Capitalist Trappings Are Slow to Come to Cuba But change is on the way

Capitalist Trappings Are Slow to Come to Cuba But change is on the way
By Noreen O'Leary
July 20, 2015, 7:40 PM EDT Advertising & Branding

Images of revolutionaries one day soon will be replaced by billboard
ads. Photo: Getty Images
This week America takes another step toward normalizing relations with
Cuba as it reopens embassies on the Caribbean's largest island. While
the U.S. embargo remains in place, barring the business activities of
domestic companies, foreign players have had more freedom in
anticipating economic opportunities if and when Cuba's state-controlled
economy opens up.
WPP is a case in point, tying its own ambitions to those of advertisers
eyeing Cuba. In a first among industry holding companies, the
London-based entity recently announced its move into the market in
partnership with state-owned Palco Group and has hired an executive
based in Havana.
WPP, a pioneer in China, has been down this road before, with Cuba more
akin to China's centrally planned economy. One of the first things Cuban
revolutionary leader Fidel Castro did in the '50s was to ban the
capitalist tool of advertising. "Conspicuous consumption" and "illicit
profit making" are still dirty words in Cuba, observed Joseph Scarpaci,
executive director, Center for the Study of Cuban Culture + Economy.
The government still largely controls media and retail. Internet access
is limited, although Cubans consume online content via an underground
network providing it offline on flash drives.
Signs of change are apparent elsewhere in the country of 11 million
people. Even with limited purchasing power and product choice, Cubans
are students of international brands thanks to American films on TV,
tourists and visits from American relatives. "People are sick of being
told what to buy for the last 50 years," said Scarpaci. "There needs to
be a change in infrastructure and mindset."
A country of state employees is giving way to more well-off
self-employed. "The entrepreneurial class is slowly but surely becoming
a middle class, although consumers are still taking baby steps," said
Pedro Freyre, chair of the international practice at Miami law firm Akerman.
Some international companies like Unilever and Nestlé are in Cuba
through joint ventures, and Coke is available because of an embargo
loophole. However, other consumer multinationals may need to justify value.
"For a McDonald's it's going to take awhile [to get established] because
they have to answer 'How does it contribute to the good of the Cuban
economy?'" said Kirby Jones, an Alamar Associates consultant.
Ramiro Prudencio, head of Burson-Marsteller's new Cuba Specialty Team,
explains how even within a more open economy, the Cuban government is
expected to impose such criteria.
"PR is going to be more important than advertising [initially]. It will
focus on corporate social responsibility and corporate positioning,"
said the B-M Latin America CEO. "Companies will have to show what
they're doing, who they are and demonstrate they're bringing value to
the Cuban people that's consistent with conditions for market entry."
Akerman law partner Freyre said among his firm's most active clients
looking at Cuba are travel and charter companies. With travel
restrictions eased by Presidents Clinton and Obama, more Americans are
expected to flock to Cuba, already the eighth most popular destination
in the Americas. An estimated 1.7 million visitors traveled to Cuba
through May, according to Cuba's National Statistics Office.
"The real advertising play in Cuba is tourism," he said, predicting
travel-related and b-to-b marketing will lead the ad industry's involvement.
This story first appeared in the June 22 issue of Adweek magazine.

Source: Capitalist Trappings Are Slow to Come to Cuba | Adweek -
http://www.adweek.com/news/advertising-branding/capitalist-trappings-are-slow-come-cuba-165965