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When it all adds up

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When it all adds up

You could call it the latest trend among ad agencies; only, it has nothing to do with their advertising business. A clutch of advertising agencies, of late, has been focussing on reviving and strengthening their non-advertising functions.

TBWA Anthem and Interface Communications, for instance, are looking at reviving their interactive functions. And while Lintas India and Leo Burnett have been restructuring their non-ad divisions, O&M India has done a complete umbrella branding exercise for its below-the-line advertising functions.

Although operating on a smaller base than the average mainline advertising business, industry estimates show that the non-ad businesses are clocking higher growth rates of between 35-40 per cent compared with the 8-10 per cent growth enjoyed by mainline advertising.

Restructuring its non-advertising functions in March, Lintas India's Integrated Marketing Action Group (IMAG) geared up to handle the rapid growth that it has been experiencing in the last few months. IMAG formed an Executive Council, comprising Presidents of different units under its fold. The council members will be responsible for the overall IMAG product and delivery, in addition to that of their own units.

Says Ashish Bhasin, Director, IMAG, Lintas India: "In order to provide a true brand experience to the consumer and to provide clients with a single window, integrated communications product, IMAG was set up last year. This has been such a success and is such a high growth area for us that we need to gear ourselves up for larger challenges. We probably have more business than we can handle in most of our units so we need to ramp up. We are also entering new areas of business almost on a regular basis. This needs a robust, senior managing team, hence the formation of the Executive Council. It has cherry-picked professionals, best in their fields."

While Lowe's pretty gung-ho about its new set-up, Leo Burnett has not been found wanting. While creating a new legal entity for its existing below-the-line divisions, Leo Burnett recently brought in an international Burnett brand, Black Pencil.

The agency has floated a separate company, Black Pencil Advertising Pvt Ltd to represent all the divisions for its non-conventional advertising business. In effect, Black Pencil would also serve as the umbrella brand for its existing divisions: Leo Entertainment, Leo Activation and Leo Stage.

According to Aniruddha Banerjee, Executive Director, Leo Burnett, "Black Pencil is not a mainline agency and we are treating it as a separate legal company in India. It will represent the 360 degree space that will not cover mainline advertising and media.''

Besides, the agency has also incorporated a new division, Leo Express, to handle studio production and artwork. This division has been floated to service smaller local clients who have low investments and may not necessarily belong to the organised sector.

Apart from this, the agency is looking at setting up a division for public relations. "We are looking at having a new set-up for doing PR for clients as well," says Banerjee. Both these divisions are expected to come under the Black Pencil umbrella.

Presently, it is Leo Activation, in-charge of events and promotions, which has the largest share of the non-conventional advertising pie. With clients such as Indian Oil and Fiat, Leo Activation has helped in launching brands such as Fiat's Petra. Black Pencil would be the third company in the Burnett fold. The Bangalore-based Orchard Advertising is treated as a second agency of Leo Burnett, primarily to handle conflicting business.

According to industry analysts, it is always better to have a separate company for below-the-line advertising business, instead of existing as independent divisions within the mainline agency. "It helps at the time of pitching, since most of the clients are temporary in nature,'' claim industry professionals.

Other advertising biggies are also in the running. In an endeavour to consolidate its offerings to clients (to communicate at the "last mile"), O&M announced the launch of its complete Out of Home (OOH) business unit, Ogilvy Activation, in May.

O&M over the years has been a pioneer in the out-of-home advertising area with its several divisions: Ogilvy Landscapes, set up in 1993, introduced outdoor media specialisation while Ogilvy Outreach, the rural communication specialist division set up in 1995, serviced rural India and the low income consumer. Two more outfits complete the picture: Ogilvy Live, the ground-level brand communications division, and, more recently, Ogilvy Signscapes, the retail brand identity division.

Though each division is a trailblazer in its own right, the decision to bring them together was prompted by the need for synergy in delivering a complete 360-degree OOH communication solutions to clients.

The new buzzword in today's fiercely competitive world of advertising and marketing communications is "consumer connect," making the OOH touch-points the communication avenue of the future. Ogilvy Activation will understand, develop and enhance the relationship between a consumer and the brand at the last mile, giving Ogilvy the first-mover advantage in the area of OOH.

Commenting on the move, John Goodman, CEO, O&M India and South Asia says: "Our clients want solutions which work ever closer with the customer, delivering real sales value. Activation will deliver this promise at the sharp end of marketing."

Pratap Bose, President, Ogilvy Activation, is confident about the industry's future: "This will change the way that OOH brand communications is executed in India and the region. We will be able to offer the complete spectrum of opportunities and services in the non- traditional area of advertising." Adds J.C. Giri, Country Head, Ogilvy Activation: "The inherent talent and current individual strengths of the divisions will help ensure that we remain at the top and clients can continue to expect the best out of us."

The merger of the four OOH services to form a first of its kind 360-degree OOH communication offering is an extension of Ogilvy's 360-degree brand stewardship programme and promises to be a winning formula for Ogilvy in India. Piyush Pandey, Executive Chairman & National Creative Director, O&M, sums up emphatically, "The power of synergy is the idea behind Activation. We intend to bring to our clients the brand power that mass media alone can never achieve."

With an estimated billing of over Rs 225 crore and a team strength of 140 people, Ogilvy Activation catapults itself into a small-sized agency. In its ability to brand the last mile, Activation offers its existing OOH team members the opportunity to become cross-disciplinary experts and broaden their scope of knowledge and learn servicing clients needs, wants and desires in the area of out-of-home communication. About 40 per cent of Ogilvy's Rs 1,000 crore billings comes from the non-ad businesses.

At the same time, agencies are not in a tearing hurry to launch such divisions just because the non- advertising business has been projecting healthy growth rates. There have been numerous instances where agencies have been forced to shut down such divisions as well. For instance, just after the dotcom bust most agencies were forced to shut down their interactive functions. Even in areas such as healthcare, agencies have been struggling to establish their business.

Says Tarun Rai, Senior Vice President & General Manager, JWT India: "Just because there is a gap in the market, it does not necessarily mean that there is a market in the gap. Although we are focussing a lot in this area, we are looking at it carefully and will start a division only if there is a business potential."

JWT, which already has non-ad divisions such as Thompson Connect (for DM), Thompson Digital, Thompson Social & Rural, is looking at the possibility of clubbing its non-ad activities in future.


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