The Hindu Business Line : Lion's share of mind and market

All eyes are on media-buying group WPP Marketing Communications as it flexes it muscles in the marketplace. Through its sheer scale and size it is expected to drive better bargains for itself and its clients.

Andre Nair, CEO, MindShare India & South Asia

Ashutosh Srivastava, Managing Director, MindShare India

INTERNATIONAL networks moving in might have become a norm in the advertising industry. But, when a new company asserts its leadership status at the launch stage itself by reportedly buying media space and time worth Rs 1,600 crore, it's time to sit up and take notice. Last month, when WPP Marketing Communications (WPP MC) was launched formally by converging the media-buying operations of the WPP group's three advertising agencies within the country (HTA, O&M and Contract), it was the beginning of consolidation within the media-buying business in the country with WPP MC poised as the market leader in the business.

This media buying `conglomerate' would in effect now corner an almost 30 per cent share of the estimated Rs 7,000-crore media-buying industry, through its sheer scale and size with its clients base from the three agencies put together. Buying slots in bulk across media through its three consolidated media buying agencies would result in massive margins and discounts, the benefits of which are likely to be passed on to its clients. But, more than getting better bargains due to its size, the industry is also hoping that WPP MC's specialised research techniques would bring about more accountability and transparency in the system, which now does not comprise agency-based deals and rates continue to be decided between media houses and the clients.

Floating different strategic business units under three names - Fulcrum, MindShare and Maximise - the purpose was to distinguish between the massive advertising accounts of Hindustan Lever Ltd (HLL) and non-HLL clients. While Fulcrum would purely service HLL, the other two units would cater to the rest of the business.

All the three units would in turn tap into its central resources based on their clients' needs. The central units would comprise a central investment unit (CIU) to provide benchmarking and group negotiations and BroadMind, a specialist unit for a non-traditional communication channels. Proprietary tools, research and customised econometric modelling projects would come under units such as ATG (Advanced Technique Group) and MCI (Media Consumer Insights). Other units would include that of WPP Outdoor (through two companies, Portland and Landscapes) and MDigital for all online planning and buying requirements.

Describing itself as a media investment company rather than a typical media buying house, WPP MC is offering proprietary research tools and training, areas which should hopefully transform the face of this industry in the country. Explains Ashutosh Srivastava, Managing Director, MindShare India, "Media buying is just one of the aspects. We help clients improve their business results through more accountable media investment management. This is a big step forward in an industry where the focus so far has largely been on internal media measures of performance (such as great buying deals, reach, frequency, cost per rating point) rather than end-business related goals like awareness sales and shares, which is what media investment is all about." Adds Abraham Thomas, Head, Network Sales, Sony Entertainment Television, "Once this company settles down, it could add value to the brand and not just better media rates. It would drive content, provide better brand fit and offer international learnings from models it owns." However, WPP MC will never really be in a position to control pricing since most rates continue to be client-specific.

Emphasises Raj Nayak, Executive Vice-President (Sales and Marketing), Star India Ltd, "As far as we are concerned we only make client-specific deals. For us, MindShare is just another name, a new entity, which is not going to make any difference to our style of functioning. Size does not matter since we will continue to make client-based deals and not agency-based deals."

Considering most of the rates after all continue to be client-specific, with media owners continuing to control pricing depending on their clients, this could be a factor working against WPP MC in India, according to industry analysts. Adds Punitha Arumugam, Chief Operating Officer, Madison Media, "It is not as if MindShare will get the best deals. There is enough room for everybody. In any case, the top media houses continue to go in for client-specific deals rather than agency-based deals." In fact, the size of the agency could also be perceived to be an impediment of sorts, with respect to the big media owners. Claims Srikanth Raman, Media Director, Mudra Communications, "MindShare would already have foreseen certain problems, especially the rising expectations from clients with respect to its services, value additions and discounts. Since the business is still client-driven, most media houses would not like to get exploited by a big player like MindShare."

Besides, being big in this business is advantageous only up to a point. Explains Ashish Bhasin, President, Initiative Media, "Although size is perceived to bring in better rates, after a point it becomes irrelevant when diminishing returns set in. In fact, media owners at times are wary in dealing with big agencies in fear of getting bullied by them." Adds a MindShare client, "It is not necessary that a bigger agency would pass on the benefits to its clients in terms of better rates. Besides, a bigger player can never provide the kind of personalised service to clients which smaller agencies can give." Claims another industry observer, "Size does not necessarily ensure quality. Even a smaller agency may be capable of better work. Yes, size can lead to arriving at a deductive proposition but there has to be empirical proof on the ground."

Projecting a turnover of Rs 1,500 crore within the first year of operations, its expat CEO, Andre Nair, agrees that retention and acquisition of clients will be a perpetual challenge, especially in times of a slowdown. Srivastava forecasts, "We expect moderate organic growth from the existing client base as growth rates have been slow for a while. New business will be the big driver of growth this year."

In the past two months since its entry into India, MindShare claims to have bagged seven new accounts, including the likes of Funskool, JVC, ICICI and Berger. According to certain industry sources, MindShare has already bought media worth Rs 1,600 crore. Moreover, the company intends bringing about accountability and transparency for its clients. As Srivastava says, "We would like to deliver what the client pays for. Most still sell on the basis of production costs and prices are determined by it. We would like to incorporate standard practices in the industry especially for those clients who shy away from TRP-based deals."

Claims Praveen Tripathi, a communications and media effectiveness consultant, "MindShare has got an opportunity to lead industry initiatives and actually improve certain industry practices. By exploiting its size, it could possibly partner with media owners in areas like measurement of TV ratings, training and enhancement of skills."

Promising a change in industry practices, Srivastava further adds, "The challenge is to bring in transparency and accountability. This calls for discontinuous change in practices in our industry - from us, the media owners and clients. We intend working closely with our media partners and our clients on this as a priority basis over the next few months. Strengthening the currency for measurement of audiences will be one of the key imperatives."

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