India is on a good wicket, but ad industry pressures remain: Sam Balsara

In conversation with Sam Balsara, Founder, Chairman and Managing Director of Madison World, the advertising veteran spoke about consolidation in the media agency business, the need for industry representation, geopolitical uncertainty, Madison’s AI platform Mbrain, and ongoing acquisition conversations around the group. 

Edited excerpts:

How do you look at the consolidation happening across media agencies globally and in India?

I think to a considerable extent the industry is resetting itself. The consolidation you are seeing is the result of years of successful operations during which the industry accumulated a lot of talent.

Right or wrong, I don’t know, but when you review the situation today, you find that the talent pool is possibly a little excessive compared to the amount of advertising being created. Consolidation becomes a way to cut down on additional expenditure, which may not necessarily be good for the industry but is inevitable.

When industries go through good years, they tend to accumulate talent. When tougher times come, that talent starts appearing excessive.

There is a growing sentiment that the media and advertising industry needs a stronger umbrella body to represent its concerns before the government. Do you think such a structure is necessary?

We already have an umbrella body — the AAAI. It represents ad agencies.

But if you are suggesting that broadcasters, ad-tech companies, tech platforms and agencies should all come together under one umbrella, I don’t think that works because all these sectors have conflicting interests.

It is better that each segment has its own industry body so it can protect the interests of its members.

With ongoing geopolitical tensions and fears of a prolonged conflict, are advertisers becoming more cautious with spending?

We are hoping against hope that the war does not escalate further. I think we are already seeing signs of cooling down globally, and that should help the situation considerably.

That said, there is likely to be at least a six-month period of hardship because of rising oil prices and other macroeconomic pressures. India is on a relatively good wicket, but there is no denying that we too will face some pressure from global developments.

Last year you had expressed disappointment over the low participation of young professionals and Gen Z attendees at Goafest. Has the situation improved this year?

Considering the amount of effort that goes into Goafest, I think we should ideally see at least 10,000 attendees. That has not happened yet.

We are at roughly the same level as last year, perhaps marginally higher. There is gradual improvement, but in a year like this you cannot expect dramatic changes overnight.

Madison has been investing significantly in Mbrain. How is the platform benefiting clients today?

Mbrain is our response to all the new developments taking place in the industry. Whoever we have presented it to has welcomed it with open arms.

I don’t know whether people are simply being nice to us, but there is a genuine feeling that it offers capabilities not currently covered by other agencies.

Q. Could investments like Mbrain improve Madison’s valuation in the event of a future acquisition?

I don’t know whether it directly affects valuation, but it is certainly a necessary component if you want to remain a relevant agency today.

This was an investment we had to make. And it is not a one-time investment — it is something that requires continuous development.

What is the latest on acquisition discussions involving Madison? Have conversations with companies like Havas or Wonderlab progressed?

Some conversations have happened, but nothing has concluded yet.

We have had discussions in the past as well over many years, and nothing eventually came out of them. So at this stage it is difficult to predict any outcome.