 "The new advertising order")
In a not-so-distant past, the advertising agency had a very clear role: Conjure up a communication idea and offer a creative team that could execute that idea at a cost that was less than what it would cost the company/brand to have a permanent staff on that job under its roof.
How things have changed! If five years ago the agency’s job was to interrupt the consumer when she is consuming television or print and pass on the brand’s message, today they are required to engage with consumers, co-create products and messages, and entertain them at the time and place of their preference. The rise of digital channels of communication has made it imperative that traditional agencies change.
“It is not that clients are spending less,” Tarun Rai, chief executive officer, JWT, told Business Standard in a recent interview. “They are in fact spending more. But the paradox is that the spending on or through the traditional agency channel has shrunk. That’s the challenge for us: finding ways to ensure more of the clients’ money come to us. How can we stay relevant?” Indeed, there are now so many touchpoints for consumers that channel-centric planning makes little sense. So the need is to better understand the consumer journey and the consumer experience—and break down silos for better customer experience and product innovation.
Some agencies are responding to the challenge through mergers and acquisitions; others by reorganising themselves, pulling down the walls between departments, scrapping the silos alltogether. Publicis, for instance, announced earlier this month that it will reorganise the structure to bust silos with cross-agency leads while simultaneously creating separate hubs by discipline. “The most important aspect of all this new organizing is the fact that we are bringing to our clients, under one single P&L with one single leader, all the resources with no fences and with no administrative work loads and none of the nitty gritty having an impact on morale of people,” Publicis CEO Maurice Levy told Ad Age.
So where does traditional advertising agency go from here? How can they secure their future by being able to help brands build stronger loyalty and sell more in a disrupted world, where people are blasted with messages from multiple channels?
Agnello Dias, chairman and co-founder Taproot India, sums up the challenges before agencies today: “Traditional agencies have too many mandates today. They have to be cutting edge enough to win international awards, come up with popular local work and deliver results in the market place. They have to become an extended marketing arm for their clients. And they also have to manage PR and be buzzy.”
Some suggest consolidation and rebundling of services might go some way in solving the problem. But that has its own set of challenges. Says Raghu Bhatt, founder, Scarecrow Communications, “Creative and media agencies are in the brand advisory business. One of the big challenges for the industry is paucity of great thinking talent. If every brand is going to have an integrated team, will this mean that the best people of an agency will be working on fewer brands compared to what they do now? Second, great work happens where there is ownership and a clearly designated leader driving the account. Will integration lead to ego clashes and collective abdication of responsibility? The third challenge is to create the perfect ideation and brainstorm process as the team size could be really mammoth. Fourth, will this lead to even slower response times?”
When did the challenges before agencies really turn serious? Were they caught totally unawares? Dias says traditional advertising agencies were built around the long-term structure of media platforms—newspaper, magazine, outdoor, point of sale, radio, cinema and finally TV. “Until TV came along, the traditional advertising agency structures were able to refit the jigsaw with the pieces they had. But after that, the pieces started getting too big to fit into the old jigsaw and started breaking out of their departmental boundaries to warrant first verticals, then business units and finally even networks of their own. As the pie grows bigger, this will result in further segmentation.”
Dias says that specialised set-ups are able to offer better value to clients, though integrated agencies offer greater control over the results.
So bundle or unbundle? Which way do brands lean?
B Krishna Rao, deputy marketing manager, Parle Products, says, “Cost savings turn out to be a very small fraction of the business while engaging a single agency as against the benefits of injecting fresh doses of ideas in your brand communication. From the media agency perspective, cost effectiveness kicks in only when a client consolidates all the brands with one media agency.”
Meanwhile, Isamu Kawaguchi, head, corporate communications group, Hitachi India, believes that a single agency is the best way forward to achieve your brand objectives. The agency conceptualising a key campaign is the best partner to offer a 360 degree perspective for all our brand endeavours. If agencies can effectively offer specialised and focused services, this would lead the future of advertising. This complements the agency’s business since it gains expertise across fields. The key here is to not compromise on quality and ensure that all departments run smoothly in sync with each other. The other aspect is creating a robust team, rich in skills across all departments within an agency.”
