Pod1, “an advertising agency in New York that specializes in creative digital services, with a focus on clients in e-commerce,” is being acquired by Group FMG.
Group FMG, while headquartered in New York, has a substantial number of its employees in India. The company is the first in what may be a new breed of advertising agencies, which, much like the accounting firms, customer service divisions and law firms before them, use cheaper labor in India to reduce their costs to clients and expand the company’s working hours.
Much like the law firms and banks that have embraced the Indian labor market, Group FMG would prefer you don’t call it “outsourcing” or “offshoring,” though. “We use the phrase ‘globally balanced work,’ ” said Dilip Keshu, Group FMG’s New York-based global chief executive, who joined the company last year from Xchanging, an information technology company.
No matter what you call it, part of Group FMG’s business model involves moving some parts of the advertising business out of New York and London — parts that Mr. Keshu said should not be there in the first place.
“No one in Manhattan should be sitting and retouching photographs,” Keshu said. At Group FMG, a photo shoot might take place in New York or London, but retouching of the pictures would happen in India, and the company would offer its clients what Keshu calls a “blended” price for the shoot. The client’s bill for work done in India is easily 20 to 30 percent less than work done in New York or London, he said.
Group FMG has about 250 of its over 400 employees in the south Indian city of Chennai, working on production, artwork retouching and the creation of interactive and mobile phone applications, among other things. The company’s clients include Disney, Microsoft and Staples.
More From This Section
The impact of a massive shift in the fundamentals of the advertising industry could be huge in the United States — much like a massive shift in the legal industry, thanks in part to outsourcing to India, has led to a two-tier structurein some firms and a re-examination of the benefits of law school.
Already, advertising agencies do a “massive amount of outwork,” Keshu said. “The agencies get a job, the client pays a lot of money for it, and then the agency hires a freelancer down the street.
There is no retention of knowledge.” Companies now are focused on multi-channel advertising – making their brand look the same on the Internet, on mobile applications, on television and other areas, which demands this retention, he said.
Companies are also focused more on costs. Today, when an advertising executive sits down with a company, Keshu said, the executive meets the chief marketing officer, as he or she always did, but also the chief technology officer and the chief procurement officer, “and they’re always discussing how to do things cheaper.”
©The New York Times News Service