The first quarter of 2004 saw a number of pitches and account wins. They are a blend of creative, media and integrated advertising accounts. The biggest chunk of 19 accounts comes from media though. Major winners in this battle have been Group M and Madison. And the agencies, which have lost substantial business, are OMS and Initiative.
A fascinating thing here is not only the amount of money, which moved from one agency to the other — but that in none of these pitches the incumbent retained the account. If you wonder why…read on…
Accounts that moved in Quarter 1, 2004:
Group M, per se had the biggest number of wins as it goes. Very recently Maximize bagged Rs 40-crore Britannia biscuits AoR. Group M also bagged the Rs 13-crore Boots Piramal Healthcare account, Rs 80-crore LG Electronics account, Maximize bagged Rs 10-crore Kuoni Travel India-'SOTC' account, and ended the quarter by winning the Titan account. Out of these, Britannia, Titan and LG moved from Initiative and, Boots Piramal from McCann. The accounts that slipped away from it included Electrolux, World Gold Council and Shaw Wallace Breweries.
Continuing on its winning spree has been Madison — the accounts that moved to its kitty in these three months are Marico’s approximately Rs 35-crore business, Rs 60-crore-plus Hyundai account and Rs 15-crore worth McDonald account. The three accounts moved from Mediacom, Zenith and OMS respectively. Lost absolutely nothing.
Starcom was another agency that picked a number of accounts — World Gold Council media AoR, estimated at Rs 10 crore, HDFC Bank Media AoR worth Rs 10 crore and Symphony Comforts System media AoR worth Rs 5 crore. Shaw Wallace consolidated its media business with Starcom. Incumbents here were Group M, MPG, Mudra and Group M, yet again. Big blow for Starcom, however, came in the form of IOCL account worth Rs 100 crore — which moved to Media Edge, as per reports partially.
As for Lintas Media Group, the win came in the form of UTI Mutual Fund AoR worth Rs 35 crore. However, the losses were far bigger – Britannia, Titan and LG Electronics — which amount to loss of nearly Rs 125 crore in capitalised billings.
OMS bagged an estimated Rs 30 crore Electrolux accout, which moved from Maximize and 13-15-crore ICI Paints AOR. It moved from McCann. Once again the losses over-shadowed the win – Samsung account, worth Rs 125 crore, which moved to Cheil communications, and the second, McDonald’s Rs 15-crore account, which moved to Madison were terrible blows for it.
MPG added Rs 40 crore to its kitty by bagging Aditya Birla Group and LG Care Media account. Incumbent in the first case was OMD, RK Swamy BBDO. The agency, however, lost HDFC Bank account.
Mediacom bagged Hindustan Pencils account. Incumbent was Carat. But it lost meaty Marico account.
And taking the risk of sounding repetitive – no incumbents!
CMD, Madison Communications, Sam Balsara sets the ball rolling by stating that the agency-client relationship gone bitter for the single most important reason of incumbents not retaining the account. He elucidates, “New broom sweeps clean! To do justice to the client, the media agency needs to have intelligent, creative and media-savvy people. A development of media strategy and an effective media plan needs capable and qualified people. A media agency needs to be compensated accordingly. In the current environment, clients are forcing media agencies to accept lower remuneration and agencies to achieve growth targets are working at low payments and, soon enough, the relationship sours.”
Sanjeev Shukla, Manager (Marketing), Hyundai Motors, believes that most of the pitches happen only because the client is unhappy with the existing relationship, and so the question of retaining the incumbent does not really arise, “Entire catalyst of calling a pitch is performance of the incumbent agency, unless the client has regular annual process of calling a pitch. If it is a mid-term issue, the sole reason is that current agency fails to meet the demand. Hence, the scope for an incumbent agency to win a pitch is very less.”
Meenakshi Madhvani, Managing Partner, Spatial Access, looks at things from a different perspective. She states that a major reason perhaps is, “Anti-incumbent sentiment. In many cases, the client has already decided to move the business before they put it up for pitch. The formal pitch is a means of deciding who to move to and creating benchmarks. The incumbent always has the most difficult role to play. They may have done a decent job but the new suitors are willing to promise the sun, moon and the stars. Two years down the line, the client finds that they have been led up the garden path and the business is once again put up for pitch.”
But isn’t the number of pitches increasing alarmingly? Till very recently, one never felt that accounts were moving at such a fast pace. Why do the clients feel the need to shift agencies so often these days? Explains Balsara: “Obviously, because clients are discontented with their current arrangement. They are not satisfied that they are getting the best of what industry has to offer. Given intense competition in their markets, clients want to make sure that they are dealing with the best agency.”
The rate factor:
And how do the rates that agencies offer fit into the entire scenario? Are they the single largest deciding factor while picking an agency? As per Shukla, though the rates are not the single largest deciding factor, they indeed play a very important role when it comes to deliveries. He states, “Rates are important as far as a media agency is concerned. Frequency and reach are also critical. Hence, if the rates are lower, we can impact the consumers’ mind much more by using the same amount of money. We can look at other media in addition to increasing the frequency of the ads.” He, however, underlines the fact that no account moves only in search for better rates.
Taking his argument further Balsara states, “Some clients who do not really understand the media business look for rates. But the more enlightened ones evaluate an agency based on its track record, media understanding, strategic planning skills, media buying clout, infrastructure, tools and reputation on transparency and integrity. It would be disastrous to handover a media account based on a commitment on rates, but some clients do. “
It is time to call for a pitch:
Going by the current scenario, it feels that the client says ‘pitch’ sooner than ever and even before he blows the whistle, he is surrounded by all the lovely ladies of the arena who try their best to woo him. When does the client really throw down the gauntlet?
Shukla takes pains to explain the reasons why the client feels that it is time to call for a pitch. Says he, “A client would basically look at bridging the gap between felt needs and deliveries. There might be problems with brand salience, brand equity or sales and the agency’s communication support may not be strong enough”.
Madhvani, on her part, believes that lack of consistency in delivery is the main reason that so many accounts are coming up for grabs, “Consistency is the key. Many agencies make claims at the time of the pitch but then fall short when it comes to deliver.”
As per her, there is more than one reason for this inconsistency, “Sometimes this is because clients are interested in the outcome but are not willing to support the process or even encourage new thinking. Coming to the agencies, senior level involvement is something that every agency focuses on during the pitch reviews but once the business is assigned, the senior team gets involved in other pitches and the client is left to the mercy of the juniors. If they are good, then the going is great! If they are not, the vicious cycle starts again.”
She concludes, “The fundamental problem in the industry is that, the existing clients are invariably taken for granted. The bells and whistles are dusted and pulled out for the next review or pitch.”