But does cutting down ad spend not affect the long-term brand building prospects of the company?
I don’t think so. I know long-term brand building objectives are necessary. But that does not mean that we completely ignore the short-term perspectives. After all, a manager’s performance is not judged entirely on the basis of where the brand will be five years hence. He or she is also judged by the short-term performance of the brand/organization. So it is only fair that during economic slowdown, marketing expenses (including advertising) are curbed.
I know that there are purists who would disagree with this view. According to them, long-term brand building comes before everything else and so should not be compromised. But one must keep in mind that economic boom as well as recession is a generic component of the normal economic cycle and one always follows the other. Besides, a strong brand is unlikely to get terribly affected by tighter ad spends and fewer ad campaigns during recession.

While we’re on the subject of brand building, it is often observed that agencies don’t do sufficient to go up the value chain by contributing to their client’s strategic thinking. Your views...
That’s not true, at least not in the case of professional agencies. Proficient advertising agencies always work closely with the client to evolve solid strategic thinking. Whether it is segmentation, positioning or the broad value proposition that a particular brand offers, agencies have to work, and do work, closely with the clients. It’s a different matter when some clients choose not to involve the agencies in such matters. But my advice to them would be to always include agencies in charting out such decisions for an overall perspective.

What is your opinion about the effectiveness of POP/trade promotion, especially during economic slowdown?
During economic slowdown, promotion is often preferred over advertising as it gives you the desired short-term results. In my view, there is nothing wrong with this approach. As long as you don’t follow any path that dilutes your brand, it is perfectly fine to do so. A good agency would always recommend strategies that serve the client’s best interests.

Do you think agencies can improve their chances of maintaining advertising budgets by focusing more on issues that enhance their clients’ strategic posture in the marketplace while at the same time also eliminating unproductive and unnecessary campaigns?
Absolutely! We should always look for ways to eliminate redundant and unyielding campaigns, not just during recession but during boom time also. Advertising budgets must be used effectively to accomplish the bottom line objectives of the marketing plan - which media vehicle is used, which channel of communication is used - is irrelevant, as long as these objectives are met. So, yes, it is extremely important to focus on issues that augment our clients’ position in the marketplace. If that requires us to focus on sales promotions instead of advertising, so be it.

Do you think that during economic slowdown, as compared to niche agencies offering select services, broad-scope (full service) agencies create more value for the clients?
An agency should be selected on the merit of each of the services offered by it. But merely because an agency offers a whole basket of services does not necessarily make it the best option. In fact, I would actually go so far as to recommend a specialist agency for certain activities that I think they can implement better than us. For instance, there are a number of media-buying houses that do a good job of optimizing media spends of the client. It certainly makes more sense for the client to employ the services of such media buying houses.
Once again, what’s important is that an agency must keep the client’s best interest in mind, and not just its own profitability.

Given the budgetary constraints, what should agencies do to ensure improvement in quality of marketing efforts made by clients while simultaneously also pushing up their own top line?
Client-agency relationships are based on mutual trust and evolve over a long term period. An agency’s long term prospects are directly linked to their clients’ performance. With performance-based incentives becoming the norm, it follows that an agency that works closely with the client and makes a positive difference in the client business will grow with the client. So agencies must always strive to work at helping the client accomplish the short-term and long-term objectives.

How many of the top agencies would be able to execute the above and achieve the results?
I think almost all the top agencies have remained at the top for some time now. And this is so because they have followed the basic business principles in advertising - those of providing the best possible service, adding value and making a positive difference to the client’s marketing efforts.

Piyush Pandey is Group President and National Creative Director, O&M. He spoke to Dr. Ranjan Das, Consulting Editor, Strategic Marketing.

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