.S. and Western Europe combined.

Recent headlines about the bailouts of major U.S. financial institutions and speculation about the dollar's fall from global dominance underscored the shift in power towards Asia that has been well under way. China and India, along with Russia, are expected to be among the fastest-growing economies in the world this year (although a U.S.-triggered global downturn could impact the BRIC economies, which are still heavily driven by exports).

Even before the coining of BRIC, WPP Group CEO Martin Sorrell identified the potential in such emerging markets, an expansion strategy often noted by Wall Street analysts when recommending WPP's stock. WPP agencies are now at the top of the agency food chain in the BRIC countries and command the lion's share of media buying in populous giants India and China. While 82 percent of WPP's revenue is generated by Europe, the U.K. and the U.S, the company believes that by 2015, 40 percent of its revenue will come from Asia alone.

From a marketing perspective, not all countries are weighted evenly within the BRIC equation. With their explosive growth and massive populations, China and India are dominant factors, often described as Chindia. But the two cultural mind-sets couldn't be more different.

"India boasts a developed managerial mind-set while China's entire economy is
production based," says Tom Doctoroff, CEO of JWT China. "This fundamental difference springs from very divergent cultural orientations. Indians are Brahmanist conceptualizers and theorists while the Confucian Chinese are, and have always been, bureaucratic and incremental pragmatists."

One of the biggest challenges for marketers and their agencies is the sheer scale of the BRIC countries and the difficulty in reaching far-flung consumers with different cultures, languages and traditions. The marketing infrastructure in countries like China, India and Russia is still under development, and Western aspects of doing business that are taken for granted elsewhere -- such as national retailers -- are still in the making.

Companies like Unilever now derive over 40 percent of their sales in developing and emerging markets, compared to 26 percent in the '90s. To manage such dispersed operations, the packaged-goods giant had to centralize its brand-development efforts while tailoring its brand building locally.

"We had ended up with 100 Unilevers around the world in the mid-'90s all doing their own thing with little central direction," explains company rep Trevor Gorin. "We needed a global approach to branding, to utilizing the synergies of a $40-50 billion company's marketing organization."

At Kimberly-Clark, sales in its "BRICIT" markets (the company includes Indonesia and Turkey in the group) have grown more than 15 percent over the past four years.



"The biggest challenge in these markets is to anchor your brand with a premium positioning," says Robert Abernathy, group president, developing and emerging markets for K-C. "It's tempting to position it otherwise because many of these people are low-end consumers. But it's important to establish yourself as a marketer of high-performance, premium products and then come back with multiple price points."

For agencies, developing a strong presence in countries like China and India has become a necessity. Global account consolidations increasingly turn on the strength of agency operations there; holding company stock prices increasingly reflect the extent of business derived from these markets.

Thanks to acquisitions like Saatchi and Bcom3's Leo Burnett, Publicis has become a more competitive player in these countries.

Omnicom has trailed its industry peers and is now investing heavily to catch up.

China and Russia are now among the world's top luxury markets as newly affluent consumers want Western badges of status to signal their arrival into prosperity. And because rapid change has become the norm in BRIC countries, consumers are becoming fast adopters of technology.

"Technology is leapfrogging the normal product life cycle in the West where you tend to have in-home media, radio, billboards, PCs, laptops," says ZenithOptimedia CEO Steve King. "That comfortable life cycle isn't happening in these markets. In the old days, we could export our best (headquarters) knowledge into these markets. Now there are new opportunities with media owners, with embedded advertising and content. Mobile, which already outnumbers landlines, is becoming a huge growth platform. It's leapfrogging media, eliminating desktops and laptops."

King cites Shanghai Media Group as an example of the pace of innovation. The media company handles TV production, and owns portals, radios and magazines. It streams programming on mobile phones with  embedded advertising that can't be fast-forwarded. "It used to be we were dealing with Third World media," he says.

"Now, it's 'God, this is frightening, they're already developing things we haven't thought of yet.'" The high growth rates in countries like Russia and China have driven up media inflation, with prices rising five to 10 times faster than in the West.