Santosh Padhi, chief creative officer and co-founder, Taproot India, has a different take on the matter. He says, “I don’t think the traditional agency with great minds and the right vision are suffering. So many of them are growing at over 30 per cent year on year, the industry itself has been growing in double digits on an average for the past three years. Take the top 20 big brands of the country and you will realise 88 per cent of their spends are on traditional media—be it TV, outdoor, print or retail/activation.” And they take the traditional route of advertising and pay the agencies the traditional way. So what is this hullabaloo all about, Padhi fails to understand.
He adds that every single brand--be it big or small—is looking for a big brand idea, not mediums. Bhatt agrees. “Traditional agencies have not become irrelevant. The biggest opportunity for traditional agencies is the Indian economy—where new ideas are getting conceptualised, new brands are being launched all the time.”
All said, having an integrated agency might be cheaper vis-à-vis having many specialist agencies, but what everyone agrees on is that traditional silos need to break down. “Going forward, the advertising industry will move towards craft agnostic think tanks where pure communication strategy, devoid of where execution comes from, will be the first port of call. Craft and execution in the form of long copy, viral scripts, design, activation etc will then be outsourced as and when required,” sums up Dias.
Expert Take: Ideas supersede everything!
Then came along the media split lead by the fact that media guys realised that there was a lot of money in media and as a result they left the creative agencies in lurch. With the exit of media, the commission which came to creative agencies too stopped and agencies struggled to even pay salaries and that’s how the retainership system started.
Now with time and splintering of media itself, media realised that even though it’s good to buy media in bulk and then sell it off in order to get a larger share in the revenue pie they needed great ideas. And therefore media agencies once again started from the backend and began hiring creative people. For example, look at Havas Media which now has a creative agency as well. With media getting more and more splintered, clients want all the solutions under one roof they do not look at fractured solutions.
In advertising, ideas supersede everything so Publicis is doing the right thing. That’s the way how agencies should be and more importantly clients should go to a single agency for its communications requirement instead of going around waste their time dealing with multiple agencies. Clients should reach out to agencies which understand new media context. In case the agency does not specialise in a given discipline, the client should be wiling to pay the agency so that it can go ahead and acquire required expertise.
PRATHAP SUTHAN
Managing Partner, BangInTheMiddle
How things have changed! If five years ago the agency’s job was to interrupt the consumer when she is consuming television or print and pass on the brand’s message, today they are required to engage with consumers, co-create products and messages, and entertain them at the time and place of their preference. The rise of digital channels of communication has made it imperative that traditional agencies change.
“It is not that clients are spending less,” Tarun Rai, chief executive officer, JWT, told Business Standard in a recent interview. “They are in fact spending more. But the paradox is that the spending on or through the traditional agency channel has shrunk. That’s the challenge for us: finding ways to ensure more of the clients’ money come to us. How can we stay relevant?” Indeed, there are now so many touchpoints for consumers that channel-centric planning makes little sense. So the need is to better understand the consumer journey and the consumer experience—and break down silos for better customer experience and product innovation.
Some agencies are responding to the challenge through mergers and acquisitions; others by reorganising themselves, pulling down the walls between departments, scrapping the silos alltogether. Publicis, for instance, announced earlier this month that it will reorganise the structure to bust silos with cross-agency leads while simultaneously creating separate hubs by discipline. “The most important aspect of all this new organizing is the fact that we are bringing to our clients, under one single P&L with one single leader, all the resources with no fences and with no administrative work loads and none of the nitty gritty having an impact on morale of people,” Publicis CEO Maurice Levy told Ad Age.
So where does traditional advertising agency go from here? How can they secure their future by being able to help brands build stronger loyalty and sell more in a disrupted world, where people are blasted with messages from multiple channels?
Agnello Dias, chairman and co-founder Taproot India, sums up the challenges before agencies today: “Traditional agencies have too many mandates today. They have to be cutting edge enough to win international awards, come up with popular local work and deliver results in the market place. They have to become an extended marketing arm for their clients. And they also have to manage PR and be buzzy.”
