The Hindu Business Line : `Ad industry doing nothing to stem exodus of talent'

Rediffusion DY&R still maintains the same equity structure that it has had for a little while — 60 per cent equity held by the Indian promoters, 27 per cent held by Young & Rubicam and 13 per cent held by Dentsu. To answer your question specifically, would our foreign partners be interested in buying more? Yes, they have been interested in buying more into this company for about six years now. We have not sold any more. Are they still wanting talks about selling more? Yes, they still want a dialogue, a desire for Y&R to increase stake, but we are not agreeing to that at this point of time.

Why do they want to hike stake? Is it an issue of control?

To look at it from their point of view it makes eminent business sense. India is a growing market in communications. And, as you go into the future, India is a market which will grow at a much faster rate than the markets in the US or Europe. China is growing at an incredible speed in terms of advertising, far faster than India, but they are optimistic about the future of India and they would like to have a company in a growing market which can be consolidated in their balance sheets.

But, that would be 51 per cent; is that what they are seeking?

They would be seeking 100 per cent!

But, is this issue causing friction with your partners?

Not at this moment, no. We have a close partnership with Y&R. We have been associated with it since 1985, even before WPP acquired it. When we won the Colgate business in India in that year Y&R won the Colgate business worldwide. And we got together to collaborate on that one account. We got into an equity association with Y&R in 1994. So, for the first nine years we were associates without equity but since 1994 it has been equity partner with a 40 per cent stake. So, we have seen and dealt with and worked with people from Y&R at all levels for two decades now. WPP came into Y&R in 2000 when WPP bought it over.

Is talent going out of the advertising industry? There seems to be an exodus the past few years.

That's very true. A lot of high-quality talent has left advertising primarily for two - three industries - media, entertainment; well-trained talented people have left. They have also moved to the client's side of the business, especially in the marketing stream. Yes, the advertising industry has suffered in the last ten years and the tremendous movement of talent is accelerating, apart form going out of the country. Many went into the dotcom business earlier.

What is the industry doing to stem that?

This is a problem across all industries, not just advertising. The industry is doing nothing! What should we be doing? One, at the industry level set up schools of advertising. You need dozens of those. Two, if you can't set them up in a short period of time, then you need to set up curriculum for advertising at university and PG level. Introduce them in MBA programmes too as a specialisation course, specialising in advertising like marketing and finance. Industry should help set it up. Thirdly, advertising companies need to hire fresh from universities on a far bigger scale than they are doing at the moment and have a training programme formalised. If you can't hire from the top business schools, don't go to School B, C or Z, go to the engineering colleges ... all you need is a fresh mind and a willingness to learn.

But, can advertising agencies pay the kind of salaries that other industries are paying?

Don't go to the IIMs or IITs. Go to the next level. Advertising is still a well-paid profession, though the industry is unable to afford better.

Why's that? Even though spend on advertising is growing 10-15 per cent every year, the revenue of advertising agencies is not growing proportionately and is under pressure. Once media was disassociated from the mainstream, the revenue of agencies came under immense pressure. Margins have been squeezed. And, with the fee system that has come into play, there has been no upscale for ad agencies.

It's a question of sharing in the client's success and bringing value to the table. If the client mindset is that you're a valuable partner and you help grow revenue and profits, you deserve a share. But, then there are clients who treat agencies as a supplier.

With the emergence of brand consultants, don't you think that advertising today is not playing the role of a brand steward that it was earlier?

Advertising agencies 20 years ago used to be the brand custodians. A lot of them have lost that space and edge. To answer it honestly, the level they used to participate in marketing plans and strategies years ago ... they don't today. Most probably, the advertising business has lost talent in that area, the single most important reason. It will get reversed because the client companies too are facing the same problem as the quality of talent in the marketing business is not as superior as some time ago because of the expansion in business in new areas like retail and telecom.

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