The biggest investment -- and challenge -- for any company doing business in BRIC countries lies in people. Training local staff has become an imperative and retaining them is difficult, and often expensive, as the limited pool of homegrown talent regularly trades up for bigger paychecks and titles.

Staffing issues exist on the client side as well. "We've had to build a relationship with local advertisers, based on equal footing, people who are not used to working in a market economy or used to marketing tools," says Publicis CEO Maurice Lévy. "We have to educate them and make them understand that out of the millions they give us, we have to pay salaries. We also need to get them to respect intellectual property because it has value and creative work has value."



As the dimensions of the consumer world quickly change, Goldman Sachs has already coined "N11," a shorthand for the "next 11" countries nipping at the heels of the BRIC markets as investment opportunities. They are Bangladesh, Egypt, Indonesia, Iran, South Korea, Mexico, Nigeria, Pakistan, the Philippines, Turkey and Vietnam.

The newly dynamic countries of Central and Eastern Europe are also remapping the world for marketers. Alex Herdt, CEO of Ogilvy Group's operations in those countries, argues that with the 10 new Eastern countries that have joined the European Union (forming a "Corporate Europe"), the EU has an economic value comparable to the U.S.

Marcel Fenez, a Hong Kong-based global managing partner at PricewaterhouseCoopers, expects global ad spending to increase by more than $100 billion in the next five years, fueled by the Web, TV distribution, video games and casinos. (China's Macau has now surpassed Las Vegas as the world's largest gambling center.) Fenez also expects that a quarter of that growth will come from the BRIC countries. Still, he cautions that global marketing dollars alone won't guarantee success with BRIC consumers.

Brazil: The most Western and mature BRIC

A country known for images of its poor living in shantytowns now boasts the highest level of home ownership among the BRICs. The past three years have been good for Brazilian consumers. After years of hyperinflation, the country's fortunes have been boosted by hard-won macroeconomic stability and government social assistance to those living at the lowest economic tiers.

"For the first time in recent Brazilian history the middle class grew and the consumption indexes of the bottom of the pyramid showed significant improvement," says Marlene Bregman, director of marketing services, Leo Burnett Publicidade. "The impact of this shift is big. ...  We are talking about 20-30 million people consuming more and/or entering the marketplace."

Ironically, that expansion of a consumer class has occurred even as Brazil's economy has slowed in recent years. In fact, Brazil's economic growth is tepid compared to the other BRIC countries and it is more different than similar to those emerging economies. It is the most Westernized of the group for one thing, and has a more mature marketing communications business, with an ample supply of talent and award-winning  advertising.

Today, some 35 percent of Brazil's population of 180 million are considered middle class. One telling sign: The use of credit cards has soared 200 percent since 1999. Brazil has the highest concentration of car ownership among the BRIC countries and its consumers are moving beyond buying basic necessities and demanding more sophisticated products like cell phones and computers. (Interestingly, Brazil lags China and Russia in PC ownership.)

"Around 30 percent of Brazilians [still] buy 80 percent of the announced products," says Eddie Gonzalez, chairman, Young & Rubicam Brands, Latin America. "Therefore, the Brazilian communication industry is highly sophisticated when speaking to that group and less innovative when the focus is the remainder of the population."

Sergio Amado, chairman, Ogilvy Group, Brazil, is more blunt: "The majority of the brands in Brazil are not able to talk with the lower-income consumers."

Unlike its BRIC counterparts, Brazil's advertising --  in particular, print and outdoor -- is known outside Sao Paulo creative corridors, thanks to award wins at shows like Cannes. In the '90s, the country's agencies went through a creative renaissance similar to what happened in New York in the '60s. Now as the country's advertising goes more mainstream, some wonder if it is losing a touch of its previous edge.



That renaissance "led to creatives heading up agencies and as a consequence a lack of creativity [based in] strategy," says Y&R's Gonzalez, who adds that by 2000, the local industry struck more of a balance. "This fact, when looked at single-handedly, can give the impression of a loss of the creative capacity, but, in fact, it is exactly the opposite—there was a huge gain in efficiency."
 
