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Thursday, Jan 29, 2004

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Where has the joy gone?

Gopinath Menon

The way advertising agencies have gone about pursuing business has undergone a major transformation.

WE all draw trends for different categories, genres and brands over the years to learn and get insights which can help form the ammunition for the future but we seldom draw a pattern on disciplines we function in. The reason is simple as we assume that nothing really changes. The rules of the game are the same, the benchmarks for success go on getting higher. The joys, the frustrations, the highs and the deep lows come unannounced as they did 10 years ago. This is what got me thinking about the discipline which has fuelled my life for 15 years. Advertising. So a travel down memory lane ...

The advertising business has changed, and how! The rules have changed, the success bars raised, the evaluation process. The business models, the chemistry within, the interactive emotions with clients, the client's attitude and the way advertising agencies have gone about pursuing business goals have gone through an absolute metamorphosis.

Change is imperative and this dynamism affects everybody. India has seen more change in the last five years than it has in the last fifty. This ongoing process will only intensify to an extent that we let it affect our lives. Looking back when Saddam was the catalyst for a media revolution, which rubbed off on advertising as a whole, there are some interesting aspects that come to mind.

People and the business

Ten years ago revenue accrued from agency commission, which was 15 per cent (fixed), and this was sacrosanct. The 700-odd agencies that existed played by this rule and the client did not have any problems. This went on smoothly and the positive effects of opening up the economy were evident. The bubble had to burst and it did by the end of the Nineties and then what followed made joy and fun go out of the advertising business. The 15 per cent income from media was no longer valid and clients wanted justification of this income. This accountability resulted in fees which was based on the man-hours put in by people working on the business. This got further squeezed as the markets were not doing well and the first thing to get cut was always advertising. As advertising was not growing at the rate it was a couple of years ago, fees on an average remuneration for a Rs 10-crore business or more worked out to about 4-5 per cent of media billings. The agencies still did not complain and continued working like dogs, which caused some angst within the agencies.

This resulted in the `Golden Handshake Era' and all of a sudden there were hundreds out of agencies looking for jobs - and the sad part was that they could not be comfortable doing any other job. The smart agencies cut corners after a lot of thought and it was unnecessary overheads which were axed. The five-star stays, the business-class travel, the expensive entertaining for business, the unnecessary foreign jaunts under the guise of workshops, the endless STD and ISD calls were closely monitored. The late '90s and early 2000 saw operating revenues as the key word and billings did not mean much. So the `Who is the Biggest' issue was irrelevant. There are cases where agencies with half the billings were more profitable than agencies double their size. Amongst the top 20 agencies, the employee to billings/revenues ratios improved and started to match up to their counterparts in the Asia Pacific region.

These were good things to happen to the business but the downside was that the wisdom was seldom respected. Age became a handicap and if you were on the wrong side of 30, the burnout was evident and the first co-relation was your cost to company! This was due to the `four-year-olds' in the agency who had the gift of the gab, expensive aftershaves, understood sartorial sense better than you and cost the company one-fifth your salary. What more, he said things his boss wanted to hear. But these happening guys were handicapped as far as understanding the consumer and the market went, which were the only two variables that mattered in advertising. They didn't know the consumer in Coimbatore had a different set of values than the consumer for the same brand in Gorakhpur. They didn't know India was one big Europe, but the crime was that they never wanted to know as they were on an upswing in the pressure cooker of life.

So the ones who should have made a difference due to their in-depth understanding of different sets of consumers across India were shunted out. The decision-makers of such an ouster didn't mind paying for a 21-year single malt as they valued the ageing but when age had life it really didn't matter.

This heady trend had to have a hangover and it was in 2000-01 that it sunk in.

Clients were not getting value, they complained about lack of understanding on the brand, brand managers lost jobs and the client changed agencies to find out that the new one was worse than the earlier. Agencies intensified the Golden Handshake. New creatures, which had never been in the communication business, came under its fold. So the advertising business became a profession by default and funnily, nobody was complaining

Larger share of the future

This was a commonly used phrase as this was the sole objective one was chasing. This merry-go-round made clients freak out in inviting pitches. So every week there were 2-3 pitches and there are cases when the client called the agency twice in a quarter for the same pitch. This was completely unheard of 10 years ago. So what happened was that for a meagre business of less than Rs 1 crore, we had the top 10 agencies lining up. Those who were not called forced their way in, thanks to the grapevine. Nobody ever won these businesses as things are decided before the pitch really starts. The owner's nephew who has a one-man ad shop would collate all the ideas, rework the layouts and execute the campaign. The 10 bereaved parties stood on the sidelines and grinned sheepishly and major cursing sessions would start when they were three drinks down. They would solemnly take an oath never to repeat this but the hunger for growth and fame and the `Boss is always right' syndrome would anyway win.

The product

This has improved by leaps as India is getting its rightful place under the sun. Advertising has become interesting and entertaining and is more than information alone. It has become more earthy and hence a better connect with the market. The consumer perspectives clearly override the manufacturers' say, and it is this rule that differentiates companies that people would want to work for or work with. The seriousness has mellowed in communication and humour is a welcome change. Advertising that leaves a smile and makes you feel good have known to have better recall and thus result in generating more traffic into stores. Gone are the days when internationally aligned businesses thought it imperative to use international creatives.


The media business has disappeared as it has become a finance business now. Managing cash flows based on operating revenues makes it a chartered accountant's delight but thankfully he will not step in here as Media has become a complex function to manage. It's seen as the `other creative department' the difference being that this is a revenue generator and not a cost head. This business has become murky, thanks to the media independents with deep pockets. Nobody even today has been able to define a `good media deal'. All brand managers are responsible for this shift as they all claim to be specialists in the fields without understanding the basics. The bitter part is that as a large piece of media business moves, it delivers a lesser operating margin for the winning agency than the previous one. So it's after all about a better price and not about a more effective way anymore. Media independents that have not succumbed to this pressure will be respected by the clients and in the market.

So where does it go from here? Will the bitterness persist, will pearls of wisdom over the years be overshadowed by young flamboyance? Will it continue to be a profession to enter by default?

Well, if the last six months are an indicator, things are definitely changing for the better. The economy is moving ahead and if GDP benchmarks are an indicator, advertising will prosper and so will the people associated with it. With Joy!

(The author is Vice-President (Media), TBWA Anthem.)

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