How is the O&M India succession plan working out? You’ve got a three-pronged management structure in place. Is that working well for you?

Yes, we put it on a three-legged stool and yes, it’s going very well and I’m pleased with it. I think it’s very smooth and I measure these things by the lack of contentiousness – if no one’s arguing that means it’s working! So far so good. The three-legged stool was a pragmatic response to a situation and it seems to have got a rhythm of its own, I suppose — creative skills and rebellious attitude represented by Piyush (Pandey, Executive Chairman and National Creative Director, O&M India & South Asia), enormous commercial acumen and unflappable sanity represented by (S. N.) Rane (Co-Executive Chairman, O&M India & South Asia) and impeccable smooth coordination and inter-group management represented by Pratap (Bose, CEO, O&M India & South Asia). So for me it’s a very good combination.

How do you see India performing vis-À-vis other regions in the Ogilvy network?

India is a star; we got two offices in the region performing exceptionally and India performs disproportionately in terms of its creativity and soft skills and in a way that merits the relationship with the country – China’s infrastructure is more advanced than India’s but is much less advanced in soft skills. One thing we have to remember, and when I say this I am greeted by howls of disbelief, India is still a small market in terms of advertising; it’s about the size of Indonesia but is growing very fast. But we have to understand that it’s still a small market.

However, for us it doesn’t have the same degree of smallness because we are exceptionally strong here. For me it’s an absolutely critical market but in total terms India lags way behind China by a large margin and the process is on of catching up fast.

You may ask why is that? The reason is that Indian advertisers spend much smaller amounts on advertising as a percentage of their sales than other advertisers in Asia. And, if you were to ask why: it has to do with the antiquated distribution system in India. It’s changing dramatically but Indonesia’s distribution system is much more organised than India’s and that’s where the difference lies. What it says is the hype about India is exaggerated but the take-off is about to happen. If this is good, what’s going to come will be even better. I am enormously optimistic about India; we haven’t seen it yet, not even started. This is an underleveraged market for me.

Media costs too are fairly low in India compared to the rest of Asia. So, is that a function too of brand owners not spending enough on their brands?

It’s a function of the fact that historically the distribution system has been rather antiquated; the normal effect of advertising where you put in something quickly through modern retail trade hasn’t worked here yet. That’s the issue. Advertising explodes when retail trade concentrates and that’s the point I’m trying to make: the apparent low ad-ex of Indian brands is a symptom of the lack of modern retail and that’s changing now and that will lead to a total explosion in our sector.

In what way will you be leveraging the O&M network as an outsourcing destination?

The simple answer is hugely. What I would like to stress strongly is I don’t see India as an outsourcing centre for low-cost work, India has moved beyond that; Bangalore is not cheap! If you want cheap, go to Bangladesh; I’ve been there and seen some of the low-cost hubs. I’ve seen some production houses in Bangladesh which are world-class and much cheaper than what you would get here. So, I don’t see it as low-cost but I see that as much more – a value-based centre. A centre which is capable of exporting very high degrees of capability. In the 12 years I’ve been in Asia Indian creativity has transformed itself from poor to very good. So, this is the opportunity to provide high value creativity, not low cost.

Can they cope with the cultural context?

Yes, absolutely, in my view, no problem.

So, do you see creative people from the O&M network in India flying all around the world for their work?

No, I see them staying right here in India working during the nights for clients in France and Argentina and wherever. We are very close to that now. There are people here who are doing it already, on this terrace (he gesticulates to the others)!

It couldn’t be done from China, couldn’t be done from the Philippines, which is an English-speaking country. India is a seminal country in the world and it’s always been a multi-cultural place where cultures converge and of all the places in the world which can do this, India is particularly well-positioned because of its cultural mix. It is not a homogenous society which is a great strength.

Why do you think China or the Philippines couldn’t do it?

Because language and culture are big issues. In the Philippines, they have got the language but not the culture while India is a great cultural power, in my view. The people here are very confident, they have been brought up in an educational system which is open to the world.

What are your investment plans for the O&M network?

Yes, huge. And, specifically in Bangalore as well. I think we see this as an increasingly flat world, a place which can play its full part in terms of creativity and in terms of servicing our clients.

In India our prime investments will be in new media and digital. And, secondly, it will be in our ability to globalise out of India and thirdly in high-growth specialist sectors such as healthcare communications.

What do you mean by global services? In production?

In terms of creative services. That will gain momentum.

Will O&M look at making acquisitions?

We are at the moment looking at four or five acquisitions in India. Not in traditional advertising but in what we perceive to be in new growth areas, digital, healthcare communications. These things take time, and particularly, they take time in India and we are very selective also. I don’t see acquisitions as a problem, we have critical mass here, so acquisitions have to be complementary to our existing business in cultural terms, in commercial terms and in product terms. And, they aren’t many like that around.

We are not buying volume but we are buying talent and added value. By nature we are price-selective.

Organic growth is much the most important thing to us. We don’t have a problem with that as we’re growing quite nicely. And, I think where we want to round ourselves out is in these specialist areas and that will require in some cases some acquisitions.

What time frame are you looking at?

These are actively under consideration but bear in mind that the acquisition process could have a one-year gestation period from initial dating, through courtship and consummation!

But, if you do not find any suitable acquisitions you would set them up yourself?

Possibly, we could. But it’s not something we have had huge success with in the past, somehow; we are very good at our core business and very good at managing positions but we aren’t terribly good at setting things up.

That’s a frank admission …

(Laughs heartily) I’m talking from a Pan-Asian context.

Have you got an investment plan or a war chest or is it case by case?

It would be case by case. But, there would be two types of investments – one is acquisition investment, that’s case by case, but each year when Piyush presents his business plan, we see investments there but that’s in the context of the P&L. So, that’s an operating investment.

You had an issue with David as well – you merged it with Bates – but you had set it up as a complement to Ogilvy didn’t you?

We took the view that it was probably better to give David more critical mass and we are quite focussed at the main brand Ogilvy – this is what we are best at! I don’t think Ogilvy is that good at spawning sons of … ! I think our master brand is enormously strong, this decision was a reflection of that sort of thinking.

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