Even as ad agencies everywhere rethink growth strategy, JWT is preparing to acquire companies in the digital and retail marketing domain this year in key emerging markets. Suvi Dogra and Sapna Agarwal caught up with JWT Worldwide President Michael Maedel, who is on his first visit to the Goa Ad Fest. Edited excerpts:
How has JWT’s growth and expansion strategy changed, given the economic downturn?
While the recession has hit countries across the globe, the emerging markets are still showing significant growth and hence their role will be more significant. Even in these times, we are looking at acquisitions across two key areas, digital marketing and retail marketing, in the key markets of India, China, Brazil and, when the time is right, in Russia. Digital, too, is an area of priority for us. We are looking at partners for the entire spectrum of services in the activation, digital and new media arena.
How will India’s role change in the coming years in terms of contribution to JWT worldwide?
India is now the third-largest market for JWT, after the US and UK. While the other markets will struggle through the next 12-18 months, our bet is on the opportunity India can provide, given its broad base. Compared to China, India has a much stronger and self-sufficient skill base.
India is truly the powerhouse of the future. Over the next three years, I believe 50 per cent of the revenues of JWT will come from the emerging markets, with India playing a significant role. The increasing polarisation of the world, with North America at the one end and India and China on the other, will determine future dynamics.
What is the key change in advertising when it comes to recession?
There is a definite shift away from the traditional media. The revenue migration is from traditional to non-traditional media. While it may vary from industry to industry, overall, I see the revenue ratio of traditional media to non-traditional media going to 60:40 within the next two years.
The recessionary environment will only accelerate this curve going ahead. Clients are willing to experiment more in these times, even as the ad budgets get trimmed. The key is to get more value out of what is spent. Hence, it is a challenge to identify new avenues and move in at a fast pace before the opportunity is lost.
Consolidation of services and offering specialised services seem to be the new buzzwords...
The strategy is definitely to diversify as much as we can, even with the recession at hand. We have been a late entrant, since other players in the industry have already taken a step in this direction. We will launch services as and where needed. The faster the better.
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As of now, we have operations ranging from RMG, IPAN and Fortune along with core advertising focus. As I said, we are looking at the digital and retail services front to add to our presence.
JWT had acquired Always in China to capitalise on the retail marketing spectrum. Have you any plan for anything similar in India?
In China, Always has helped us expand our ability to activate our clients’ creative in practically any supermarket, stadium or shopping centre on the mainland. From road shows and in-store sampling to promotional initiatives and door-to-door surveys, Always leverages expansive specialist communications capabilities.
In India, the retail environment is evolving from the traditional mom-and-pop store format to the modern retail model. Therefore, there is a need to offer appropriate tailor-made services to capture, communicate and analyse the data in this set-up. There is also a need to strike the right balance between above-the-line advertising and below-the-line approach.
It is critical to develop a unifying idea, one rooted in consumers’ fundamental behaviour and preference and extend that idea through different media, right down to the store level, in a way that triggers short-term sales, while reinforcing a consistent brand image.
Have you found a potential partner yet?
The challenge is to find the right partners operating in this domain but, unfortunately, there are only two or three small-scale players available in India. Always, on the other hand, has a workforce of around 7,000-8,000.
We will wait for the right partners for better regional coverage, with an ideal workforce of 2,000-3,000 people. In India, an acquisition of this scale may not be possible. Hence, we will look at opportunities, even if small, and scale it up according to the need.