Do high-level personnel spats at ad agencies hurt business? The relatively public tussle between Lintas Pvt. India Ltd chairman Prem Mehta and national creative director, R. Balakrishnan, has continued to rage in recent weeks. At issue: Balakrishnan, who is a creative consultant, is not eligible to get proceeds from the employee-trust shares sold by Lintas to global holding company Interpublic Group. Media reports say that high-level Lintas executives would have got Rs1 crore and upward on their share of the proceeds and that’s what Balki could have lost out on.
So, what do clients think? “I think that it’s a personal matter rather than a professional one,” says Rahul Welde, general manager at Hindustan Unilever Ltd (HUL), a major Lintas client (Lintas offers advertising services under the brand Lowe). “We do not want to actively involve ourselves in this, at least for the moment.”
Adds Santosh Desai, CEO, Future Brands, Pantaloon Retail (India) Ltd: “Advertising is a people-intensive business. The high pressure job and close proximity leads to creative, financial and ideological differences. When there is a shift to a new order, the differences are magnified. There is a lot of uncertainty amongst clients because one of the two may exit the argument and the agency.”
Future Brands is not a Lintas client though. Desai is former president of McCann Erickson (India) Ltd, which competes with Lintas. A Lintas official declined to comment.
The concern stems from a fear that either Balakrishnan or Mehta could end up having to leave, disrupting an agency that is among the country’s top five in terms of revenues, with clients such as HUL, Maruti Udyog Ltd, Idea Cellular Ltd and ITC Ltd.
Other advertising industry executives claim the issue has already had an impact. “This has undoubtedly done some serious damage to Lowe’s internal morale, and to its reputation and prestige in the market,” insists Mahesh Chauhan, CEO, Rediffusion DYR Pvt. Ltd. “Clients would be uncertain about their future.”
Adds film-maker Prahlad Kakkar, founder of Genesis Productions Ltd, “The biggest whammy has, of course, been to the reputation of the agency...an agency known for iconic creative work...”
It isn’t just Lintas that has to deal with personnel issues spilling out. A senior executive notes that differences at ad agency McCann Erickson (India) Ltd between Desai, who was then president of McCann Erickson, and regional creative director Prasoon Joshi, and Desai’s subsequent departure to the Future Group, were responsible for Tata Teleservices Ltd shifting its ad business from McCann Erickson to FCB Ulka Advertising Pvt. Ltd.
But Abdul Khan, vice-president (marketing), Tata Teleservices, refutes this. He says: “Differences between Prasoon Joshi and Santosh Desai did not lead to us moving out of McCann. It was purely a business decision, led by external factors.” Still, the account did move just after Desai left the agency to join Future Brands.
Most Indian ad agencies are now part of international ad networks or their holding groups and so local spats have a way of escalating into larger issues. “I think that it’s a fine spectacle when you need the Lowe Worldwide board to sort out differences between the chairman and the national creative director of an Indian agency,” says Kakkar. “In my opinion, it’s a reflection of Indian advertising as a whole, and certainly it’s a network issue.” Kakkar is, however, not one of those who believes that Lintas’ business itself will be impacted.
Quite often, executive walkouts, if not differences, are inadvertently catalysed by the international network. A classic case is the recent merger of WPP agencies David Ltd and Bates Enterprise Pvt. Ltd, which precipitated leadership and other issues, and eventually led to the departure of the top brass at David.
Because of the tight-lipped nature of clients, it is rarely clear why a business has shifted from one agency to another, or the true fallout of personnel differences. Some agency executives, for instance, say reported disagreements between the then Euro RSCG chief executive officer Ishan Raina, and Ravi Deshpande, then chief at its creative agency, Lemon, are likely to have played a role in the eventual closure of Lemon.
Agencies can benefit by keeping their clients in the loop. “There was a phase at St Lukes when the entire creative team had walked out almost overnight,” recalls Aloke Banerjee, chief executive officer, home textiles, S Kumars Nationwide Ltd, and former country head of Bombay Dyeing—an advertiser of St Lukes. “But since we were more concerned about strategy, and promoter Praveen Kenneth was personally involved with our business, there was nothing for Bombay Dyeing to complain about. The development could have had ramifications on business, but there was a lot of transparency from St Lukes’ side, which helped retain existing business. They sat with clients, spoke about the issues within the agency and reinstated a creative team in less than a week. They didn’t push it under the carpet.”