IndustrySpeak: Specialist digital agencies Vs Traditional agencies - Part 2

IndustrySpeak: Specialist digital agencies Vs Traditional agencies - Part 2

Author | Robin Thomas | Monday, May 24,2010 8:26 AM

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IndustrySpeak: Specialist digital agencies Vs Traditional agencies - Part 2

Continuing with the IndustrySpeak report on digital agencies versus traditional ad agencies, the second and concluding part finds out what industry experts have to say on the role and scope of specialist digital media agencies in India, the advantages, challenges and the road ahead.

The scope of digital agencies in India

According to Sanjay Dhar, Co-Founder and COO, Integrid Media Pvt Ltd, “The total digital advertising market is currently about Rs 600-650 crore, and this is roughly less than 2 per cent of the total advertising spends in India. While the potential of growth is highest in this segment when compared to all other media, we estimate that most of this growth will be cornered by mainline agencies, who will try to capture a lion’s share of this segment once it starts looking like a significant business. In that scenario, the scope for digital specialist agencies in India would be very limited in the future.”

Sandiip Kapur, CEO, Promodome Communications, noted, “The Internet has proved that while things move fast, change is still slow, especially when it comes to big, old and traditional business models. Most companies only wake up to change once their industry has already radically shifted beyond all recognition. That change is usually led by much smaller groups (or companies) who are rapidly innovating through an interactive process that engages their consumers as co-developers in the process. Digital media has tremendous future and it is going to be very strong in the coming years.”

Sudhir Nair, Vice-President, G2 South Asia, explained, “Technology comes naturally in this part of the world. But, if ideas can lead to technology, which is what we witness today, then there is nothing to stop Indian agencies from taking the centrestage, not just locally, but even at a global level. It is only going to get even more exciting and competitive when across all industries, the focus is to deliver more at low costs, yet keep the product extremely competitive. India will tend to be an obvious choice to create global delivery hubs, even in terms of digital.”

Atul Hegde, CEO, Ignitee Digital Solutions Pvt Ltd, pointed out, “There are only a handful of pure play digital agencies in India. Clients are quick to spot if traditional agencies without the right support functions disguise themselves as also offering ‘digital’ services. This, coupled with the fact that the user base for this medium is growing at such a rapid pace, the potential for specialist agencies is immense.”

Amardeep Singh, Co-Founder, Interactive Avenues, explained, “The rules of marketing and consumer engagement are being rewritten and digital agencies have the opportunity to play a leadership role in this transformation. Digital agencies can keep adding to their scope if they are nimble and able to latch on to the next big thing. Currently, the scope for digital agencies lies in harnessing the power of social media and mobile.”

The road ahead

Sandeep Singh, Business Head, Quasar Media, observed, “I think we have great scope, but the mantra to success will be to evolve into a communication specialist for digital mediums. Two years from now, specialist agencies will have their due importance only if they can offer complete digital solution to the clients. I don't see much scope for super speciality agencies.”

Anurag Gupta, Managing Director, DGM India, noted, “We do have a handful of specialised digital agencies in India, but with expected exponential growth, there is scope for more such agencies to come in and make a place for themselves. Over a longer period, we can expect a consolidation in the space on the lines of the mainline agencies. I see most of the standalone digital agencies in medium to long term being aligned with the mainline agencies.”

According to Dhar of Integrid Media, “There are less than 10 digital specialist agencies in India today that can be considered to be truly experts of the digital domain. We see the number reducing to less than that in the next two years, as there will be certainly mergers or acquisitions, wherein mainline agencies wanting to grab market share and readymade expertise as quickly as possible will seek out partnerships with these specialists. We believe that faced with a shrinking ‘available’ market, many digital specialists will accept M&A as the only option for survival and growth. The top two or three may still survive as independent players, but most would certainly have strategic alliances with some of the large mainline agencies.”

Nair of G2 South Asia stressed, “Two years from now digital will be the buzzword, and in many cases, the lead medium. However, digital as a phrase will undergo transformation. PC will be a subset of the mobile. 3G will only speed up that transformation. Convergence across mediums will make almost everything digital. Agencies that keep pace with this reality, invest in creating these core capabilities or acquire them, will stay ahead. Hopefully, many of them would have become global hubs for many global brands, not just in terms of delivery, but also in terms of ideation. Most importantly, making those ideas a reality with a leap in creative + idea + technology integration; seamlessly.”

Speaking on the way ahead, Ignitee Digital Solutions’ Hegde pointed out, “For one, you will see a lot of consolidation. Most of the leading digital agencies in the country are independent and do not belong to a large international communication network. This will come down with global companies looking at acquisitions. Lastly, video and language content will change the media landscape of this medium and push the category into a much larger play.”

While specialist digital agencies offer holistic digital approach to brands, they also have the advantage of understanding the medium more than the traditional agencies. Digital agencies have expertise in this space and strong understanding of technology and diverse skill sets. Traditional agencies, on the other hand, provide a complete 360 degree package to brands.

While there is scope for a few more specialist digital agencies in India, the future would see consolidation in the digital space, which could be in terms of merger and acquisition of specialist digital agencies by traditional/ mainline advertising agencies.

Also read:

Specialist digital agencies Vs traditional advertising agencies - Part 1

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