The information technology industry has grown over 10 times since the 1980s. IT industry is valued at Rs 2,00,000 crore and the advertising industry is just Rs 17,000 crore.
Ranjan Kapoor, country head WPP India said, "China, which is not even a consumption-driven economy, has 85,000 registered advertising agencies and India has just 1,000. Yet we talk about competition and how the margins of agencies here are diminishing. We have to follow a model of inclusiveness and expand the competition like the IT industry did because more competition would lead to expansion of the market. The business model of advertising agencies of earning revenue through commissions is also hampering its progress and squeezing their margins. Agencies pitch for accounts by lowering their price and make their own business unviable. There is not a single agency in India which works for more than 15 per cent of commission."
According to Saurabh Srivastava, former chairman of Nasscom said, "We worked together and re-looked at our business models. One of the steps we took after that was sending IT professionals abroad. We all know how well this has worked for the IT industry. At the industry body level we knew that Nasscom could play a much bigger role in creating value and hence we recruited a full-time head like Kiran to do the thinking and entrust him with powers. This saved a lot of time and energy of some of the big company heads. Whenever, we needed to speak to the government, we knew Kiran could do it for us and Narayana Murthy need not come. When the government representatives would see Kiran, they knew it was enough and they could speak to him."
Through the discussion, the panelists agreed on how AAAI could have greater representation from sectors like digital advertising, open up more sectors which have not been spending heavily on advertising yet, relook at their business model and promote competition.
