Brand and the value proposition; quantifying the worth of an idea; and market prioritisation were some of the issues addressed at the Advertising Conclave at GoaFest 2008. An eminent panel comprising Saugata Gupta of Marico, Balki from Lowe, Sameer Nair of NDTV Imagine, and Vikram Sakhuja of GroupM deliberated on these issues and more during the session. The session was moderated by Madhukar Kamath, President, AAAI.
Gupta observed that there was a need to differentiate any brand’s product offering from the competitors and back it with the right communication strategy. “You need to worry about the product and how to differentiate it from others in the market. Innovation, technology, the right marketing mix, with the right communication strategy, will deliver the results in terms of getting the consumers to buy more products on a continuous basis,” he added.
Kamath recalled Vodafone’s acquisition of Hutch in a bid that was worth Rs 19 billion. He said, “If you go by the subscriber base of the telecom operator, the valuation wouldn’t have been more than Rs 14 billion. But Vadafone finally did pay a premium for Hutch even when they knew that its valuation was actually much lower than what they ended up paying.”
Madhukar commented, “The brand is built by the agency, but what does the agency get from the sale? There is so much that an advertising agency does for a brand, gives value to its stakeholders and consumers, increases sales of the products and services. It is time for creative agencies to mull this situation and ask for a premium for the idea and the services it provides to its clients.”
Sameer Nair, CEO, NDTV Imagine, agreed that the creative and the media agency added a lot of value to the clients in delivering the message in the most creative manner, and by reaching the appropriate target audience via media agencies that were responsible for chalking out an exposure plan for a brand. He further said, “Of late, New Media has been showing a decent amount of effectiveness, if we look at the amount of money we spend for it.”
As a media planner, Sakhuja raised a valid point on the media buying pattern of some clients. “There is competition in the sense that people want to buy media cheaper than others normally do. But some of the mature clients do understand the importance of ‘value’ for agencies and often spend a decent amount. Otherwise, on a serious note, we are an illiterate society when it comes to understanding the true value of what the industry can produce,” he added.
On the creative side of the business, Balki put great emphasis on the big idea and the wonders it could do for a brand and for the company it belonged to. A creative idea is valuable in the business of advertising, and in cases of great ideas, I think credit should be given to the owners of the idea. On the measurement metrics, he explained that it was mighty difficult to quantity the worth of an idea, and that the clients should look beyond revenue generation from a particular piece of communication. “Clients should look at how an agency has delivered in making the brand younger, in positioning it in a manner that it differentiates it from its competitors,” he said.
Marico’s Gupta shared insightful thoughts on having a common shared goal. He said, “Ultimately the consumer should accept your offering. Looking at other brands, not enough money is spent on marketing functions. Smaller brands, when they prepare their budgets, hardly some per cent of their total spends go to creative and media agencies. Marketers need to understand this, and find a solution to up their spends in advertising, and this could be one of the means with which we can increase value in this industry.”
According to Balki, only 5 per cent of the work see could be called good stuff, while the rest of the brands and their communication strategies were mediocre. He stressed that the quality work needed to be recognised and paid a decent amount by the clients.
On the compensation side of the business, there were some clients who offered a fixed amount in a prescribed period of time, and over this, they also gave a share of profit from the sales to the creative agency involved in building the brand. Sakhuja said that intangible products like ads and media services need not be associated with a particular number.
Gupta said that there was a huge variable compensation that he had observed. “Ultimately, you should appreciate the media for its fragmentation. Margins are not going to increase with the current set of costs, and thus, it becomes important sometimes to pass on the load to consumers,” he added.
Nair, too, noted that media was getting expensive like any other business. What went through in the scope of planning, budgeting, 360 planning, portfolio management, trading negotiation, data management and so on, there was a huge amount of cost involved in everything. “We need to look at market prioritisation, and only this can give us the desired value in the industry,” he said.
Madison’s Sam Balsara said that it was sheer weakness from the client’s side to not charge a fee in the industry that it was worth. “It is a weakness, only when we recognise it as a weakness would we be able to do something about it. Somehow we are not able to deliver over a period of time after the pitch. I salute Saugata for the way he handles pitches. Clients should not call for pitches and change their agencies in as lesser period as two years. On the value side of the business, we need to have a dialogue with the clients, on their costs, and figure their ability to pay for the services we render.”