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Client– agency should team up to face changing environment, say experts

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Client– agency should team up to face changing environment, say experts

Changing business realities and new expectations from advertising agencies was the topic in the first session of exchange4media Conclave 2004 at Mumbai. Panelists in this session included the who's who of the advertising and media fraternity. Moderator D Shivkumar, Head Audio Division, Philips, shared the dais with Pranesh Misra, COO, Lowe India, Sam Balsara, Chairman, Madison Communications, Kaushik Roy, Head, Marketing, Reliance Infocomm, Rajesh Jejurikar, Head, Marketing, Mahindra and Mahindra and V Ramani, CEO, South Asia, MPG and CEO, Mediaturf Worldwide.

The adage 'small is beautiful' for ad agencies seemed to be echoed by more than one panelist during the inaugural round of the Conclave.

Referring to the topic, Kaushik Roy, Head, Marketing, Reliance Infocomm, said, "The advertising industry has come a long way from what it was when I joined the industry in 1979. Agencies were operating under mental blocks and indulged in extra activities purely for the sake of the cushion factor. In the face of the evolving business landscape, big is not beautiful, in fact small is better. Certain businesses are meant to be small and advertising is one of them. The moment you become big, you loose your focus. The term small implies to flexibility and creativeness and not the size factor. "

Being an ex-agency hand and currently working for the client, he believed that clients tend to buy good strategies and in order to get real talent, they are willing to pay the right price.

He observed, "Agencies should have a transparent fee structure and also need to desperately reduce operating costs, like doing away with departments such as dispatch." He also spoke about the leaner structure of media agencies vis-à-vis the advertising agencies.

Reiterating Roy's point of view, Sam Balsara, Chairman, Madison Communications, shared, " In the ’90s, agencies were growing at 30 to 50 per cent year on year. The industry began to believe that growth was their birthright and they should have it. What ails the industry today is this addiction to growth and sadly, at any cost. We have grown but at the cost of quality which is not good."

Balsara added that the economy was growing, but the benefit of the same could be noticed only in the telecom and automobile sectors. Sharing some figures that shed light on the status of the advertising industry, he said that as per the AC Nielsen survey, the monolith Rs 470 billion FMCG market, also the mainstay of the advertising industry, had grown by only 1.4 per cent in 2003 and the rural markets for the same plunged by three to four per cent in the same year. Number of seconds on TV time has grown to 200 million seconds. As per Central Statistical Organisation (CSO) figures on expenses like food, beverage and tobacco have fallen from 55 to 49 percent. Expenses on other areas such as housing and communications have also gone up.

He agreed that the media scene had changed rapidly. From broadcasting the industry has moved on to narrow casting. "From talking to the masses we have moved to addressing the audience one on one. The proliferation of media has resulted in combined options by media owners, which in turn is taking away the negotiating power from the agencies," he added.

Pranesh Misra, COO, Lowe India painted the picture of today’s reality. He said, "Time crunch is a big issue these days. From annual reports we have moved up to quarterly reports. More accountability is required in a shorter period. Advertisers do not have the time or patience for long-term brand building. Also, there is an extreme degree of over supply of advertising-related services putting immense pressure on margins and price. "Clients are demanding a greater level of strategising from advertising agencies. They require solutions more than campaigns. All this is putting an extreme pressure on the agencies," he added.

Misra also discussed the loyalty factor that takes a major beating these days. "For client-agency relationship, period has shortened and averages at two to three years. Moreover, brand managers, on an average, work with an agency for 1.2 to two years. And there is immense pressure on them to deliver within that period. This has made short-term returns more important. A campaign is also supposed to deliver within two to three months and if it does not, there is pressure to change it right away," he said.

He ended his insights in the changing business scenario with a question, "Will all this result in quality work from the agencies, especially in a scenario where an agency is as good as its last campaign?"

Ramani, CEO, South Asia, MPG and CEO, Mediaturf Worldwide, believed that more changes had taken place than ever before. Business, communication and consumer - all three have changed. He said, "Smart ideas are needed to drive home the advertiser’s strengths to the consumers and more so the prosumers who are the change drivers. In this age of clutter and media fragmentation, in order to be effective, ads must not only be informative but also entertaining."

Rajesh Jejurikar, Head, Marketing, Mahindra and Mahindra, agreed with the cluttered world scenario for the media industry. "In the current times of low product differentiation and intense competition, rules of the game have changed. New truths should be followed which include rewriting strategy as and when required followed by top-of-the-line execution. If there is a choice to be made between great strategy with average execution and average strategy with great execution, I would opt for the latter."

He also stressed on the point that communications was not just a science but a business of the people as well. It was important to have an acute understanding of social sciences and to address the softer issues of the consumer.

"Research should be considered to seek trends rather than decisions and to seek insights and not solutions. Data should be used for a sharper target group definition. Most importantly, dare to win by being different and following your gut feel," he advocated.

The session moderator D Shivkumar, Head Audio Division, Philips, noted that the booming economy is expected to surge till 2050 and was driving the changing business scenario. Small is indeed beautiful if it reflects flexibility and creativity and it is good to grow but not at any cost. Time crunch was the order of the day and ads needed to be entertaining rather than mere informative. These factors have led to new rules for the advertising game, which should be played like all other games – on gut feel.

After all the panelists had shared their perspectives on the changing business realities for the media industry, Shivkumar put forward a couple of questions to the panel. The first one being, "In the these days of tough times, do clients believe that advertising is the key to growth?"

Balsara answered by saying that in events like the Conclave and other such media get-togethers, clients strongly proposed that they believe in advertising, but when they went back to their offices, they acted differently. This is also one of the primary ailments of the FMCG industry.

Misra added that there were a handful of clients who believed in advertising. They stuck to it even during tough times and got results but sadly this learning does not travel. Jejurikar believed that it was category-specific. He explained his perspective with an example of the automobile industry. He said people buy cars purely because it is a status symbol and such a commodity sells purely on advertising. Commercial commodities on the other hand, such as three wheelers and tempos etc. did not require the assistance of advertising.

Roy held the viewpoint that advertising was the Unique Selling Proposition for any product. In the current times of media clutter and low product differentiation, advertising was the differentiator that consumers fell for.

Ramani said that a decade ago, 35 to 40 per cent of the advertisers were happy with their agencies and as on date, the figures were more or less the same. The only difference being that three to four per cent will openly express their satisfaction while the rest will try and squeeze their agencies still further.

The second question posed before the panel was, "Are clients looking at agencies as just 20-second deliverers or full fledged communications partners?" Misra believed that the 30-second specialist tag for agencies was a dangerous trend. Agencies operating in this genre will shrink the industry. Planning has become a specialist function but it is also crucial to partner the client and understand his problem. Jejurikar said that agencies were communications partners but could not be advertising partners. Each agency had their strength area and no agency was good in all aspects of advertising. Citing an example, he said that Public Relations is one area where agencies were not very strong. And it was an onus on the brand manager to choose the specialist.

Roy held the view that the agencies needed to address all the issues right up till the last layer. Balsara said that TV ads, irrespective of them being 30-second 20-second or 10-second, was the most cost-effective medium to sell a product and he believed there was nothing wrong in putting money in it. Only at times when TV does not work it becomes necessary to consider the other options.

However, it turned out to a very enlightening first session, successful in creating the right mood, of sharing, scrutinising, debating and finally evolving solutions to media-specific issues.


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