Sergio Valente, CEO of DDB, which bought local hot shop DM9 in 1997, adds, "Although there has been local talk about a creativity crisis, I do not believe this. The economic stability we now have brought a somewhat 'settled' advertising. Brazilian advertising is highly eclectic; it has humor, it has emotion, it is powerful."

Multinational agencies dominate Brazil. In the last five years international networks partnered with or bought local agencies accounting for nearly all of the 10 biggest shops. Other multinationals like McCann, led by globetrotting clients like Esso, have been there for 73 years. Advertising is a glamorous, well-paid job in Brazil, and the social moves and love lives of certain executives are tabloid fodder. Y&R Brazil president Roberto Justus stars in ad campaigns and hosts the Brazilian version of The Apprentice. One of the industry's most high-profile executives, Washington Olivetto of W/Brasil, drew international headlines after he was kidnapped in December 2001 and held in captivity for nearly two months.

By law, media agencies are not allowed to operate in Brazil, a provision that has prevented media unbundling which agencies say allows them to prevail in channel planning. But one executive at a global media company says that law has also prevented the kind of media clout that forces price negotiation: "The Brazilian media market is a cozy cartel controlled by the country's two biggest media owners who don't want us there."

Those two vendors are Editora Abril, with about 70 percent of magazine ad budgets, and Rede Globo, with about 70 percent of TV's ad dollars. (Muti-channel subscriber TV has yet to make an impact and media fragmentation is still nascent.).

"If you want to buy very good [TV] slots, best positions, you have to buy in September for the full following year," says Luca Lindner, McCann Worldgroup regional director, Latin America/Caribbean.

Brazil may be one of the only markets in the world where agencies, per a 1998 law, have to be paid 15 percent commissions. Globo's dominance also impacts the country's TV production values.

"Globo drives the agenda, the way serials are shot, the way commercials look. Creative experimentation is not very strong," says Stefano Zunino, CEO, JWT, Brazil. "It's not that Globo is controlling, it's just that consumers are used to one kind of TV advertising."

Even though Brazil's more mature economy isn't growing at the rate of other BRIC countries, multinational marketers have been rewarded for their investment. Brazil was one of the first countries targeted by Farine Lactee Nestlé and provided the inspiration for the company's first global brand: Nescafe. (Nestle is now the country's largest food company.)

"Omo [detergent] is Brazil's biggest brand, bigger than Coke," says Unilever's Gorin, who says the company has been in Brazil for over 75 years.



"It's considered a Brazilian brand. The same is true of Dove. It's fantastic for an advertiser—people feel you are part of their consumer texture."

The growing dynamism of the market is driving the creation of strong local companies. In 2004, the merger of Belgium's Interbrew and AmBev of Brazil created InBev, the world's largest brewer by volume. One year later, Latin America alone accounted for almost 50 percent of the new group's earnings.

"During a long time, Brazil had a closed, protected market, causing a huge repressed demand on automobile, high technology, luxury and other imported items," says DDB's Valente. "In the '90s, the market opened its doors to imports and their high quality pushed local industry to achieve higher quality standards, for competition increased."

Brazilian Highlights:
-- Population: 180 million
-- 2008 Estimated GDP Annual Growth: 4.5%
-- 2007 Ad Spend: $8.3 bil. '08: $8.8 bil.
-- Brazil has the largest number of MSN Messenger users worldwide, as well as the most members in Orkut, the Google-sponsored social networking site.
-- About 35% of Brazilian families are middle class, representing 50% of total consumption.
-- Some 68% of the Brazilian population owns their house. Of these, 80% own houses, 20% apartments.

Russia: Corruption gives way to consumerism

In 1998, the head of Publicis' Moscow office was beat up by local racketeers trying to sell him a protection contract. The agency immediately pulled out of Russia. The local industry was virtually demolished that year as other agencies bailed out of a country whose business practices were becoming increasingly corrupt and dangerous for foreign executives.

