The death of the Indian agency

When liberalisation opened the doors for a host of global brands to enter India, it eventually did the same for the advertising world: Global ad agencies took a controlling stake in most of the local ones, a trend that came to stay.

Major networks — WPP, Interpublic Group (IPG), Omnicom, Dentsu and Publicis — now own several of the world’s advertising and communications agencies. Twenty-five years from now, will an Indian network emerge, reversing the death of the Indian-owned ad agency?

In the first place, is selling stake to a foreign firm death or an entrepreneurial move? Second, is an Indian network even necessary?

Ramesh Narayan, founder, Canco Advertising, and Immediate Past President of the International Advertising Association, preferred winding up his agency to selling out as he valued his independence. This was over 10 years ago. He says he has always been “a little disappointed with myself and the industry that we haven’t been able to carry India and Brand India outside. Part of the angst I felt about foreign stakes in Indian firms was due to the Indian arms of multinational ad agencies mindlessly carrying out instructions from New York and London.”

The first wave of acquisition, says Tarun Rai, Chairman and Group CEO, J Walter Thompson, one of the world’s pioneering ad agencies and now a WPP network agency, was in the mid-90s, when global agency networks entered India as foreign brands trained their sights on the country. “So yes, a lot of Indian agencies ‘died’ to take advantage of the growth opportunities the international brands offered.”

The second wave, in the mid-2000s, “was a reflection of the growth of strong Indian brands that were working with local agencies. In many cases, it was more an acquisition of talent rather than business.”

Incidentally, JWT entered India in 1929, but had to quit the country in the 1970s due to government diktat, handing over the reins to its Indian employees who ran the agency as HTA (Hindustan Thompson Associates). In 2002, JWT took back control of the agency.

The question is not whether an Indian agency can become a big network, but whether an Indian brand can become a global brand, says Saurabh Varma, CEO, Publicis Communications, South Asia.

“The reality is that brands are moving to India as growth has slowed in the rest of the world, but Indian brands need not go elsewhere,” he says. The country’s 1.3 billion population contains enough market potential. Though he “doesn’t see an Indian ad conglomerate ever happening”, Varma sees Indian speciality firms across various disciplines dominating the market.

Madhukar Kamath, Chairman Emeritus, DDB Mudra Group, says stake sales are not death but “a lot of wonderful and exciting entrepreneurs who built and allowed themselves to be acquired so that they can grow. Anything can happen in 25 years — it could be an Indian agency spreading its wings, just as firms in other sectors have done; it could be the status quo, which is not possible as the pace of change is dynamic; or an Indian group could acquire a global network.”

JWT’s Rai, too, thinks it’s possible. Chinese and Korean firms are coming out tops, taking on major players in electronics and phone brands, and Indian companies such as Airtel, Zomato and OYO are moving into other countries, so why not? “However, in terms of ad spend, India is not even among the top 10 countries. It spends just 0.3 per cent of its GDP on advertising, compared with the US where that figure is 1 per cent. But 25 years is a long time. In today’s world, even five years is long.”

‘Global Indian’

The situation in which ad agencies operate now is vastly different from when he ran Canco, says Narayan. “We’re in an era of the global Indian, not Indian vs global. Indians are holding positions of responsibility in the advertising industry and I’d like to celebrate that,” he says. To name a few, Piyush Pandey is Chief Creative Officer, Worldwide, at Ogilvy; Sonal Dabral is Ogilvy’s APAC head; and Himanshu Shekhar is CEO, GroupM, Indonesia.

For that matter, “I’d like to question who’s Indian or foreign when you have Indra Nooyi, Nadella, Pichai (all heads of major multinational companies).

Moreover, today, people start a company solely with the objective of scaling it up, selling if off and moving on to the next venture, not running it for three generations. In that environment, this whole Indian ad agency thing is non-existent,” Narayan adds. Acquisitions help leverage a global footprint, expertise, financial prowess and client relationships, but both Narayan and Kamath acknowledge that Madison, Rediffusion as well as RK Swamy are “wonderful” and “isolated” instances of Indian agencies not controlled by their foreign partnerships.

The author is an independent journalist based in Chennai

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