Contract Advertising hit by successive account losses
Contract Advertising, especially their Delhi office, is believed to have lost a string of accounts while some others are being re-evaluated, which sources say have led to a loss of Rs 7 crore
Contract Advertising, Delhi, is believed to have lost several accounts in the past six months and some others are being re-evaluated, resulting in losses to the tune of at least Rs 7 crore. This was one third of their Delhi office revenue as on December 2018, claim highly placed sources.
Leading standalone health insurance player Max Bupa, exchange4media has heard, called for a pitch in the capital a few months ago. While several big agencies have participated in the pitch, Contract isn’t going to be part of it. Contract was working on the account since the beginning of 2018.
Another Contract Advertising account, which is up for a pitch, is Orient Electric, a CK Birla Group company. However, Contract is participating in this one. The agency has been working with Orient Electric on this account for the past three years. Also, Anchor Health & Beauty Care from Mumbai which had Contract Advertising as the agency on record for the past couple of years is believed to have ended their contract as on December 31, 2018, for entirely different reasons though. Their creative mandate is currently being handled by Hats On, a Mumbai-based agency.
Another big loss for Contract Advertising, which exchange4media was the first to report, was the Domino’s account which had been with Contract for nearly two decades. The size of the account is believed to be approximately between Rs 3.5 crore to Rs 4 crore, making it one of the biggest accounts for Contract in Delhi. FCB India has won the account, even though nothing has been officially announced yet.
Aviva Life Insurance, another of their clients, is currently in the middle of a pitch and Contract is also participating in it. The agency’s association with Dabur Glucose D has also reportedly ended. Aviva Life Insurance has been working with Contract Advertising for close to three years now. Negotiations are also believed to be on with some clients to continue the collaboration. In all, Contract Advertising has roughly faced losses of approximately Rs 7 crore in revenue in the past six months in a growing market like NCR, said a source close to the development.
The past six months have been rather rough for Contract Advertising with CCO Ashish Chakravarty announcing his decision to move on. He join McCann Worldgroup after leading Contract for six years. His ECDs in Mumbai and Delhi, Kapil Mishra and Mayur Hola, too resigned and Contract had to put in place an all new leadership team, headed by Sagar Mahabaleshwarkar, a veteran in the industry.
But sources say the crash has been rather gradual, with the past two years contributing majorly to the agency’s slump. Most people who have over the past few decades worked with Contract say the agency set up by ad guru Mohammad Khan in India was not a typical second agency to JWT (now Wunderman Thompson), then HTA, it was a fairly independent and powerful agency. The agency was not reporting to JWT India directly but instead to JWT Singapore till Chairman and CCO Ravi Deshpande’s exit in 2013.
The first wave of change was noticed after the exit of their CFO Vivek Kamath who was an old hand in the agency and was known for not being a pushover. Things changed after he left Contract and was replaced with someone who was working with J Walter Thompson office then, and thereon the parent company in India became a lot more controlling.
A Contract insider who blames the agency’s decline on the enforced JWT (now Wunderman Thompson) culture and the domination of the parent company says, “Despite being a part of J Walter Thompson, Contract has always functioned as a separate independent entity. But then there were major changes after Vivek Kamath left. Hiring became tougher, replacements weren’t okayed. At the beginning of 2016, there was a 61-member Creative team in Delhi, which was expanded on the back of solid growth. But over the past two years, one by one they had to be escorted to the door because the agency could no longer support them. Till the end of 2018, the Delhi team size was back to 17-18 which was reminiscent of what it was in 2013-14 before the massive growth the agency had witnessed.”
A former employee says, “In 2013, the Delhi office had two big businesses, one of them was Domino’s, and the size of the Creative team in the capital did not exceed 12, the Bangalore office had lost one of its key accounts - Jockey - and the Bombay office was relying on three big accounts for revenue – Shopper’s Stop, Asian Paints (which are still with Contract’s Mumbai Office and industry sources peg the account worth at Rs 3 crore and Rs 4 crore respectively) and Cadbury’s. In the next two years, the Delhi team focused on winning new accounts and by 2015 new spaces had to be created in the office to accommodate the growing Creative team.”
Highly reliable sources say that between the end of 2013 and 2015, Contract Advertising had won 30 businesses, including Docomo and Microsoft, and their Delhi office alone grew from a Rs 17-18 crore agency to over Rs 30 crore agency in two years flat, which was an unprecedented growth for the advertising agency. Mumbai didn’t grow then as much because it was a market which was saturated, unlike Delhi which had new businesses coming in. Of course, the Mumbai office then lost the Mondelez account, first the Halls & Choclairs business to L&K Saatchi and Saatchi due to international realignment of business and lastly Celebrations to Ogilvy.
Another ex-Contract resource says a lot of senior leaders at Contract Advertising were unhappy with the change in the style of working after Rana Barua, then CEO, quit the organization. “With the new management coming in, the culture was not the same. Contract was a very creative-led agency wherein the creative leadership would take the calls, even strategy was cracked by the creative leads when the idea was finalized. But later it became more management oriented, typical JWT culture started creeping in, which was more servicing oriented.”
A creative professional who has worked with Contract said: “All the accounts we would win then started getting clubbed while being publicized as J Walter Thompson Group wins and rarely as Contract Advertising’s wins individually.” Summing it up, the professional said: “Contract was a separate entity, a respected separate entity. But in the last two years it has been reduced to a JWT-owned entity and has lost miserably after being throttled and not just neglected.”
Responding to exchange4media’s query, Raji Ramaswamy, CEO, Contract Advertising says, “Contract India has won a number of new businesses and projects in the last two years like Bata, Veeba, Wipro - four brands, Sony SAB, Brigade, McCain, Khimji, Nayara Energy, Oppo, Godrej Interio, to name a few. Our specialized offerings like Design, Digital and Core Consulting have won over 10 new projects and businesses. We are currently handling all the clients that you have mentioned in your list and it is business as usual with all of them. We will be announcing yet another new business win in a couple of days. The wins in the last two years are far more than any losses that we may have had and we continue to win assignments and businesses every month across the country. Contract has a unique culture built over 30 years that we are proud of and will continue to build on it.”
(Exchange4media got a response from Contract Advertising on the story on 11th June and on 13th June the agency announced through a press release that their Mumbai office has won the mandate for Godrej Interio.)
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