Since Vladimir Putin was elected president in 2000, Russia has benefited from structural economic reforms as well as higher global oil prices stoking the country's petro-economy. One indicator of that change: Publicis reopened in that market and, bolstered by its absorption of D'Arcy Masius Benton & Bowles, is now the largest multinational. All the holding companies are again represented in Russia and WPP, which formed a joint venture with Video International in 2004, is now the largest entity.

Much is made of the country's flashy new oligarch money. Russia now has 53 billionaires, and Moscow alone is home to 88,000 millionaires. On any given night they drop tens of thousands of dollars on drinks in the ultra exclusive lounges in Moscow's nightclubs, rubbing shoulders with a new generation of wealthy youth who have no recollection of Soviet-era food lines. Russia has already become the world's fourth-largest luxury market, which is expected to ring up $13 billion this year, nearly twice the amount of just two years ago.

Outside of cities like Moscow, what was formerly a pastoral dacha area is now home to Barvikha Luxury Village with retailers like Giorgio Armani, Tiffany, Prada, Ferrari and Lamborghini. For the last three years, Moscow has hosted the Millionaire Fair where, in 2006, 38,000 people came to look at jewel-encrusted pencils, helicopters and dresses stitched with dollar bills. Those who can't afford such extravagances like Cartier watches or Chanel couture settle for Cartier cigarettes or Chanel perfume.

"Luxury products gradually cease to serve as show-off elements only and are more and more used for personal pleasure," observes Dmitry Korobkov, chairman, ADV Marketing Communications. "In Russia the number of people who exploit luxury brands to demonstrate their status is still high, yet there is a noticeable tendency to shift motivation towards personal pleasure."



If not yet on that luxury threshold, the plight of Russia's rank and file is improving. Workers' salaries have doubled since 2003 and the country is also home to a newly developing middle class. While one in five Russians still lives in poverty, others are enjoying newfound discretionary income. (Due to privatization, many Russians now own their homes, the government subsidizes utilities, and citizens pay a flat 13 percent tax.) By some estimates, Russians are now spending 70-80 percent of their per capita income at retail. Consumption grew by 27 percent, in U.S. dollars, in 2006 and sales in the retail, consumer goods, finance and construction sectors are expected to increase 40 percent over the next several years, according to investment bank Renaissance Capital.

Not surprisingly, Western marketers like Coca-Cola, Ikea, American Express, Nestle, Wrigley, Procter & Gamble and Unilever are rapidly expanding there.

As a result, Russia is also one of the fastest-growing ad markets, with spending increasing in excess of 20 percent year over year.

But for all of its prospects, marketers and agencies find Russia's complex scale and diversity extremely challenging.

Crossing vast steppes and tundra, the country covers 11 time zones and is home to dozens of peoples, cultures and languages. How tough a job do marketers have? Consider Khanty-Mansiysk, Russia's fourth-richest city, which has the highest per-capita income in the country. But its 18,000 inhabitants are isolated in northwestern Siberia where tough winters make mail deliveries difficult and they don't get all of the country's terrestrial TV channels.

Television is the predominant media in tackling the country's scope of consumers and the number of channels has doubled since 2000, enabling marketers to better reach those diverse audiences. Media is still largely in the hands of the state. WPP partner Video International -- a media sales group founded by a Putin advisor -- controls 80 percent of TV sales.

Russia's rapidly growing consumer culture is stoking media inflation, with prices up  40-50 percent the last couple of years and expected to increase similarly this year. TV costs have risen by 237 percent between 2005 and 2008.

In 2006, the government reduced the number of minutes of ads per hour from 15 to 12. This month, they were further reduced to nine minutes.

Perhaps not surprisingly, certain marketing disciplines are harder to implement.

Conventional public relations, for instance, doesn't work as it's widely understood that businesses pay for editorial coverage. Lack of data precludes sophisticated direct marketing efforts. Harking back to the closed society of the Soviet era, official consumer data is often inaccurate and income statistics have been underreported due to tax fears and threats from organized crime. But now that research companies like WPP's TGI and TNS Gallup have entered the country, consumer information is becoming more reliable.

