 "After Publicis-Omnicom combine, can independent ad agencies last?")
The big question an advertising consolidation frequently raises is the fate of independents. Specifically, on creative independents.
India and, indeed, the advertising sector across the globe is dotted by myriad such creative shops and agencies, which've opted not to align with any of the big networks. Weiden & Kennedy and Droga5 are some examples globally of such enterprises. In India, there was Taproot until August last year, standing as a prominent independent in a business which has seen the networks rapidly gain ground, wooing some agency or the other to join their fold.
The home-grown Mudra Communications, for instance, in which Omnicom agency DDB was a minority partner, is a case in point. The latter acquired majority stake in the agency in November 2011, making it a part of the network. Another is of Capital Advertising, a prominent Delhi-based ad agency, which found itself unable to resist the temptation of joining the big boys, becoming a part of Publicis Groupe.
Can independents, then, hold on in the face of massive consolidation and the clout the big networks bring to the table?
The answer remains mixed, with some saying it is impossible not to be swept by the tide. Some are strong votaries of independence. Sajan Raj Kurup, founder & creative chairman, Creativeland Asia, the agency with brands such as Frooti, Appy Fizz and Cinthol on its rolls, said in an earlier conversation that he was not prepared to be one among myriad other ad agencies in a network, the fallout of an acquisition by a large group.
“That was certainly not why we were set up,” he said. “The first few years saw us move organically; the next few years will see us target inorganic growth. We are keen to do acquisitions but we’d rather tie-up with a private equity investor than a network.”
In constrast is Manish Bhatt, co-founder of Mumbai-based Scarecrow Communications, an independent which does work for companies such as ITC and the Zee group of channels. He says he is not closed to the prospect of a tie-up or association with a large ad group. “There are challenges of running a business. As long as your ambitions are small, you can carry on. The challenge is when you decide to expand or you have a global client on your roster. You need the support of a larger network to help you carry on with your operations,” he adds.
Emmanuel Upputuru, earlier national creative director, Publicis India, who quit to set up ITSA Brand Innovations last year, with brother Daniel and former Publicis India colleague Anirban Mozumdar, says which way an independent will go quite often depends on the founders themselves.
“They might want to cash out or to stick around,” he says. “If you go back in time and look up the history of the big networks, you will find they were all set up by individuals, who were led by their dreams. These independents began to grow and then went on to acquire other agencies. It is a cycle, where you will find independents come up, then being acquired and eventually becoming part of a larger network. Some might not want to be acquired and may opt for loose affiliations or alliances.
“And, even as this churn is on, there are more independent agencies that are set up by a totally new bunch of people. I don't think this will ever stop.”
ITSA, much like Scarecrow before it, has a partnership going with home-grown communications group Concept. “Strictly speaking, we are not independent,” Upputuru says. “We might not be part of a global network but we are part of an Indian group.”
India and, indeed, the advertising sector across the globe is dotted by myriad such creative shops and agencies, which've opted not to align with any of the big networks. Weiden & Kennedy and Droga5 are some examples globally of such enterprises. In India, there was Taproot until August last year, standing as a prominent independent in a business which has seen the networks rapidly gain ground, wooing some agency or the other to join their fold.
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The home-grown Mudra Communications, for instance, in which Omnicom agency DDB was a minority partner, is a case in point. The latter acquired majority stake in the agency in November 2011, making it a part of the network. Another is of Capital Advertising, a prominent Delhi-based ad agency, which found itself unable to resist the temptation of joining the big boys, becoming a part of Publicis Groupe.
Can independents, then, hold on in the face of massive consolidation and the clout the big networks bring to the table?
The answer remains mixed, with some saying it is impossible not to be swept by the tide. Some are strong votaries of independence. Sajan Raj Kurup, founder & creative chairman, Creativeland Asia, the agency with brands such as Frooti, Appy Fizz and Cinthol on its rolls, said in an earlier conversation that he was not prepared to be one among myriad other ad agencies in a network, the fallout of an acquisition by a large group.
“That was certainly not why we were set up,” he said. “The first few years saw us move organically; the next few years will see us target inorganic growth. We are keen to do acquisitions but we’d rather tie-up with a private equity investor than a network.”
In constrast is Manish Bhatt, co-founder of Mumbai-based Scarecrow Communications, an independent which does work for companies such as ITC and the Zee group of channels. He says he is not closed to the prospect of a tie-up or association with a large ad group. “There are challenges of running a business. As long as your ambitions are small, you can carry on. The challenge is when you decide to expand or you have a global client on your roster. You need the support of a larger network to help you carry on with your operations,” he adds.
Emmanuel Upputuru, earlier national creative director, Publicis India, who quit to set up ITSA Brand Innovations last year, with brother Daniel and former Publicis India colleague Anirban Mozumdar, says which way an independent will go quite often depends on the founders themselves.
“They might want to cash out or to stick around,” he says. “If you go back in time and look up the history of the big networks, you will find they were all set up by individuals, who were led by their dreams. These independents began to grow and then went on to acquire other agencies. It is a cycle, where you will find independents come up, then being acquired and eventually becoming part of a larger network. Some might not want to be acquired and may opt for loose affiliations or alliances.
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“And, even as this churn is on, there are more independent agencies that are set up by a totally new bunch of people. I don't think this will ever stop.”
ITSA, much like Scarecrow before it, has a partnership going with home-grown communications group Concept. “Strictly speaking, we are not independent,” Upputuru says. “We might not be part of a global network but we are part of an Indian group.”
| Pepsi, Coke together Publicis Groupe SA’s merger with Omnicom Group Inc won’t just create the world’s largest advertising company: it will mean longtime rivals such as Coca- Cola Co and PepsiCo Inc are sharing the same firm. The business will have $23 billion in sales and bring together a large stable of global clients, putting it in the position of crafting campaigns that criticise its own customers. |
Bloomberg