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Rina Chandran

One of the ads from Cholamandalam General Insurance Co's print campaign

CHENNAI, Dec. 31

TIME to uncork the bubbly - if only from relief that the year has ended; a year when the ad agency remuneration system came under attack, budgets were smaller, and the question of accountability grew bigger. No one expects a dramatic reversal of fortunes in the Rs 8,000-crore industry next year, but everyone agrees that the times are a changin'.

For starters, the way agencies are structured will change, said Mr U. Jayraj Rau, Vice-President & Client Services Director, JWT. "The core planner-creative-servicing structure is still intact, but because media buying is now handled separately, there is going to be a redeployment," he said. "And teams will be aligned with specific brands or clients."

Also, there will be greater emphasis on below-the-line activity and interaction with the consumer in the marketplace, Mr Rau said. "We have to do a complete review of the service we offer: the fine line between marketing and advertising is just a blur now. So we have to not just come up with ideas, but also ways of implementation."

This, he added, will shift the focus away from mass media, particularly TV, and advertisers will look more closely at events, sponsorships and strategic alliances that bring them closer to the consumer. These additional functions will necessitate new systems of remuneration, which will eventually replace the commission system.

According to the 12th A&M Agency report, the ad industry registered a growth rate of 23.49 per cent for the year 2000-01. Insiders believe the industry may show a marginal growth this year; one of the few bright spots was the apparent success of the fledgling media buying agencies.

Interpublic Group's Initiative Media crossed Rs 1,000 crore in billing recently, and expects to grow at least twice as fast as the market in 2003, said Mr Ashish Bhasin, its President. The agency is particularly bullish on its new divisions - Lintertainment for the marketing of films, music and entertainment plazas; Aaren Initiative for outdoor; and Linterland, its rural division.

There will be greater emphasis on reaching the rural consumer, Mr Bhasin said. "Two out of five Indians are not reached by any media, so you cannot have marketing, advertising and media people sitting in South Bombay and figuring out what works in rural," he said. The agency has compiled a digital database of close to six lakh villages, and has thousands of people on the ground, too, Mr Bhasin said.

As it gets more organised, the entertainment industry will also be a huge growth area, Mr Bhasin said. The agency is developing a system to pre-test a film's storyline and music. "A film is a brand, and needs to be targeted more specifically. Promotional activity will also have to go deeper, and be more localised," he said.

The industry only has room for three or four big players, so there will be further consolidation, Mr Bhasin said. Also, AORs (Agency of Record) will become the norm: "In 1995, only one per cent of the market was through AORs - that moved up to 36-37 per cent in 2002," he said. "By 2003-2004, at least 50 per cent of professional advertising will be through AORs."

India will have "a small, single-digit growth" next year, Mr Bhasin said, and advertising will be skewed heavily in the first and last quarters because of the ICC World Cup and the festive season. The World Cup will generate a lot of media and advertising activity, but the high ad rates will force advertisers to look at alternatives to TV, leading to "an explosion of media options," he added.

For WPP's Mindshare, too, this has been a good year, its first in operation, said Mr Ashutosh Srivastava, Managing Director. Media buyers have so far focused on cheap deals, and used a gut feel to pick options; going forward, there will be less of an obsession with rates, and greater emphasis on research and consumer insights to determine what works best. Mr Srivastava also anticipates that there will be greater consolidation of media ownership, like in the more developed markets.

The Conditional Access System, when implemented, will change the rules dramatically for TV channels and advertisers, Mr Srivastava said. Meanwhile, media penetration of rural markets has grown, and growth will come from these markets in two or three years' time, but not many companies have invested in them yet, Mr Srivastava said. "Everything's under scrutiny, and businesses are not really growing, but we have demonstrated how we can improve returns on media investment," he said.

Among the media, there is consensus that radio will be big. While FM is growing slowly, and radio is not yet a serious part of any media planner's budget, it has enormous potential, said Mr Josy Paul, Country Head & National Creative Director, rmg david. The WPP agency is setting up a specialised radio unit, radioactive, in January.

"For a lot of today's kids, FM is a dotcom - it's hip, cool and sexy," Mr Paul said. Also, it is generally cheaper than TV and print, and is therefore more appealing to local advertisers, who are increasing their ad spends. India only has 10 FM stations as compared to 22 even in Sri Lanka, and the opportunity lies in expanding the listener base - by putting it on buses, and drawing in housewives, Mr Paul added.

Al Ries' new book on the fall of advertising and the rise of PR was much debated, and while no one is sounding the death knell for advertising, PR's star is clearly on the ascent. "PR makes the marketing mix stronger - and that is better understood now," said Ms Mahnaz Curmally, President - South Asia, Ogilvy PR Worldwide. In a challenging year, PR has been able to establish cost-effective value, and build image and market share for brands, she added. She expects that the areas of healthcare, rural outreach and DM will show robust growth.

All told, 2003 will be a time for agencies to "rebuild, renew and revisit relationships" with clients and potential clients, said JWT's Mr Rau. And, perhaps, rejoice.

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