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Dissecting the Dentsu Aegis - Milestone Brandcom deal

Dissecting the Dentsu Aegis - Milestone Brandcom deal

Author | Abhinn Shreshtha | Wednesday, Jul 30,2014 7:49 AM

Dissecting the Dentsu Aegis - Milestone Brandcom deal

Dentsu Aegis Network’s (DAN) acquisition of majority stake in OOH agency Milestone Brandcom is set to create the largest OOH network in the country. Dentsu Aegis Network already has a pan India presence with its OOH agency Posterscope and the addition of Milestone Brandcom will add a different set of capabilities to their arsenal say industry peers.  For example, Rajan Mehta, MD and Founder of LiveMedia opines that Milestone Brandcom’s in-depth local knowledge combined with Posterscope’s global understanding will be helpful to the joint partnership.

Though, both Milestone Brandcom and Posterscope are more of media agencies than media owners, there is still a lot to differentiate between the two. For example, Haresh Nayak, Regional Director, Posterscope Asia Pacific & MD, Posterscope Group India feels that the key difference will be an optimization of the market for the clients. “We are both different kinds of companies,” says Nayak. When asked about the synergies, he said that the only thing that could be considered a benefit would be price rates, which could reduce due to volumes.

“The OOH sector will remain competitive. We will continue to have different sets of planning, services, creatives, etc.,” he said. Both the companies, Posterscope and Milestone Brandcom, are worth around Rs 500 crore, according to sources, which is miles away from their closest competitor. But it is not the valuation that makes a difference but how these two fit together in the current Indian OOH sector.

Milestone Brandcom has consistently been among the fastest growing Indian OOH agencies. As a 360 degree agency it has also invested money in developing different key areas. Earlier this year, it launched an audience measurement tool called Milestone Optimizer. In an industry where lack of common metrics is one of the biggest hurdles; the launch of a metric system that allowed clients to make sense of their OOH investments, could be considered a key differentiator. And other OOH agencies consider this a positive development instead of something to worry about.

Mandeep Malhotra, Executive President at the DDB Mudra Group thinks that a takeover of this magnitude will encourage other entrepreneurs even as it leads to media agencies looking at OOH agencies as a consolidation of their offering.

For some time now, OOH players have been talking about the need for consolidation in one of the most fragmented advertising medium in the country and, hence, it is perhaps not surprising that they feel that the entry of larger, multi-national players will only add value to the industry. As the head of one agency told us, “Once a large player enters the market and provides better service; it will only lead to clients thinking better of the OOH sector, which will help the industry.”

However, though consolidation might be something most OOH players talk about; the fact remains that remaining an independent agency still attracts a number of players. Yogesh Lakhani, MD of Bright Outdoors, an agency that has been doing quite well over the last few years, says that he has maintained his independence despite a number of offers. The reason for this he says is that staying independent gives one a freedom to work as one wants; which is probably a sentiment that many entrepreneurs will agree with.

If Dentsu Aegis had not bought over Milestone Brandcom, would it still have remained an independent agency? In any other sector, to give an example, digital, a company like Milestone Brandcom, which has an experience of quality work, a good name in the industry and a client base of over 100, would be an ideal acquisition target. However, the OOH industry in India is a very different ball game. Though consolidation has been long spoken about; the fact remains that there is much less scope, as compared to other mediums, in this industry. Would another agency have snapped up Brandcom if not DAN? Perhaps, but the question remains which one? 

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