Sam
Balsara
Chairman & Managing Director Madison Communications Pvt.
Ltd. . |
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The
pace of change today has become so frenetic and, more
importantly, trends so erratic that to survive you need
to be able to ‘see’ tomorrow. Success today is no guarantee
of success tomorrow. One is familiar with business tycoons
consulting pundits to select an auspicious day and time
for a factory inauguration or a wealthy, kitty party-going
society butterfly consulting a Vastu Shastra practitioner
for advice on which direction her husband’s bed should
face, but I wonder if the time is not far when business
strategists of today will feel inadequate and be compelled
to give berth to the Majorie Orrs or Bejan Daruwallas
on their boards to help them better ‘see’ tomorrow’s business
scenarios. |
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Business Scenario 1
First, let
us see what the business scenario related to our business
is going to look like soon.
Whilst it is true that globally and even in India, agglomeration
is taking place and will continue to take place with
big fish eating up small fish, and that in every market,
every company will want to occupy one of the top three
slots in terms of size or market share, with these advertisers
becoming tyrants and dictating and demanding a range
of top-qual-ity services at unremunerative prices, I
actually see a phenomenal increase in the number of
advertisers, albeit medium and small, who will seek
out the services of advertising or communication agencies.
A back-of-the-envelope
calculation tells me that today about 120 agencies service
about 2,500 advertisers all over the country. It is
my belief that this number of 2,500 will sharply increase
to 4,000 or even 5,000. This large body of advertisers
may not all want advertising, as our media barons in
press and TV understand it, but they will need an advisory
service in the area of selling and communications. The
rate of increase in the number of advertisers will be
dictated not by their propensity to consume our services
but by the ability of agencies to service them and offer
them cost-effective solutions that work in the short
term (defined as one year) at a price that is remunerative
for the agency. .
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A
back-of-the-envelope calculation tells me that today
about 120 agencies service about 2,500 advertisers all
over the country. I believe this number of 2,500 will
increase to 4,000 or even 5,000. This large body of
advertisers may not all want advertising, as our media
barons in press and TV understand it, but they will
need an advisory service in the area of selling and
communications.
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Agency
response
Obviously one
would require two very different types of agency structures
to meet the needs of the big fish and the small fish.
It’s not that the same agency will not be able to meet
the requirements of both — it will, but it will need to
have two different types of structures to meet these needs.
In the case of thelarge advertiser, the present structure
with one large full service agency and separate independent
units for media, promotion, PR, direct marketing etc.
should suffice — because large advertisers will themselves
have talent and skill sets and, more important, the confidence
to selectively choose only those of the agency’s services
that they need or feel that the agency is particularly
good at. The large advertiser at the full service agency
will probably have to do away with the luxury of having
client service executives hovering around to carry artworks,
do minutes, spend half the time reminding the client of
what he has to do and, of course, chase payments. I say
this because I believe the remuneration offered by these
large advertisers will force agencies to cut down all
unnecessary expenditure and perhaps reinvest that in strategic
advisors and creative people to strengthen their competitive
advantage. Also, I presume in the new scenario with all
the techno stuff that is and will be available to us,
there will be greater accountability and responsibility,
and each function within the agency and at the client’s
end will do their job completely, thoroughly and on time
so as to obviate the need of a co-ordinator. Perhaps the
large but not-so-large advertiser may even be tempted
to do away with the brand manager, function if the agency
can earn his confidence, and the agency’s strategist can
be relied on to perform this function. This would optimise
cost and increase the input-output ratio.
On the other
hand, the structure required to service the medium or
the small advertiser would be very different. Such an
advertising account would have to be headed and led by
not an account director, but what I would call a business
director — and where the latter would differ from today’s
account director is that he would be conversant with not
just advertising but every discipline of communication,
including direct marketing, PR and promotion. He would
also need to have a strong business and commercial sense
and be committed to delivering profit to his client rather
than be worried about what his colleagues might say about
the quality of his work or campaign. He would also play
the role of brand manager to the advertiser, not just
because the advertiser cannot afford to hire one, but
also because the advertiser will not be savvy enough to
attract one and deal with him. To better describe the
role played by the agency to the client, perhaps such
a structure should be termed not an ad agency but a marketing
agency.
Business Scenario 2
Secondly, in
terms of tomorrow’s businessscenario, whilst advertisers
will invest heavily in brand-building, their impatience
with advertising will come into sharp focus. The breed
of marketing managers who genuinely believed that advertising
takes time to work is extinct. Advertisers will believe
that if it doesn’t work in the short term, it won’t work
in the long run — and the definition of short term will
get shorter and shorter.
