Fortune, Black Pencil, David… The rule of third agency brands begins?

Fortune, Black Pencil, David… The rule of third agency brands begins?

Author | Noor Fathima Warsia | Thursday, Jul 30,2009 8:33 AM

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Fortune, Black Pencil, David… The rule of third agency brands begins?

JWT India floated Contract Advertising as a second agency. Contract grew enough to compete with elder sibling on occasions. JWT subsequently even launched a third creative brand in its family – Fortune.

Leo Burnett India got a second brand Orchard, and just as Orchard began making its own place in the advertising world, Leo Burnett had a third brand in Black Pencil.

And now, arguably the biggest player in the industry, Ogilvy India, too has a third brand in its system. Ogilvy has announced the re-launch of David. The plans for the entity are still fluid and Ogilvy officials have said that a head for the third brand would be announced soon but for now, Ogilvy India too has two more brands – Meridien and David.

As is known, a couple of year’s back, on grounds that David was not “profitable enough”, the agency was merged with Bates Enterprise. Eventually, the brand name David was dropped. Now that Ogilvy India is of the opinion that there is place for a third agency, it chose to revive the brand ‘David’.

Second agencies are commonplace in the Indian advertising industry today. Lowe has Pickle; McCann Erickson has TAG; Rediffusion Y&R has Everest Brand Solutions; Mudra has Mudra Advertising and Mudra DDB; Publicis has Publicis Ambience and Publicis India and the list goes on. However, various second agencies are still fighting to be reckoned. In a situation like this, is their place for a third agency?

A quick conversation with advertising agency heads, and it is clear that the rules don’t change for the third agency brand. The third brand too has its own management, its own P&L, it’s a business in its own right, which for the people in the agency is “third to none”. exchange4media spoke to the top advertising honchos to get a view on whether the third agency brands can survive and contribute to the umbrella brand in the longer run.

Different Philosophy, Not Just Conflict Biz

Colvyn Harris, CEO, JWT India, explained, “There is a reason every time an agency decides to launch a new brand, and that has very little to do with conflict businesses. True that that is an important reason but sometimes agencies look at bringing a different philosophy. For instance, a mainstream agency versus an agency that focuses more on the creative product.”

He also said that sometimes an agency is acquired, and in order to retain the ethos and DNA of that agency, it is run as an independent entity. An example of this can be seen in Publicis’ acquisition of Capital Advertising.

Arvind Sharma, Chairman and CEO, Leo Burnett India, noted, “On the outset one may think that a new brand is to accommodate a conflicting business but one can’t sustain opening a new agency on the basis of one business. At least in our case, the set up has reaped rewards and done well for us.”

Charles Cadell, CEO, Lowe Lintas, too seconded Harris’ viewpoint on a second agency. He said, “The nature of the second or the third agency depends upon the strategy of the master agency. There are agencies from the same parent but can be based on a different philosophy or it could be a different kind of agency like focusing on non-traditional medium. It all depends on the way the master agency perceives the second or third agency to be. Between Lowe and Pickle, there is a good deal of separation and both the offices have different set of people.”

However, Josy Paul, Chairman and National Creative Officer, BBDO India, pays more weightage to conflict business as a reason to launch a second brand. Paul believes that “successful agencies need new garages to park new business wins- especially if they are competing.”

A Third Brand is first, a People Opportunity

Bringing a very different point of view to the discussion, Ogilvy India’s Piyush Pandey stated that a new brand is first and foremost about creating opportunities for good talent. He said, “At one level, it is true that the advertisers’ needs are increasing, and there are brands who would want a mindset and culture that is different from your first agency brand. There it makes sense to be able to develop a differentiated offering. But even before that discussion takes place, a new brand is first about people.”

Paul added here, “The good thing about a new brand is that it creates opportunities for the mother agency to create new cultures and offer new exciting challenges for its people. There is an entrepreneurial spirit about it. It is an interesting model to have satellite agencies if it is based on encouraging diversity.” But when the likes of JWT and Rediffusion Y&R are taking the routes of internal promotion to fill in the gaps left by senior level exits, how do agencies propose to furnish new brands with right talent? Sharma replied, “Attracting talent is also not an issue for us. While small maybe beautiful but the truth is that many small agencies are not able to attract talent. We have a pool of talented people who do justice to our other agencies. Going forward, as India would have more players in any sector with high quality competition, I believe that this trend would be more apparent.”

Pandey said, “I would say that within Ogilvy itself, there is so much talent that can still self-actualise itself. I don’t see a problem there.”

Harris on the other hand said, “The ECDs at JWT handle businesses that are probably comparable to the overall size of some agencies. There would always be shortage for great talent but good agencies develop talent in their system to eventually take on greater challenges.”

The industry is of the opinion that if second agencies can enter the league of the first brands, then why can a third agency brand not thrive. But as Paul puts it, “it is a business decision at the end of the day”. For the longer run, those brands that have a sound business plan at the base of the structure would survive and contribute to the growth of the mother agency or the master agency or the first brand.

(Inputs by Tuhina Anand)

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