Category: MAM

VARCA: Advertising agencies should cut costs and invest in technology, experts at the Goafest 2011 summit said.

Cutting costs and employing technologies that can save recurring costs found a common ground with Reliance ADAG president brand marketing and Big TV CEO Sanjay Behl and Ernst & Young, media and entertainment partner and national leader Farokh Balsara.
 
Behl cautioned that excellence comes at a cost and agencies have to hire the best practices to increase profitability. “If automated systems are hired, wastages can reduce”, Balsara implied. “While doing media audits for our clients, we have seen instances where agencies have lost out because the system and processes employed have let them down.”

Managing a service business is completely different from managing a product business, said Behl.

Behl was speaking at the second session of the Advertising Conclave, discussing what ad agencies can learn from other service industries. The session was moderated by Advertising Agencies Association of India (AAAI) president Nagesh Alai.
 
Behl also discussed about various tools that are required for a successful services business. “Service companies should understand that they can’t excel in everything they do. They need to define experiences created by the brand and not its features,” he said.

The session was initiated by Tata Consultancy Services HR vice president and global head Thomas Simon who began by drawing parallels for recruitment in both sectors. He detailed the various processes hired at TCS to recruit the right candidate and suggested that the advertising sector should follow similar methods.

Simon said, “We just do not hire the talent, we also develop them.”

Simon discussed various other talent engagement, selection processes and training programmes carried out for employees at TCS. “In India, we are an average 28-year-old workforce. Meeting the instant gratification and work life balance needs for this generation is very important.”
 
Balsara highlighted the importance of people measurability and advised hiring fresh talents to give a new approach for the client. He suggested that at least 10 per cent workforce should be from overseas or with PSU backgrounds.

Yahoo! India CEO Arun Tadanki drew similarities between the problems faced by advertising agencies and technology service companies. Tadanki said, “Issues faced for hiring talent in agencies is similar to ours as engineers too are important but difficult to retain. Over the years, we have realised that smaller towns are a great source for finding new talent and maybe agencies too. We should look in that part of the country for recruitment.”

On the new structure, Balsara was of the opinion that the fragmented business structure – media, creative and PR – should be combined to offer synchronised solutions for the clients. He suggested that all specialist agencies should be gathered under one umbrella so that they can concentrate on extracting the best out of the single-agency model.

Tadanki stressed on the need to have a differentiated approach among agencies. “Agencies should let go certain clients to focus on value generation, accountability, reaching out to newer customer segments and investing in growing categories like digital and mobile,” he said.
 

VARCA: Advertising industry is growing world over except in North America and India is a star among the emerging markets, said Leo Burnett chairman and chief executive officer Arvind Sharma.

Speaking at the Advertising Conclave Goafest 2011 on “Where’s the upside in the profession?”, Sharma warned that things are changing rapidly and growth in the next ten years would come from different areas. “Emerging markets is where all the attention is. The way media is consumed is changing. We will have to work harder than what we did in the past.”
 
India will see unprecedented growth and in the times of growing economy, different sectors will need different approaches as their needs will be different. The changes are driven by the changing media, Sharma added.

The session was moderated by Madison World chairman Sam Balsara. He said, “We as advertising agencies are very ambitious. It will be only fair to say that in the past with whatever growth we’ve achieved, my sense is that we would’ve done better if we were placed better in terms of the resources we have.”

Balsara expected the clients to be more co-operative for agencies to hire the best talent.
 
Sharma agreed with Balsara and implied that though the industry was growing, the remunerations are decreasing and even the clients are respecting agencies less. Sharma advised, “Agencies should win more businesses, acquire new talents and develop capabilities to provide expertise in every form of communication and be more competitive.”

Carat Media Services chairman Ashish Bhasin said that brands are built by consumers and not agencies. He said agencies have to think of 365 days of consumer engagement.
 
Bhasin underlined the miniscule ad market in India by quoting some figures. “In India the ad market scales up to $5 billion compared with $43 billion in China and $145 billion the in United States. Reaching these figures is the real challenge,” he said.

Bhasin celebrated the increasing literacy rate in India, “The growth in literacy rates spawn spend on media.The Industry is yet to see its best,” he said.

Complaining that these aspects are being ignored in the rush, Bhasin said: “While looking at the micro, we miss the macro picture and, hence, miss taking risks.” He also said that though we have great tools to communicate in the current times, “execution is still our weakness”.

Bhasin cautioned, “We need to get rid of the ‘mine is bigger than yours’ philosophy.”

VARCA: Agencies should be ready with leaner structures, have a strategy for new media and retain their talent pool as they compete in the new decade in a whole new business environment.

The future of advertising agencies lies in retaining the right talent and making the profession more lucrative, said Aditya Birla Management Corporation group corporate services director Rajiv Dube.
 