Russians are embracing new technologies. A full 60 percent of Russians now use mobile phones compared to 5.1 percent in 2001. PC ownership has risen to 31 percent, up from 12 percent seven years ago, and 21 percent of the population now use the Internet.



"Increasing use of mobile phones and computer penetration are creating new opportunities. Russian consumers are not only advertising and marketing literate, but they're also very receptive to it. They're less cynical than consumers in the U.S. and the U.K.," says John Farrell CEO, Publicis Groupe specialized agencies and marketing services.

Russia doesn't have a long history of advertising. In the Soviet era, the Ministry of Foreign Trade ran an agency, Vneshtorgreklama, which was a clumsy effort at foreign trade advertising. Early post-Perestroika efforts from local entrepreneurs were essentially notices of product availability and pricing. Multinational agencies, following their global clients, largely created the industry as they moved into Russia in the '90s.

"With Perestroika, we had a very strange revolution," says Sergey Koptev, CEO, PGM Eurasia in Moscow. "We were not consumers, we were buyers and often products were not available. When products became available, we had the evolution to becoming consumers and as young consumers, it is trial, trial and trial. Even for very well-established brands, people are not brand loyal at all -- it's all very exciting. Whether it's an old lady with her sausages or a new brand of milk or the wealthy with a new expensive toy, if they can afford it, they try it."

No doubt Russia is among the world's fastest growing ad markets. But unlike China, where its growing economic prospects are more widespread (that country's highest GDP growth is in its third- and fourth-tier markets), Russia's growing affluence tends to be located around areas involved in the oil business whose fortunes fluctuate with global pricing. Marketers face other uncertainties as well. In a country with fragile Democratic traditions, politics may be unsettled; Putin's future role is still unclear as the outgoing president seeks  to maintain control. Though there's been stabilization, Russia has had a rocky transition to a market economy: GDP has grown steadily since the late 1980s, but Russia's economy deteriorated after Mikhail Gorbachev's reforms, and the marketing communications business has not steadily built its presence the way it has developed in China.

Many foreigners in Moscow still find it a chaotic Wild West business culture, requiring a great deal of local knowledge and contacts. In the era of Sarbanes-Oxley, dealing with some local clients is simply off limits for multinational agencies.

What might be viewed as corruption in other markets is just standard business procedures in Russia. One exec at a multinational agency recalls an ultimatum made as his company was merging two of its agencies: "You need a 'roof' in Russia, an institutional requirement to have some level of protection, to pay people to look after you in business. [During the merger] I had my managing director held up at gunpoint by a 'roof' rep who advised him to pick the right 'roof' in the merged organization."

Just last September, Moscow's Central District Police Department arrived at BBDO's offices, claiming software licensing violations and asking for $1 million in fines. The agency had just completed a KPMG audit and knew that wasn't the case. The police department lowered its fine to $500,000, then $250,000. BBDO held strong and ended up paying 50 rubles pertaining to some graphics software that had been bought by an employee for his laptop that happened to be in the office.

The most essential problem is the image of Russia, which still leaves much to be desired, says ADV's Korobkov. "Companies and public opinion tend to extrapolate general opinions to the advertising market. The other side of the same problem is that Western colleagues often underestimate the professionalism of the Russian ad makers, while the algorithm of creative agency work has been the same in Moscow, New York and Hong Kong for a long time already," he says.

Russian Highlights:
 Population: 141.8 million
-- 2008 Estimated GDP Annual Growth: 6.3%
-- 2007 Ad Spend: $9.1 bil.  '08: $11.3 bil.
-- Russia's oil and gas industry accounts for nearly a quarter of the country's GDP; its tax revenue, one-third of all state income.
-- Car sales are growing 70% annually and this year sales in Russia are expected to surpass those in Germany.



India: 'A marketing man's dream'

In India, creative personalities like McCann's Prasoon Joshi and Ogilvy's Piyush Pandey are stars on par with Bollywood celebrities. In fact, India's film business -- which this year will produce more movies than Hollywood -- borrows freely from the country's ad business and many agency execs also dabble in the film biz.

