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Growth of media service agencies in India: What was, what is and what will be

Growth of media service agencies in India: What was, what is and what will be

Author | Ruchira Raina | Friday, Jan 08,2010 8:18 AM

Growth of media service agencies in India: What was, what is and what will be

The 17th Annual General Body Meeting of the AAAI, held on September 9, 1998, had amongst other things on the agenda a very unusual item to resolve. This unusual item would lead to a complete metamorphosis of the advertising business in India and very quickly shift existing paradigms to an extent that nobody could have imagined.

It was to define who or what qualifies as a centralised media planning and buying unit or an Agency of Record (AOR).

HTA had set up a dedicated unit called Fulcrum to handle all buying duties for Hindustan Unilever after winning the business from Lintas in 1995 and this accelerated the move from other large advertisers to look at efficiencies of scale by consolidating their media duties as well. This, and protests from agency heads handling other brands, led to the historic AAAI meeting in 1998.

Not to be left behind, Proctor and Gamble decided to consolidate their entire media with Madison as AOR in 1999. Madison was hitherto handling only the TV buying business, while Saatchi & Saatchi, Chaitra Leo Burnett and Trikaya Grey were handling other media.

The media unbundling juggernaut started rolling with the above and when on February 21, 2002, the media departments of all WPP group agencies (HTA, O&M, Contract) were merged to announce the launch of WPP Marketing Communications (now called GroupM), full service agencies were scrambling to set up their own media units and convert their media departments into an independent P&L.

The media agencies were supposed to invest in more client customised research, improve the quality of talent, improve buying efficiencies and raise creativity in media to new levels.

But sadly, what happened was a conflict between the creative agency and the media agency over the custodianship of ‘creativity’. This, in turn, started creating enormous rift between the two and the drift away from each other started. While the media agencies started to use their new found stardom with a vengeance to own brand custodianship, the creative agencies started getting left behind in the race for ideas as they now had limited or no access to media owners to keep themselves abreast of any new developments or trends. Syndicated data and client proprietary data, too, had become the ‘property’ of the media agencies, thereby cutting off whatever little supply of oxygen that the creative agencies had.

The Present

With the creative agencies completely marginalised and independent, contact with the clients having been firmly established, the initial euphoria settled down, and the media agencies quickly realised that the abysmally low commission on media placements would in no way permit growth, pay higher salaries to retain talent or invest in research. This led them to explore media options beyond the traditional media and hence, looking at improving their bottom line by creating specialist divisions. Not to be left behind and having been on the sidelines for way to long, the creative agencies, too, joined the race to explore non-traditional media and they too have gone and set up specialist units.

Both had the same proposition to their clients: ‘Traditional media is dying, let’s engage the customer through non-traditional media options’.

So now, you have a hilarious situation wherein the same client is being propositioned by both the creative agency and the media agency to offer the same service. So, if a client X has a digital media requirement, he now has the option to choose between the digital division of his media agency and a similar division from his creative agency. This picture extends to activations, Bollywood tie-ups, sports, etc.

To make matters really humorous, imagine a situation wherein a client is dealing with the same group for his creative and media requirements!

Mr Client is obviously delighted. He now shops for the best price without actually calling for a pitch and obviously settles for the lowest offer. And herein lies the self-destructive streak that we as an industry specialise in… the specialist divisions were meant to lead to healthy bottom lines, instead, everyone is caught up in undercutting each other, leading to revenue minimisation rather than maximisation.

In the midst of the mind boggling developments that have become the hallmark of our industry, clients are increasingly getting restive about having to manage the communication process at their end. Brand communication ownership, which earlier used to vest with the client servicing head, is now nobody’s baby. Accountability has become the biggest casualty. There are increasing instances of clients having to force the media agency and the creative agency to sit together at the same table to discuss brand solutions. It’s only a matter of time before they start losing their patience and start demanding a more rational and structured approach to the whole situation.

Somewhere, we seem to have forgotten in the mad race for billings that we are in the business of ideas… and ideas get killed when egos and partisan ambitions start dictating the process. Unbundling of the media function, by itself, is not the problem; it’s the ever increasing conflict between the creative agency and the media agency that’s the issue.

The future

With media rates not remaining a closely guarded secret anymore and media owners, too, getting wary of cartels, the whole proposition of a media agency to offer better buys because of consolidation stands in danger of getting diluted. Add to this, the fact that most large clients have gone through the learning curve of which specialist division of which entity delivers the best value for money, we will witness a complete churn and don’t be surprised if a lot of these ‘specialists’ get shut down.

The day is not far when either the media agencies will need to hire creative talent or the creative agencies will need to hire a media specialist. Either of the two is bound to happen given the current chasm between the two. And if it does happen, then lo and behold! Will we not be actually moving back towards the formula of a full service agency?

(Ruchira Raina is Managing Director at Dentsu Communications and Dentsu Media India.)

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