Ad agencies are feeling the withdrawal symptoms of the ban on tobacco advertising. Be it HTA, Bates or Lowe Lintas -— all are desperately seeking succour, churning their business and revenue models. It’s time to downsize (some still call it right-sizing), change business models and find new revenue streams.
Some are putting up a brave front, some not. But with ITC out of the advertising radar screen, all the three biggies have taken a big hit on their topline.
Take HTA for one. Close to 45 per cent of its turnover from the east came from ITC. With that gone, HTA is getting the feel of the rough weather ahead. HTA handles the entire Wills portfolio along with Bristol and Scissors brands. Currently, about a 100-odd people work at its outfit in Kolkata —- big by the standards in these parts of the country.
It’s not that HTA does not have other clients in the city. But as ITC brands contribute most to its revenues, the loss is a big blow.
Thomson Connect, the direct selling arm of HTA, Portland, for outdoor ads and HTA the parent had their fortunes intrinsically linked to ITC's ad budget. Ironically, HTA bagged the entire Wills portfolio last year.
Commenting on the possibilities of downsizing, once the tobacco bill is implemented, Tarun Rai said: "Obviously we would be affected, but we would help our employees settle in. While some can be redeployed, others can also be relocated to our other offices and services. As a strategy, we would also be talking to ITC for its other businesses like greeting cards and food."
The agency is also discussing with the cigarette major to re-define a new role for itself -— as a partner in marketing and designing products.
It’s a sudden impact for others too. Bates and Lowe Lintas gross nearly two-thirds of their businesses from other ITC brands. With the eastern region being already starved of accounts, it can only get tougher for them.
Bates stands to lose Gold Flake, Benson & Hedges, 555 State Express and Capstan. With staff on the role already pruned when Clarion turned Bates, new business options to try compensate for the loss is now on at a hectic pace.
Ad agencies, however, see a lot of loopholes in the tobacco bill. Urging for a level playing ground, many of them feel that foreign cigarette companies would have an upper hand with their ads being widely displayed in the smuggled magazines.