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India bucks global trend in ad business realignments

India bucks global trend in ad business realignments
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First Published: Mon, Sep 14 2009. 09 28 PM IST
Updated: Mon, Sep 14 2009. 09 28 PM IST
Mumbai: The world’s biggest mobile phone firm, Vodafone Group Plc, and the No. 1 handset maker, Nokia Oyj, recently changed their global media buying and planning agencies, but stayed on with the incumbents in India, bolstering the country’s reputation as the ad market most likely to buck global business realignments.
Advertisers’ local managements know that India is market-driven by diverse socio-cultural patterns and that in challenging times, it’s imperative to have an agency already cued into their brands’ media needs and which offers strong cost efficiencies.
UK-based Vodafone appointed Omnicom Group Inc.’s media specialist OMD to handle its £800 million (Rs6,456 crore) global media planning and buying business.
The account was earlier divided among Omnicom, Aegis Group Plc and WPP Group.
In India, Vodafone’s estimated Rs200 crore-plus business remained with existing media agency Maxus, a GroupM India Pvt. Ltd firm. “In India, there will be a longish transition period during which the existing agency will continue to service our account,” said a Vodafone spokesperson. Ogilvy and Mather Pvt. Ltd continues to handle Vodafone’s creative account.
Finland-based Nokia retained its Rs200 crore-plus local business with its incumbent agency, again Maxus, although the global $450 million (Rs2,185 crore) media planning and buying account moved to Aegis’ Carat from GroupM’s MediaCom. Nokia’s creative account is handled by JWT India.
R. Gowthaman, leader, Mindshare (South Asia), GroupM India, says that India quite often steps out of the grid of global alignment for ad accounts. Media markets such as India and Latin America are unique and are more value-driven in media buying deals.
“I think we are waltzing at a different beat than many other global markets. The UK and the US are reeling under heavy recession and India’s media scene has not been hit the same way. A change may not be required as with many other markets,” he adds.
According to Gowthaman, the local managements of multinational advertisers have a huge say in global pitches. If they are happy with an existing agency here, they may want to continue with it and not heed the global call.
The country’s leading advertiser, consumer products maker Hindustan Unilever Ltd (HUL), for one, is expected to break the global grid in the coming months. While parent Unilever called for a global media review this year, leading media buyers here say the account is likely to stay with GroupM in India.
The chief executive (CEO) of a leading media agency not handling the HUL business said: “They are getting cost efficiencies out of GroupM, which they would not get with any other agency. Unilever has called for reviews earlier as well and the business has not moved out of GroupM.”
A Unilever spokesperson said that the agency review process is under way already and will be concluded over the next few months. “We cannot comment on any speculation.”
Marketeers in competitive categories and with strong expansion ambitions for this critically important market are particularly loathe to change agencies they already work well with.
Two years ago, Japanese electronics maker Sony Corp. retained its media planning and buying mandate with Lintas Media Group here, even though the account moved to WPP’s Mediaedge:cia from Publicis at the Asia-Pacific level. Sudha Natrajan, president and chief operating officer at Lintas Media, recalls how Sony put up a case for the agency in Japan, and obtained special permission to stay with the agency. “These global deviations essentially testify to the fact that media is completely local in nature,” said Ambika Srivastava, CEO of Zenith Optimedia Pvt. Ltd.
L.S. Krishnan, president of Radar, the media agency of Mudra Group, said that local managements would not like to change agencies if they see no significant value to be achieved in delivery or scale with global alignment. Some may keep the incumbent temporarily for a smooth transition before ultimately shifting to the global agency, he says.
Multinational media networks just setting up agencies here are at a higher risk of losing globally aligned business. Explains CEO of Lodestar Universal Pvt. Ltd, “A lot of global companies are giving these agencies time before they make the move.”
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First Published: Mon, Sep 14 2009. 09 28 PM IST