Inevitably, Mumbai agency execs traverse both worlds as they gush about the pace of change and opportunity in India.

"India is a place even Spielberg couldn't have thought of in his wildest dreams," says Colvyn Harris, CEO, JWT India. "Land here and wonder how someone could have imagined a set like this."

It's hard to imagine how fast that social backdrop is changing. Twenty years ago more than 90 percent of Indians lived on less than a dollar a day; now the country boasts more millionaires than the U.S. The ranks of desperately poor have been reduced to 54 percent of the population, from 93 percent, according to McKinsey & Co. The perception of a country blighted by poor rural villages and urban slums is being replaced by the new glass and steel buildings of Bangalore, India's Silicon Valley.

While China's stratospheric growth has captured the imagination of marketers, India's grassroots revolution is expected to yield larger results, long term. Goldman Sachs estimates that India's growth rate will be the highest of the BRICs in coming years and the country will overtake Japan as the world's second-largest economy by 2032.

Of all of the BRIC markets, India arguably has the best potential for a stable middle class. Indians place a high premium on education and the country's knowledge-based economy has reduced the income extremes that have long characterized its social strata. Since the early '90s, with India's shift away from Socialism, the country has become more of a Westernized economy open to free-market ideas, with a parliamentary government and contract law. But perhaps the most compelling aspect of sociological change is the country's youthful optimism: Half of India's population is 25 years old or younger.

"The sooner people understand how young a country we are, the better they'll do here," says Anil Kapoor, DraftFCB regional president, Asia/Pacific and Africa. "We have a lot of happy people looking forward to the future. The economy is moving strongly, markets are growing rapidly. It's truly the land of opportunity, a marketing man's dream."

Joshi, McCann's executive chairman, India, concurs. "India is emerging as a more confident country. People who used to talk about dreams now talk about hope. Building aspirations around products used to be the  mantra here. In the new India consumers are very confident. They want promises that are achievable," he says.

India's middle class currently numbers some 50 million people. But McKinsey estimates that number will grow to 583 million by 2025, about 40 percent of the population. Compare that to 20 years ago when much of the country depended on government subsidies just to consume enough calories each day.

For industry multinational marketers and agencies, India has built-in advantages not found in China and Russia. Despite its many languages, it has more of an affinity to English because of its colonial past. It's a data-rich country, thanks in part to India's pervasive IT business.



Bollywood has influenced production technology and experimentation. The Advertising Agencies Association of India is 75 years old and India's Audit Bureau of Circulations is 70 years old. There is a long-standing professional class.

"The actual depth of talent is much deeper in India than in China," observes Lowe CEO Steve Gatfield. "The country has a longer tradition of an agency sector. It has to do with Hindustan Lever, which benefited its agencies."

Hindustan Unilever, which has been in the market since 1933, is the largest consumer products company in India. (It is two- to three times the size of the next biggest marketer in India.) The company is a corporate gold standard in India and is a first-work choice among new graduates from India's best universities. The multinationals who have worked for the client—JWT, Ogilvy & Mather, McCann Erickson and Lowe—are still the country's strongest players.

India has a staggering array of media. WPP's MindShare unit, which buys media for Unilever, has a firm grasp on the market, controlling more than 40 percent of India's media billings. By Lowe Lintas' reckoning, India has about 300 TV channels, 12,000 newspapers, 60,000-65,000 magazines, 12,000-13,000 cinemas and 1,000 radio stations. Almost 65 percent of the population lives in rural areas and six out of 10 consumers still don't have access to mass media.

That variety of media underscores the diversity of the country, which has 22 official languages, with Hindi its most predominate. In tackling rural India, marketers would have to deal with 16 languages and more than 2,000 dialects, according to Ashish Bhasin, Asia regional director, integrated marketing, Lowe Lintas. "Different parts of India are like different countries. The north of the country is completely different from the south, with different races, subdivisions and fragmentation. It's very complicated."

