Variety

‘I'm a Terrible No. 2'

Gokul Krishnamurthy | Updated on February 09, 2011 Published on February 09, 2011

Mr. Sandeep Goyal. - Photo: Shashi Ashiwal   -  Business Line

Ad veteran Sandeep Goyal's pad in Mumbai, next to his residence, was designed to relax, not impress. But it does both. It could well play host to art shows. Adorning the walls are a slew of paintings, and thoughtfully distributed works of art in myriad forms can be found in every direction. Keeping with the ambience, Goyal, 48, looks more relaxed than he has ever been in the last seven years, having sold his company Mogae's 26 per cent stake in Dentsu India to Dentsu Inc, for an undisclosed sum - reported to be in the region of Rs 240 crore.

Even as he is hounded with calls, there is a bevy of guests trooping in. His interview is playing on a business channel, on a flat panel TV in a pub counter set-up. With the remote being ably handled by his daughter, and the guests taken care of by the ever-gracious hostess Tanya Goyal, the man in the picture took time off from the ‘informal get-together of friends' to speak to BrandLine, on his exit from advertising, and future plans. Excerpts:

Is this your exit from advertising?

Effectively, yes. For the next five years, I am bound by a non-compete commitment. I wish I could predict what would happen five or seven years from now. But when I come out of the non-compete in five years, I don't think I would have the appetite or the will to get into a profession as strenuous as advertising.

I have had my fill over the last 25 years and enjoyed every moment. When I have done advertising with the world's most powerful brand name (Dentsu) on my card, why do I need to do it again? Also, the business of advertising isn't as lucrative as it should be and used to be. With mounting costs, dwindling talent, and clients paying you less than they should be, from a business point of view there are several other industries which deliver better RoI.

Why did you start an advertising agency then (2003), after quitting Zee?

I could have got into broadcasting then but was bound by a non-compete clause. The only other thing I knew was advertising. There was no real choice. The good thing about advertising is that it doesn't require huge capital. With the limited amount of money I had then, and Dentsu as partner, it was a very viable business to get into.

Things are different now. I have more capital. I have more experience. I have more friends. I know and understand more businesses.

Is your digital foray independent of Dentsu now?

Dentsu has bought out the three advertising and media agencies. I own all of what we were doing in the digital and mobile space. Where we had shared ownership, I have bought them out. Much of the digital venture is in partnership with Astro.

Your love for media is evident …

A lot can be done in media buying, outside of the traditional agency model. Lastminuteinventory.com has proved that there is a market for remnant inventory. I believe there is a market for bulk buying. The Rs 500-crore deal for the cricket World Cup with Sony is proof. That deal went haywire because I bet on the right thing and Sony didn't want to lose the upside to us. But it proved that bulk buying is a large and rewarding business providing you put your bets in the right places.

Within digital, what would be the focus areas?

The focus would be on mobile. There's huge potential in VAS. We're doing a lot of work in the 3G area. I've been to Israel and Silicon Valley to look at some very interesting products, which can be adapted to Indian requirements.

3G is a level playing field; no one knows what's going to work and what isn't. There are no large players. We have the necessary wherewithal to be the large player. We also have the benefit of being part of the Aircel family (Astro is an investor in Aircel).

Any regrets in your advertising journey?

Only one - clients have basically stopped respecting the advertising agency. My biggest downer was when a client told us that our contract will be negotiated by Supply Chain Management. The moment the client treats you like a vendor, and doesn't place any premium on the talent you bring in, that is the death knell of advertising.

Agencies have let it happen. I cannot take the blame because things had deteriorated to this level well before I started Dentsu in India. It's actually the larger agencies who are to blame.

The nastiest thing that happened to this business is the business of retainership. In my experience, a lot of the smaller clients tend to take advantage of this. They will sign on the agency on a retainer of, say, Rs 3 lakh a month. In the fourth month, you end up doing a film and a lot of the work required for a brand launch. Then the client sacks you in month five.

Effectively, the agency is paid Rs 15 lakh for a job that possibly deserved Rs 40 lakh. And then the client moves to the next agency.

Were these among issues you wanted to address by getting elected President of AAAI?

My stand is that the AAAI (Advertising Agencies Assocation of India) is looking at issues only from the standpoint of the big agencies. If you are the 20th largest agency or 100th largest agency, no one gives a damn about you.

For instance, they came up with this bright idea of ‘pitch fee'. Let's say the client calls five agencies, paying each Rs 2 lakh. The client will call the big boys for the parade because he's paying for it. Why will he call ‘Pappu & Co'?

How long has the Dentsu deal been in the works, and do you believe the timing is right? Also, didn't you contest the AAAI elections during this period?

A deal like this takes six months or so. And what impact do the AAAI elections have on this deal? I continue to be the Dentsu representative on the AAAI. I have only exited the shareholding.

My contesting the AAAI elections was only prompted by the fight we (Dentsu) had with Thomas Cook. For the very reasons the AAAI would not support me, today they are doing cartwheels for Sam Balsara whose money has got stuck at Mother Dairy. The IBF (Indian Broadcasting Foundation) has jumped into it, AAAI wants to put an embargo on the client - they will do it for a Madison but not for Dentsu? At least I have the guts and the means to seek legal redress. What does the small agency guy do?

When I contested the elections, I hadn't even started negotiations with Dentsu. All the three agencies that Dentsu has bought out are profitable, dividend-paying, have a very high level of reserves and surplus, and do not have a single rupee of bad debt or borrowing.

We've taken it to Rs 1,200 crore in billing. If I were to take it to the next level of an exit, I need to take it to Rs 5,000 crore. That's another five to seven-year journey. I asked myself whether that was worth doing and the answer was ‘no'. It's easier to create that Rs 5,000-crore value today in the digital space.

The ‘Food Food' channel is an interesting beginning in broadcasting …

The food channel is Sanjeev Kapoor's baby. I am only an investor. Astro has also invested in the channel. Sanjeev will drive that asset. The only role that I've asked for is a title of CTO – Chief Tasting Officer.

What will be the driver - broadcast or digital initiatives?

I honestly don't know. The priority right now is to chill out, lose some weight and write my next book. Dum Dum Bullet 2 is very much on its way, and will tell the story of Dentsu India - the Japanese story.

Wasn't Dum Dum 2 supposed to be about the Zee experience?

Originally, yes. That will come after the Dentsu story. The Dentsu story is far more hilarious and contemporary. There is far more to tell because there are things that only I know.

Are you not keen to further capitalise on the learning and experience of working with the Japanese?

I am not ruling out possibilities. I'm meeting people. But I want to keep time for myself. I want to do things that I couldn't do earlier in my structured executive role.

As an entrepreneur, you never know where the next opportunity will come from. My foray into digital, for example - for a guy like me who is totally ignorant about technology, it had to be by chance. The much-needed trigger came from out of the blue.

You've said you want to be an investor. Does that mean you will not take up an executive role?

I want to be an investor, a mentor. I don't want to take up a hands-on job. I've received two calls from two very large clients in the last three days, who were exploring my joining them. They could be very good jobs that pay well too. But I'm not keen on that route. Someone told me a long time back that I'm a terrible No. 2. It's true. I can only report to myself.

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Published on February 09, 2011
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