Agency response
To respond to
this scenario, agencies will need to cultivate a new breed
of creative people (or maybe recalibrate today’s creative
people) who are less obsessed with beautiful sunsets and
snow-clad mountains and who do not have a natural apathy
to anything that is bold, direct or simple. Such people
could be renamed solution providers. Whilst it is indeed
true that we need to develop the advertising sensibility
and sensitivity of our masses (like Britain has done)
to understand and respond to the language of advertising,
we need to recognise that our target audience is intelligent,
alert and responsive, provided our solution providers
provide the right stimuli or press the right nerve. .
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Market
shares of established brands will become erratic. Brand
loyalties will reduce sharply. Not only will I not use
what my father used, but I will also want to use something
other than what I used yesterday and not because I was
unhappy with it — change for the sake of change.
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Business
Scenario 3
Market shares
of established brands will become erratic. Brand loyalties
will reduce sharply. Not only will I not use what my father
used, but I will also want to use something other than
what I used yesterday and not because I was unhappy with
it — change for the sake of change. Market shares will
increasingly be dependent upon the brand offering of the
day in which its historical position will play a small
part.
Agency response
If a creative
person is as good as his last campaign, the time is upon
us where a brand is also as good as its last campaign.
Given this, the agency will need to develop a mechanism
to conceptualise, test and execute campaigns in one-tenth
of the time that they now take. In tomorrow’s fast-paced
world, nobody will have time, least of all a brand who
will continuously be challenged by other brands. Agencies
which adopt a 24/7 work ethic, are clearly going to be
winners. If printers, typesetters (in the olden days),
computer animation artists and film-makers can offer services
round the clock, there is no reason why agencies cannot
or should not. Agency managements will need to develop
a structure that enables them to offer their services
round the clock.
Business Scenario 4
The share of
mass brands will be eroded by a large number of niche
brands, made viable by consumers’ need for individuality
and availability of targetable media like localised or
specialised publications and channels, the Net and interactive
media, and perhaps telephony.
Agency response
This is of
course good news for the smaller and medium-sized agencies
and is probably one of the reasons why they will continue
in business and survive, if not thrive. Agencies, however,
will have to figure out a way to provide inputs to brands
that are commensurate with the agencies’ earning on those
brands without there being any cross-subsidy. Today, within
the agency, big brands support the small brands of the
same advertiser, and perhaps to some extent medium-sized
advertisers support small advertisers within agencies.
An important
area that I think agencies will need to focus upon is
that how they can make advertising work more effectively
in the advertisers’ interest. Today, advertising works
today much less efficiently for the advertiser than it
did five years ago, and if we continue in the same vein
it is going to work even less effectively. Over the last
six years the advertising market has grown from under
2,000 crore per annum to over 8,000 crore per annum, taking
spends only by advertisers through about a hundred advertising
agencies. Which means an increase in investment by the
advertiser of 6,000 crore. If we assume an average advertising-to-sales
ratio of five per cent this additional investment of Rs.
6,000 crore should have led to an increase of 1,20,000
crore in terms of advertiser company sales.
I suspect this
hasn’t happened and the actual figure may probably be
not even halfway past this mark. Who is to blame for this
reduction in the efficiency with which advertising works
today for the advertiser?
Obviously the Indian consumer is maturing, and whilst
his propensity to buy has gone up, the porosity of the
veil that he employs to filter and receive advertising
messages has reduced. Last year, about 50 channels beamed
out 51 million seconds of advertising, an increase of
20 per cent over the previous year and a staggering 50
per cent over the year before that.
An area that
advertising agencies should concentrate on to achieve
better results for the advertiser is pre-test research.
Current methods, I dare say, are woefully inadequate and
throw out the baby with the bath water. They have the
ability to reject a hundred ideas and perhaps select 10
which can achieve somewhat moderate success, but certainly
lack the ability to select that one idea which could exponentially
increase the brand’s sales. Given current structures and
remuneration patterns, there is no incentive for the research
agency to invest time and money to identify or even support
that one idea. To my mind, the advertising agency, because
of its obvious vested interest, will have to invest in
arriving at a research methodology that can identify that
one idea. And agencies would have to look upon this as
a cost centre rather than a profit centre.
This article
is based on a talk Mr. Sam Balsara gave at Future Shock,
Chennai, 2001. |
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