In early July, RK Swamy and BBDO announced parting of ways after a partnership that lasted 37 long years. The RK Swamy Group had good reasons to separate as Chairman, Srinivasan Swamy, articulates in this interview. “We are not a pure play advertising agency but a marketing services group,” he says. He also speaks about the future growth for the group, which clocked revenues of $100 million. Excerpts:
Are you and Madison the last men standing as home-grown, Indian-owned agencies?
There is a big difference between Madison and us. We initially sold 50 per cent stake to an international agency, but we were not comfortable with it. We then started BBDO India and gave them a majority stake in it, and bought back majority in RK Swamy. And then, after some 12 years we withdrew from the relationship. Unlike us, Madison never had a partnership with an international company to start with. We had a good relationship with BBDO since 1985, and been with them for 37 years. We went in with total goodwill and came out with lots of goodwill. Irrespective of the monetary relationship that we had with BBDO, we also have a strong personal relationship.
So, in 1985 when you tied up with BBDO, was it quite early for Indian advertising?
We were among the first Indian companies to start an affiliate relationship with an international entity. We first entered into a partnership with BBDO in 1985 and then in 1989, when government opened up to foreign companies, we first gave them a 20.1 stake in RK Swamy (and later went up to 50.1 per cent).
What was the inflection point for separating from BBDO?
There was no one inflection point as such. People think we are a pure advertising agency; that’s the first fallacy. We are an integrated marketing services group, while RK Swamy the agency (in which BBDO was involved)had primarily media and creative and were pretty much a traditional advertising agency. Parallely, we were building a marketing research and a data analytics company, an events /activation unit, a continuing medical education practice, and we were spreading our footprints across various segments in the market. While we had the relationship with BBDO for advertising only, we couldn’t go to clients and say that we will offer you advertising services and some other company can handle other needs. Now we can present a unified face. In fact, senior management of the operating entities would feel ownership only of the unit they were involved with. To break away from that, the departure from BBDO makes it possible for us to look at RK Swamy as one large company. In fact, under RK Swamy now we have brought in Hansa Research and Hansa Cequity as direct subsidiaries.
These two companies have any other investors? Are you planning to merge them all now?
In Hansa Cequity we had a private equity partner when we wanted to grow. They were with us for four years. We did a formal valuation and bought back the private equity partner like we bought back BBDO. Now, all three companies are all privately owned by us. I don’t believe we need to merge to successfully operate the companies. It’s better to keep them as different entities but it’s easy to integrate the services we offer.
At the momentwe have no plans to change anything; businesses will run as before. But, the difference is that we are now one company and the feeling is sinking in and cross-selling will happen now. The silos are going. And the fact that we are one large integrated group will help us introduce clients to each other and work together as a larger team so that the client gets a benefit out of it.
What are future plans for growth? Is an IPO on the table to expand?
If we want to grow, IPO is an option. But, there are two opinions on an IPO. We run a profitable business and want to grow it. We have opened subsidiaries in Singapore, Dubai and Bangladesh and we already have a company in the US. These primarily extend services in the areas of research and analytics and also marketing consultancy services in the US. Advertising at one level is now a low-tech business, unless there is some seriously differentiated offering. In areas of research, we can offer differentiated service such that those markets can see value in. Here we already do multi-country projects from India for international clients. A lot of collaboration is happening between the research and analytics groups. That kind of collaboration is still not visible in RK Swamy. It’s because the advertising clients have always wanted to hire different specialists for different tasks. It is going to take time.
What about your digital play? Do you today offer the full stack ranging from print, TV, digital and social media marketing?
We have a very strong digital play; as a matter of fact, we have specific groups of people who focus on digital. We have large digital clients, who spend a lot of money with us. Today, you can’t be in advertising without doing digital work. From the very beginning, we never looked at digital as a specialist medium; it’s just like another media so, don’t complicate your life by treating it as a special beast, and having a specialist separate group for it. People have been trained to look at things holistically (i.e including digital) to solve a problem and deliver a solution.
RK Swamy has had some traditional long-standing clients, right?
Yes, we have long-standing ones such as RBI, SBI, LIC. Hawkins has been a client for long. They became a client in 1985, 37 years ago. The same values that their founder Brahm Vasudev had, the current generation also has. If they have stayed on with us for all these years, we must have been doing something right for them. Then there are clients like Amrutanjan, TAFE, Magicbricks, Havells which have been growing very well. We work for south India’s largest edible oil brand, Gemini. They have been a huge success story as well.
The new age start-ups are not looking at the traditional big guys in advertising. Is that impacting larger agencies?
They don’t want to partner anyone on a long-term basis. They do projects. There are a lot of small boutique companies that have sprung up, started by successful advertising professionals. They have good credentials and have relationships with clients, and it’s easy to do a project with them than have a long term relationship which is monthly-feesbased. It’s a transactional kind of relationship. I believe that it’s easy for clients to give a project than to enter a long-term relationship since it’s cost effective. But a long-standing relationship with a larger agency helps with continuity as it has organisational memory on what was done few years ago and what worked and didn’t.