To tackle that complexity, Lowe Lintas employs 10,000-15,000 field service personnel. The agency has collected extensive geographic data covering 650 districts, 4,500 towns and 6,000 villages in India and has created digital maps for marketers that are more precise than even the ones used by the Indian Army, says Bhasin. As marketers plan their field campaigns, Lowe customizes the data to suit their objectives. Some marketers might want to focus on activities near a road, where areas are more built up; some might prefer a location near a haap, a weekly shanty market, or a nela, one of the 60,000 annual fairs and festivals.

"You can sit in Bombay and plan, but how do you know what's happening in the field?" asks Lowe's Bhasin. "We have field force supervisors who upload photography and information from cyber cafes and post offices and clients can see in real time how the campaign is progressing and take corrective steps, if necessary."

Despite such sophistication in problem solving, India still poses considerable challenges. Harkening back to its Socialist past, the country still has tight controls on foreign investment, strong unions and a restrictive retail environment.

"When you walk into India, the infrastructure is appalling," says DraftFCB's Kapoor. "The country's hardware still leaves a lot to be desired while its software is tremendous. The good news? Almost 20 percent of the world's population lives here. The bad news? We still have miles to go. But in the next  10-15 years, it will all be fixed."

Indian Highlights:
 Population: 1.1 billion
-- 2008 Estimated GDP Annual Growth: 7.9%
-- 2007 Ad Spend: $5.8 bil.  '08: $6.7 bil.
-- There are 250 million consumers now considered middle class.
-- India added over 17,000 millionaires in 2006.
-- It also has the highest growth in high net-worth individuals, after Singapore.
-- India is one-quarter the size of America with four times the population.
-- The country has over 200 TV channels and more than 10,000 publications in at least 18 languages.



China: Olympian leap to new world image.

To appreciate the pace of change in China, consider this: Fifteen years ago an advertising community hardly existed. Last year, American entrepreneur Fredy Bush's Xinhua Finance Media went on a buying spree, scooping up mobile, outdoor, advertising and production assets to focus solely on China's high net-worth consumers, with liquid assets of at least RMB 1  million ($138,081). Bush says there are already 140 million in this group  and another 365 million about to join their gilded ranks.

Brand China goes on display this summer during the Olympics and with it, the  staggering change under way in the world's most populous country. This year, China's GDP will make it the world's third-largest economy and for the first time, Chinese demand will become the main impetus for world economic growth, overtaking America.

China now has 163 cities with populations of more than 1 million people. By comparison, Western Europe has 24 of the same size and the U.S., 12. Major marketers are moving beyond China's most affluent areas, if they haven't already done so, and are shifting their focus deeper into tier 2 and 3 areas, adding a new level of complexity to a market that is already one of the industry's most challenging.

"The realization of how different these cities can be from each other is  hitting home. There is no homogenous 'Chinese consumer,'" says Carol Potter,  CEO, BBDO/CNUAC, Shanghai. "While local Chinese agencies still lag behind the international agencies in their strategic and professional capabilities, international agencies have a hard time setting up and getting representation outside of Beijing, Shanghai and Guangzhou because they are not making enough money as it is. They cannot afford to invest in regional offices to get that kind of local understanding."

Last year, there were more ad industry acquisitions than in the previous five years combined, according to Asian industry consultants R3. In addition to field marketing operations, holding companies snatched up digital shops.

Strengthening resources on the Mainland has become critical: R3 said China played a critical role in the outcome of recent global reviews like Nokia, Johnson & Johnson, Dell, Samsung and Wrigley. China has become a center of product development for marketers, with some of those innovations, launched globally. Agencies like Ogilvy & Mather are already producing advertising in its Beijing office that is being used elsewhere in the world.

"Next year China is expected to overtake Japan as the second-largest ad market," says Miles Young, chairman, Ogilvy Asia Pacific, which runs the largest mainland group. "And how much longer, after, before it overtakes the U.S.? This part of the world has to be as sophisticated as the West. Now you have agencies here with the same global standards as anywhere else."

With the evolution of the Chinese marketing communications industry, clients  are demanding more accountability.
 
"More and more marketers are now conducting media and financial audits in  China to validate agency performance than ever before," says Greg Paull, principal at R3, Beijing. "In recent years, the market has become so critical globally for companies and they are bringing in the world's best practices into their operations."