Speaking at the GoaFest 2011 Advertising Conclave on “Are agencies ready for the new decade?”, Dube said agencies should become communication consultants again “as well as change agents with leaner structures, and stakeholders in the advertiser’s business”. They should also become more entrepreneurial as holding companies are less likely to take risks.

Dube encouraged the agencies to ask for more in terms of partnership with their clients. He implied that clients should be flexible enough to support agencies during economic downfalls.
 
“Advertisers should become strategic partners, and not just a source of creative inputs”, said Dube. “They should understand the business and help clients understand the business of consumers.”

Dube emphasised the need for investment in relationship building and talent nurturing as the advertisers don’t want to deal with new sets of people all the time. He said that agencies should help advertisers look at new modes of communication to reach out to the audience and senior management should be involved in interactions with the advertiser beyond the early days of winning the account.

“The world of advertising revolves around the advertiser, not the agency. Agencies should get over their self-obsession. Please factor this into your plans,” Dube advised.

The session was initiated by Goafest 2011 chairman Srinivasan Swamy, who began his address by comparing old agencies with the new ones.

“Previously, agencies acted as consultants. Now they’ve become agents. Consultants add value, agents conduct transactions. This is not a sound development,” Swamy said.

Swamy also expressed his concern over the splitting up of media agencies, “Agencies offered an integrated and specialised service. Now this is getting disintegrated. The old configuration is affecting the profitability of agencies and is not effective in the current times,” he said.
 
Dube, however, felt that the media and advertising divide was a healthy way forward. He lauded the creation of specialist agencies that focus on specific communications – digital, outdoor, et al.

One common suggestion made by Swamy and Dube was better remuneration for advertisers. Both said that agencies were not paying well and, hence, the right talent was shifting away from the industry.

Maruti Udyog managing executive officer Mayank Pareek urged agencies to be ready in dealing with the new media. With the advent of social media and various other touch points, he felt agencies needed to work harder.

Pareek also underlined the need to develop tools that can measure effectiveness and understand customers in a better.

The topic of responsible creativity found a common ground with Dube and Pareek. Both of them highlighted India’s growing stature across the globe and, hence, the need to be more responsible in terms of propagating the right values.

VARCA: A common emotion runs through the agencies: Better remuneration.

Almost every speaker at ”The Advertising Conclave–‘Preparing the profession for the new decade’ implied that the agencies were not being paid enough.
 
Said JWT CEO Colvyn Harris, “Agencies are not demanding enough, they give in too soon.”

Harris was speaking at Goafest 2011 while Indian Market Research Bureau (IMRB) country head Rohini Abraham was presenting a report based on interviews with senior industry leaders and various clients. The topic of the session was “How have some Advertising Companies organised themselves for the new decade?”.

The report, presented by Abraham, highlighted the importance of long-term relationships. Also, social media is accelerating the growth and offers a great opportunity for advertisers, who can do much more by using it effectively and more efficiently.
 
 
The study stated that there should be a fresh approach towards consumer engagement. The agencies should look from the consumer’s point of view as there are a million touchpoints now.

Discussing the relationship between agencies and advertisers, Abraham said: “According to our interviews, the sentiments are same on both sides. The agencies are complaining, ‘We can’t attract, can’t retain good talents, and that is the real trouble’, and advertisers reply, ‘We can see that.”

When agencies complain that the remunerations are not good enough, the client reples: “Give me a value and negotiate. Value counts. I want the agencies to understand the consumer and his behaviour.”

On this, Harris added: “An agency charges somewhere between Rs 6 million to Rs 300 million. They don’t realise the kind of profit their clients are making.”

Detailing the report further, Abraham added: “Agencies say that TV and conventional media are still big and most important. Clients insist on creativity with the current media.”

The report also emphasised the client’s other concern – that agencies have very few people and high attrition rate.
 
 
The study concluded with high fives for the agency: talent, customer centricity, creativity, digital and technology and integrated communication.

“This is the way forward for the ad agencies”, Harris concluded.

He also advised agencies to do what’s best for the clients. “Build relationships that will last for 20, maybe 30 years.”

Harris also added that clients and agencies need to be more ambitious “because for any success, we need an ambition.”

He said different innovations will spawn big ideas and big delivery engagement and, hence, should be encouraged.

Harris concluded: “If we want the next Zuckerberg to be from India, new insights should be encouraged.”

Marketing guru Suhel Seth who was sitting in the crowd was randomly called upon the stage by Harris after he made a comment on the issue. Seth agreed with the touchy sentiment and complained that he left the ad world because it didn‘t pay well.

Yahoo! India CEO Arun Tadanki speaking at a different session did his bit to add fuel the fire by saying, “Agencies should focus on value and not money. They are not negotiating well enough and agree with terms very easily.”