More global ad firms may come to India

The new year could see more global advertising agencies making a foray into India. The year may well see more entrepreneurs and many more start-ups than in 2007.

Besides, online advertising should become more popular than it has been so far.

The biggest ad spenders in 2008 are clearly going to be service providers, rather than the conventional product manufacturers.

Says R Balakrishnan, chairman and chief creative officer of Lowe India, "Business is at an all-time high and this is the right time to set up shop in India. It is a good time for start-ups as well as global agencies to enter the country."

Agency heads are optimistic about the emergence of India as an advertising hub in Asia.

"In the coming year we will see more Indians getting into global campaigns. The country could become for the region what a New York is for the Americas," says Balakrishnan, who is better known as Balki.

Arvind Sharma, chairman, Leo Burnett (Indian subcontinent), however, has his doubts.

"The kind of work that's needed for us to get there hasn't yet been done. India needs to win a few Grand Prix before it becomes an ad hub for Asia," says Sharma.

Conventional advertising has seen the slowest growth pace in 2007, compared with the non-advertising businesses of ad agencies, which comprise 40 to 50 per cent. This includes the digital, activation, marketing services and the likes. While conventional advertising grew about 10 per cent in 2007, it is expected to grow at 15 per cent in 2008. Below-the-line and non-advertising divisions enjoyed much higher growth, between 25 to 30 per cent, in 2007.

"These businesses are expected to grow 30 to 40 per cent in the coming year," says Subhash Kamath, CEO, Bates David Enterprise.

In 2007, the industry saw quite a few takeovers and stake buyouts. It also saw the entry of Wieden + Kennedy, a Portland, US-headquartered global giant famous for the iconic Nike ads.

Interpublic Group (IPG), on the other hand, acquired one of India's biggest agencies, Lintas, in which it held a 49 per cent since 1989. Lintas is now known as Lowe India. Lowe is IPG's flagship agency.

There were smaller acquisitions, too. Bates David Enterprise took over 141 Sircon, a direct marketing agency.

Grey Worldwide is eyeing several agencies in the digital space. The endeavour is to cover the entire range of media solutions.

Leo Burnett's Sharma feels that the coming year would see a change in the nature of the highest advertisers "" sectors like retail, infrastructure, real estate, telecom and financial services and institutions would have higher ad spends than FMCG, which has so far ruled the roost.

Everyone agrees that marketing services would grow faster than advertising and the talent crunch would continue to persist. Balki is, however, optimistic about people returning to the industry after stints in television and radio.