IPG has consolidated its media agency operations in India under Mediabrands. How successful it can be depends on how deftly the entity manages competing interests
In the last four months, Matt Seiler, the worldwide chief executive of Mediabrands, the media arm of the fourth-largest global advertising network Interpublic Group (IPG), has quietly made two trips to India. If all goes well with his current plans, he will be flying in a lot more regularly than that.
The reason for his quick sorties is a consolidation drive amongst all the different IPG media agencies in the country which will redefine their operations and position them as an entity with bargaining clout. This is not the first time that Mediabrands has eyed an India entry. In the last few years, the buzz about the company entering India grew louder, but somehow that didn't quite work out. Now Seiler appears to be working overtime to make sure that it does.
Seiler's plan is simple. Agencies that were once rivals will now be clubbed together for synergistic purposes. Niche or boutique agencies are also networked-in to offer specialised services to clients, who can often avail of a bouquet of them, specific to their needs. “It’s really a format store versus a kirana store approach,” says one industry insider.
Rival holding companies in India have long consolidated their domestic operations—WPP media entities under GroupM, Publicis under Vivaki (chiefly for media buying), and Omnicom under OMD (though DDB Mudra has its own media unit called DDB Mudra Max in India). IPG is doing so only now and will be playing catch-up.
IPG ranks number two in the pecking order of advertising networks in India, after WPP, with revenues of Rs 650 crore. WPP, the leader, has revenues of Rs 2,000 crore, while Publicis, the third-largest network in the country, has revenues close to Rs 500 crore. Omnicom after the Mudra acquisition in November last year has revenues close to Rs 300 crore, and stands fourth.
As part of the consolidation drive, both Lintas Media Group (LMG) and Lodestar UM—the two media entities representing IPG —have begun increasingly working together under the Mediabrands banner. "We have had two agencies here, who worked separately all this while. We needed to bring them together," says Seiler.
In the first phase, kicked off during Seiler's first trip in February this year, Lynn de Souza-headed LMG was integrated into the Mediabrands network so that tools and resources available to other entities within the network (such as Lodestar) could also be made available to it. "Lodestar was already a part of the Mediabrands network," Seiler says. "So, it did have access to our resources. It was LMG, which was out of Mediabrands. It has now been merged into Mediabrands," he says.
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Market experts say that it was important for IPG to kick-off its consolidation drive in media in India at the earliest. "Media is about the heft you bring to the table. The sooner you come together the better," says the head of an ad agency, who declined to be quoted.
With LMG and Lodestar UM now both working under the Mediabrands umbrella, Seiler contends they are a force to reckon with. The network boasts advertisers such as Coca-Cola, ITC, Maruti, Bajaj Auto, companies of the Tata group (such as Tata Motors) "We are strong," he says.
In the coming months, more members are likely to join the board: Specialist agencies from the Mediabrands fold including Map, which is a digital agency, and Magnaglobal, an intelligence and negotiations offering (basically a research and media buying agency). Magnaglobal will be launched in India next month, while Map will mark its entry by October-November this year. Richard Beaven, chairman emeritus of Initiative Worldwide (a global media agency under Mediabrands; in India Initiative is represented by LMG), along with Seiler, is working closely with the Indian board to ensure it works smoothly.
These specialist units will join others such as Reprise Media, which is a search and social marketing agency, Mediabrands Analytics, a specialist data mining and analytics division, and Initiative Lintas Outdoor, an outdoor agency, which are already present in India.
Still, success is hardly a foregone conclusion. Agency observers say there could be a push and pull amongst members of the two leading agencies—LMG and Lodestar UM—for greater access to resources, not to mention the board members who would try and root for decisions favouring their respective agencies. Seiler, however, has a different point of view to offer. He says, "In some markets, we have a Mediabrands head, in some we don't. In the markets that we don't have a Mediabrands head, the model followed is similar to that in India. We don't have a problem with it at all."
That may be so, but how IPG fares depends a lot on how Seiler, with the help of de Souza and Sinha, is able to both aggressively grow the business as well as ensure that no blood is spilt within the family due to competing interests.