MUMBAI: The “television commercial break” behind him, former Zee Telefilms broadcast CEO Sandeep Goyal is ready for action.
Government clearance has been applied for (on 8 August), and it’s time to get the business rolling. New joint venture ad firm Dentsu Communications Pvt Ltd, in which Goyal is a 26 per cent stakeholder, gets its first big account – Toyota Kirloskar – activated from 1 October.
The JV that Dentsu Inc is setting up with the former Zee and before that Rediffusion DY&R CEO entails Japan’s largest advertising agency holding a 74 per cent stake in the new entity. Dentsu Communications will have an initial paid-up capital of $1 million (a little under Rs 46 million). Since Dentsu Inc already holds 20 per cent stake in Rediffusion-Dentsu Young & Rubicam (DY&R), it had to obtain a no objection certificate (NoC) from the latter for floating a separate company in the country.
Informed sources have told indiantelevision.com that the Toyota-Kirloskar account, which is reportedly worth around Rs 300 million and expected to grow as Toyota focuses on the A segment, will move to Dentsu as of 1 October. Reports say the account shift could spell curtains for Orchard Advertising, through which Dentsu was servicing the Toyota account.
Goyal has already set up an office in Bangalore with Ruchira Raina in charge, the sources confirmed. When contacted, Goyal would provide no details as to the company’s plans, saying it was too early to announce anything as he was still in the process of setting up the agency.
Getting the agency fully functional will reportedly take another three months. Information available with indiantelevision.com indicates that Starcom India’s Bangalore office, which manages Toyota’s media buying and planning, has already been informed that from 1 January 2004, the account would shift to Dentsu.
The new JV will initially target almost all Japanese brands present in India including Toyota, Honda, Suzuki, Mitsubishi, Sony, Panasonic, Sharp, Toshiba, Canon, Epson, Fujifilm, Kawasaki, Yamaha and Daikin – all global clients of Dentsu. The total worth of all the accounts in Dentsu’s immediate sphere of attack are worth an estimated Rs 1300 million, according to sources. Sony, Fuji and Hitachi are the other brands that are currently with Starcom.
It will be interesting to see what happens to accounts such as Canon, currently with Rediff DY&R. Even if they do not shift out in the immediate term, advertising circles believe it is only a matter of time before a parting of ways comes about. This is because internationally, the DY&R relationship weakened post WPP acquisition of Y&R, which pushed Dentsu to strengthen its investments in the Publicis Groupe. Dentsu is the single largest shareholders in Publicis, as also in Leo Burnett. By virtue of its investments in these agencies, Dentsu also owns significant stake indirectly in Starcom.
The benchmark that Dentsu Communications will have to aim for will likely be China. Dentsu’s Chinese billings were a massive a $278 million in 2002, having more than quintupled in just four years. It is now China’s third-largest advertising firm.
“India might not necessarily be the next China, but it’s a big market,” Dentsu Inc’s executive vice president Fumio Oshima has been quoted recently in a Reuters report as saying.