Advertising related to the Olympics began over a year ago and is set to boom as the August games approach. In November at the raucous annual China Central Television auction of prime-time slots, the country's biggest traditional medium reeled in nearly $11 billion in ad spending this Olympics year, about 20 percent higher than in 2007. One new development was the amount of local money at the auction, where multinational marketers were actually outbid by more aggressive Chinese companies.



The state-owned national network is a power unto itself in China, censoring ad content before it airs. CCTV is facing new competition from other media, including provincial stations which have hit shows and digital media. As a voice of the Communist Party, CCTV is subject to restrictions and limits on programming, so it is somewhat limited in the kind of innovation it can attempt.
 
"The major challenge for marketers in China is to reach consumers through the increasingly cluttered media environment which is surrounding the consumer," says Paul Pi, vp, marketing, Adidas, Greater China, an Olympic partner. "The digital platform is becoming increasingly important to the marketing mix within China."

This year, for instance, China will surpass the U.S. as the country with the largest number of Internet users.

As the only Chinese company to be an Olympic worldwide sponsor, PC maker Lenovo will be the first sign of the arrival of China Inc. on the world stage just as the 1964 Tokyo games introduced Japanese companies to a larger global audience.

In recent years, Western auto companies have capitalized on China. Now the
country has become the world's second-largest car market with local companies like Chery (this being China, the company's name mimics Chevy) beginning to sell branded vehicles in the U.S., Europe and Latin America through an alliance with Chrysler.

One of China's most fascinating recent client developments occurred in December. Appliance maker Haier Group hired ex-Motorola and ad agency exec, American Larry Rinaldi as its first global chief brand officer. Like most state-run companies, Haier -- which already sells products through U.S. and European retailers -- has focused more on tactical promotions than corporate brand building.

"This could be a watershed. If Haier becomes successful, a lot of Chinese companies could follow suit," says Tom Kao, chairman, Y&R, Greater China, who worked on Haier. "A lot of Chinese brands are ambitious and want to become worldwide brands. But there are few Chinese brands that have become successful in becoming a more global organization."

While some Chinese marketers seek a global profile, others are focused first in expanding in their own booming backyard.

"We're seeing more of the rise of the mid-sized local marketer," says JWT's Doctoroff. "They're eager to establish a marketing framework."

Those multinationals have their work cut out. Grey Group Asia has found that  across the region the majority of consumers surveyed, 73 percent, are interested in advertising, with the glaring exception of China.



"Only 27 percent believe there is any excitement [in ads], and [15 percent]  feel it is not exciting, and only 5 percent believe their advertising is  world class," says Mike Amour, CEO, Grey Global Group, Asia Pacific. "There is a truism that advertising is a window into a country's culture. So the Chinese people's desired view of their own country, and the view portrayed by advertising, may be out of synch. It's clearly a huge opportunity for
marketers."

And it's clearly a time of social change. There's a growing number of  working-age "empty nesters" as China's first generation of "little emperors" leave home. Those parents, estimated at 265 million and growing, have much more disposable income since they already own most of their household needs.

Those little emperors, who are swelling the ranks of China's first  professional class, are already redefining status in the world's third-largest luxury market.
 
"Ten years ago wealth was the most important aspect of status, but now  lifestyle is the expression of the newly arrived," notes T.H. Peng, CEO,  McCann Worldgroup, Greater China. He says the "old Chinese" way equated wealth with materialistic luxury and power.

And despite the considerable cultural differences that make that journey unique within each of the BRIC countries, brands are increasingly the common language consumers share in articulating that arrival.

China Highlights:
 Population: 1.3 billion
-- 2008 Estimated GDP Annual Growth: 10.1%
-- 2007 Ad Spend: $16.6 bil.  '08: $20.9 bil.
-- China had 210 million Internet users at the end of 2007 and in 2008 will surpass the U.S. as the country with the most Web users.
-- China is already the world's largest mobile phone user population, with 500 million owning the devices.