Some suggest consolidation and rebundling of services might go some way in solving the problem. But that has its own set of challenges. Says Raghu Bhatt, founder, Scarecrow Communications, “Creative and media agencies are in the brand advisory business. One of the big challenges for the industry is paucity of great thinking talent. If every brand is going to have an integrated team, will this mean that the best people of an agency will be working on fewer brands compared to what they do now? Second, great work happens where there is ownership and a clearly designated leader driving the account. Will integration lead to ego clashes and collective abdication of responsibility? The third challenge is to create the perfect ideation and brainstorm process as the team size could be really mammoth. Fourth, will this lead to even slower response times?”
When did the challenges before agencies really turn serious? Were they caught totally unawares? Dias says traditional advertising agencies were built around the long-term structure of media platforms—newspaper, magazine, outdoor, point of sale, radio, cinema and finally TV. “Until TV came along, the traditional advertising agency structures were able to refit the jigsaw with the pieces they had. But after that, the pieces started getting too big to fit into the old jigsaw and started breaking out of their departmental boundaries to warrant first verticals, then business units and finally even networks of their own. As the pie grows bigger, this will result in further segmentation.”
Dias says that specialised set-ups are able to offer better value to clients, though integrated agencies offer greater control over the results.
So bundle or unbundle? Which way do brands lean?
B Krishna Rao, deputy marketing manager, Parle Products, says, “Cost savings turn out to be a very small fraction of the business while engaging a single agency as against the benefits of injecting fresh doses of ideas in your brand communication. From the media agency perspective, cost effectiveness kicks in only when a client consolidates all the brands with one media agency.”
Meanwhile, Isamu Kawaguchi, head, corporate communications group, Hitachi India, believes that a single agency is the best way forward to achieve your brand objectives. The agency conceptualising a key campaign is the best partner to offer a 360 degree perspective for all our brand endeavours. If agencies can effectively offer specialised and focused services, this would lead the future of advertising. This complements the agency’s business since it gains expertise across fields. The key here is to not compromise on quality and ensure that all departments run smoothly in sync with each other. The other aspect is creating a robust team, rich in skills across all departments within an agency.”
Santosh Padhi, chief creative officer and co-founder, Taproot India, has a different take on the matter. He says, “I don’t think the traditional agency with great minds and the right vision are suffering. So many of them are growing at over 30 per cent year on year, the industry itself has been growing in double digits on an average for the past three years. Take the top 20 big brands of the country and you will realise 88 per cent of their spends are on traditional media—be it TV, outdoor, print or retail/activation.” And they take the traditional route of advertising and pay the agencies the traditional way. So what is this hullabaloo all about, Padhi fails to understand.
He adds that every single brand--be it big or small—is looking for a big brand idea, not mediums. Bhatt agrees. “Traditional agencies have not become irrelevant. The biggest opportunity for traditional agencies is the Indian economy—where new ideas are getting conceptualised, new brands are being launched all the time.”
All said, having an integrated agency might be cheaper vis-à-vis having many specialist agencies, but what everyone agrees on is that traditional silos need to break down. “Going forward, the advertising industry will move towards craft agnostic think tanks where pure communication strategy, devoid of where execution comes from, will be the first port of call. Craft and execution in the form of long copy, viral scripts, design, activation etc will then be outsourced as and when required,” sums up Dias.
Expert Take: Ideas supersede everything!
PRATHAP SUTHAN
Then came along the media split lead by the fact that media guys realised that there was a lot of money in media and as a result they left the creative agencies in lurch. With the exit of media, the commission which came to creative agencies too stopped and agencies struggled to even pay salaries and that’s how the retainership system started.
Now with time and splintering of media itself, media realised that even though it’s good to buy media in bulk and then sell it off in order to get a larger share in the revenue pie they needed great ideas. And therefore media agencies once again started from the backend and began hiring creative people. For example, look at Havas Media which now has a creative agency as well. With media getting more and more splintered, clients want all the solutions under one roof they do not look at fractured solutions.
In advertising, ideas supersede everything so Publicis is doing the right thing. That’s the way how agencies should be and more importantly clients should go to a single agency for its communications requirement instead of going around waste their time dealing with multiple agencies. Clients should reach out to agencies which understand new media context. In case the agency does not specialise in a given discipline, the client should be wiling to pay the agency so that it can go ahead and acquire required expertise.
PRATHAP SUTHAN
Managing Partner, BangInTheMiddle