The Hindu Business Line : Media services set for churn with advent of global players

In India, Magna Global is expected to represent the media buying functions of the three Interpublic Group Companies - McCann Erickson (Universal McCann), Lowe (Initiative Media) and FCB Ulka (Lodestar).

The media outfits of TBWA India and RK Swamy BBDO (Media Direction) and Mudra (Optimum Media Solutions) would exist under the Omnicom umbrella.

Commenting on the entry of the new players, Mr Ashutosh Srivastava, Managing Director, Mindshare, said: "The business that these agencies have is relatively small at the moment. Compared to the global markets, such agencies will be challenged in India since the media buying functions exist as divisions within agencies and not as independent companies. In the case of Group M, there is no conflict with the agencies since it exists as an independent company and has its own legal entity.''

In fact, the entry of Group M led to the agencies such as JWT, Contract and O&M divesting their media buying functions to a consolidated entity.

Group M then brought in own its brands - Mindshare, Maxus and Media Edge - to represent the businesses of these advertising agencies to avoid having conflicting interests.

Mr Amit Ray, Executive Vice-President, Optimum Media Solutions, the media arm of Mudra Communications, said: "Group M already has a huge headstart and it was the first one to create the group media concept in the country. The entry of other players is unlikely to have an impact, at least not in the short term."

But Magna Global operates on a slightly different model compared to Group M, whereby the media planning functions continue to rest with the respective ad agencies while Magnus handles the media buying functions independently.

According to Mr Shashi Sinha, President, Lodestar Media, globally Magna has a different model compared to Group M. "It is based on a collaborative effort between the media agencies who will continue to give the strategic inputs like planning while the buying and negotiation functions are handled by Magna.''

Although Group M may not feel immediately threatened with the entry of new players, the combined strength of agencies under the umbrella entities of Magna Global and Omnicom is expected to lead to faster growth since the media buying outfits would no longer be competing as independent divisions within agencies.

Ms Punitha Arumugam, CEO, Madison Media, said: "Just because there are more agencies does not necessarily mean that clients will be spending more. But competition is always good as it helps in improving the quality of the product.''