Media owners hate media agencies for beating them down on rates and destroying their margins. Ad agencies hate them for appropriating their revenues. So do other below-the-line (BTL) agencies that offer activation, events, digital or other services. Over the last 10 years media agencies have taken away their business. If Ravi Rao, leader, South Asia, of the (billings) Rs 5,200 crore Mindshare has his way consulting firms will join them too. Rao, who took over last year, believes that the way out of the commoditised, low margin, corner that media agencies have painted themselves into, is not just in offering a 360-degree solution to marketers. It lies in offering strategic consulting. Vanita Kohli-Khandekar spoke to Rao, about the new Mindshare. Excerpts.
What are the big changes you see in the media agency business?
From a people perspective there are no major changes. Clients still want to grow their business in new geographies and categories. Chennai, Bangalore, Andhra Pradesh, Karnataka are new areas of thrust for us. Where we need to change is our thinking. We need a digital thrust. We have grown but not according to plan. We handle many clients but not enough digital. So we have set up a Mindshare Mobile Centre of Excellence (MMCE). It is a global project so that we have a better understanding of how to connect with and how to use the mobile. Then we have Madhouse in China which we brought to India. (Mindshare's holding firm WPP has a joint venture with Madhouse is one of China's leading mobile ad networks) So as Mindshare we are investing in three things — research and insights, MMCE and Madhouse (under WPP).
A lot of media agencies have invested in specialised services, but the business still remains about this ‘aloo pyaaaz’ mentality of low rates and volumes...
Things will change even more dramatically because in planning and buying the remuneration has gone as low as you can get. Most of our clients, in fact 60 per cent of Mindshare’s business, is fee-based. The question is as an organisation you still have to grow. So you bring in value-added-services (VAS) such as digital, social media management, activation etc. When we do this even media planning as we know it will change. So we are talking right now not of media but of communication budgets. And even within that the splits will change. In FY 2012, media planning and buying brought in a bulk of Mindshare’s revenues. Digital brought in 4 per cent in VAS such as branded entertainment, activation, consulting and insights brought in 30 per cent.
Take automobile, for instance, where marketers are largely dependent on print. But that is decreasing though the overall ad spend (from auto) is increasing. The money is going to digital, to showrooms, to creating buzz and engagement. So we need people who understand communication not media planning. Paid, owned, earned media has transformed every part of the business. As an agency we are getting more and more into comms (communications) planning.
Isn’t that what agencies have been attempting for over a decade now...
The change has come about because clients are letting us in on marketing problems. At one level the whole thing is about how much have I spent on TV and print. At the second level it is about pricing and promotion. At the third level, it is about how to jumpstart sales. It is about strategy itself, about business planning as a function. For business planning to make a difference you need to merge strategy with market intelligence. And we sit on the consumer insights, the market intelligence. So yes, am I going to be competing with an Ernst & Young or a Deloitte. We are in a better position to do this than the creative agency because the biggest money in a market is spent on media. When we decide that the media mix has to be changed it is because we are analysing to death.
Retail data is very critical but most clients don’t combine everything. For example, both retail audit and digital get live data. Therefore there is the opportunity to synchronise everything with a live dashboard. The idea is to bring disparate sets of data to make some sense and get some direction. But we can’t move this to a full-scale service for all clients because they don’t want to share data. So we moved beyond this area to strategy planning. Currently two-thirds of my top line comes from media planning and buying. Three years later a bulk of my revenues will come from being a strategic consultancy firm.
That is a tough one, from a budgets, getting people to join… perspective...
The composition of the type of people I recruit will change. We have identified two colleges that will help us develop MBAs for media, that we tailor and design to meet our growth needs. We need creative but tech-savvy people capable of handling analytics. Media is the only area where I don’t know what I am getting for what I buy. We get the metrics and then use a leap of faith.
There is this rising worry about corruption in media planning and buying. Your comments.
I have seen this across markets, in Germany, France… wherever there is money there is abuse. There is a tendency to go wrong. It is more so here. I think that if there is complete transparency in what you are buying and selling, if there are no dark areas and the rules are clear, then there is no scope for misdeeds.