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Media holding companies fight neck and neck on the digital front in India

Media holding companies fight neck and neck on the digital front in India

Author | Noor Fathima Warsia | Monday, Nov 12,2007 6:11 AM

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Media holding companies fight neck and  neck on the digital front in India

The digital medium might only be 2 per cent of the Indian advertising pie, but the heads of almost all media holding companies guarantee that this number is expected to grow to a lot more in the near future. Interestingly, in India as far as the digital capabilities are concerned, all media holding companies are more or less in the same space.

WPP, IPG, Omnicom, Publicis Groupé, Havas and Aegis are all looking at acquiring Indian digital companies, which has not proved to be an easy task, and are also busy developing internal capabilities. The recently announced WPP-Blast Radius deal is an indication of the fact that the digital fever is on a high, not just in India, but in other markets as well.

The Digital Interest
Mark Read, WPP’s Global Strategy Director and WPP Digital CEO, said, “The interest in digital acquisitions is because Internet ad spend is not going to stay at 2 per cent for long. We expect it to grow substantially, and India is such a strategically important market that we are looking to invest in some ways ahead of the growth.”

According to Steve Gatfield, CEO, Lowe Worldwide, some of the reasons that the digital interest was so high globally as well as in India was because the digital space was exploding in many parts of the world. He, however, also pointed out that there were limitations to this growth thanks to issues of bandwidth and penetration. Gatfield is of the opinion that the emerging mobile Internet was expected to have a transformational impact and would be a natural extension of the wider explosion of highly targeted media.

He said, “Inherently the lack of a single technology protocol across the wireless medium makes the challenges of working in the arena more complex, although this will ease with time and convergence to a standard.”

Speaking more on the India case, he added, “Internet penetration in India is low but the absolute numbers compare well with some European markets. As GDP per capita income increases, penetration will rise swiftly. India is also a high competence centre for digital architecture and analytics, and the costs compare favourably with many parts of the world.”

Patrick Stahle, CEO, Aegis Media, APAC, said that building a global digital offering in Isobar had been the priority for Aegis Group over the last five years. He said, “We have managed to build by far the largest global digital network with 2,500 staff in 25 countries. India is an important strategic market and we will continue to search for good candidates to hire or acquire. The digital market in India is still a young and unexplored market, and due to the low Internet penetration, the Indian market has become interesting in the medium term from a digital perspective.”

The Digital Challenge
The need for speed to develop capabilities in this medium is so high that everyone appears to be shopping at all times. “We’re also investing organically in addition to acquisitions. It’s just that acquisitions attract more attention,” countered Mark Read.

One clear challenge is on the pricing front with more buyers and less sellers. Patrick Stahle said, “Like all market driven structures, demand-supply will set the price. I am sure some agencies manage to get a fair price for their operations, but some networks are quite experienced in acquisitions, and would overpay for any services.”

Second, is to ensure the right acquisition. Commenting on this, Stahle said, “It is important to acquire and integrate companies for the right reasons. As we have the strong network, it is easier for us to use the global capabilities to start or develop existing operation in new markets rather than buy if the price is not right.”

Talent and the right skill-set is another important area that needs more concentration when it comes to the digital domain. Summarising the great digital challenge, Steve Gatfield said, “Demand will outstrip supply for some time. We are in a transformational period in which scarcity will prompt some deals that will be regretted in hindsight. The people entering the industry grew up as digital natives in most cases, whereas most people who have been in the business for several years are really digital immigrants.”

Explaining the IPG strategy, he said, “Our game plan is to integrate the natives and the immigrants than to foster a generational divide by acquiring silos. The key is sustainability of competence and talent, and this requires a developmental approach. We integrate all our new discipline activities with robust training and development incorporating offside programmes and on the job training. Our approach to digital capability has emphasised the development of specific skill sets within a cross-disciplinary framework.”

The Digital Opportunity
The dual nature about the digital domain, where it is a platform and an enabler that allows the traditional media and the new media to work together, enhances the opportunities that it offers. “It's not going to fundamentally change our business models, but it will allow us to bring new ideas to our clients,” observed Mark Read.

Gatfield explained, “Looked at in isolation, digital per se is little more than a production platform. It is the way that people use and integrate the online experience with their wider brand engagement that really matters.” He believes that the key to success in the digital arena is to integrate the online medium, and the interactive and social networks, which could then drive a total communications plan that recognises the fit of media choice with the wider brand objectives.

Stahle pointed out that the emerging mobile medium was a huge opportunity. He said, “The mobile marketing market is interesting as mobile penetration is growing very fast and there is no limit to what can be done with that in terms of solutions for clients, creating engagement, brand building, and so on.”

Gatfield added here, “The migration of content to the mobile web will be defined by the economics of subscription versus advertiser support, but we have already seen simple sweepstake and mass promotional activity engage the wireless medium and the move to rich web content is a natural extension.”

The India scene
The digital fight in India has just begun and everyone is so far only getting their acts right. Isobar is one of the most successful global digital capabilities, but in India, action to develop Isobar has only just begun. Whether Isobar’s international success would be duplicated in India when the likes of WPP are more aggressive than ever, promises to be an interesting watch. Stahle isn’t too worried yet. “We run the largest digital network across the globe and we believe we have found a good way of developing these services from a market leadership position. We welcome good competition, but do not see this as a changing factor for our model,” he added.

Vishnu Mohan, CEO - APAC, MPG, spoke on Havas’ digital attention in India. He said, “We have taken a great step forward already with establishing a Global Centre of Excellence in Search and Analytics for Digital out of Hyderabad, wherein we have 17 people and would be scaling to a 100 within 8-10 months. In addition, we are developing many web technologies locally to be used across the network.”

Digital capabilities can play a crucial role in the competitive standing of agencies in times to come, and most media holding companies already acknowledge that.

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