Mumbai: Steve King is chief executive-worldwide of global media network, ZenithOptimedia (ZO), part of Publicis Groupe SA, and has almost 4,500 employees across 170 offices in 66 countries. King was in Mumbai to speak at a ZO seminar on return on investment (or RoI, in advertising and marketing) and advocacy. He spoke to Mint on the slowdown and his firms’ business plans for India, including the expected launch of VivaKi here.
VivaKi is a recent initiative by Publicis Groupe to help maximize RoI from new media and digital marketing, while increasing the network’s digital business. It will tap agencies within the group, including Starcom MediaVest, ZO, Digitas and Denuo, to develop new services, tools and partnerships along with the VivaKi Nerve Center and the VivaKi Talent Development Platform. Publicis will also launch a new open source on-demand network, “Nerve Center”. The platform, expected to be the largest of its kind in the advertising industry, is the result of a collaborative agreement with Google Inc., Yahoo Inc., Microsoft Corp., DoubleClick and Platform A to help clients reach precisely defined global audiences better. Edited excerpts:
Tech push: Steve King says his company’s recent initiatives will strengthen its digital capabilities in India. (Photo: Ashesh Shah / Mint)
We have just redone our ad forecast, which shows a 6.6% growth in ad spending for 2008. We really haven’t changed that forecast. The make-up of the forecast has changed because we see greater growth from developing markets such as India—which, in a couple of years, will account for one-third of total revenue—and these markets are growing (at) double digit (rates). Russia, India and China will grow three-five times more than world markets.
We have reduced our forecast in some of the more established Western markets. Digital (globally), in which the Internet alone is 10%, is growing at 30%.
This downturn is different from the other two. We’ve covered three downturns in the advertising cycle which are an exaggeration of the economic cycle. The 2001 downturn was partly due to 9/11 and the dotcom crash. The downturn this time is different for three reasons: In the previous two downturns, the proportion of ad spend to GDP was 1.3% and 1.25%, respectively; now it’s just below 1%. Compared with previous investments, the degree of investment is much more conservative. Second, there’s very little abatement in terms of emerging markets. Finally, there’s the growth in measurable digital media.
The second threat after recession is speed of change. Negative stories spread like wildfire. The third is replication of the bubble. A number of new companies are reinventing themselves as media companies: Google, Yahoo, Microsoft, online auction site eBay, content developers, producers putting content (up) for free, telcos, etc. Are there enough ad funds to sustain these businesses is the questionable part. There will be a huge degree of consolidation in a very fragmented market so far. The challenge finally is of getting and retaining talent, especially in digital where no one has more than a decade of experience.
On Zenith’s India plans
Generally, what we are looking to do is to try and strengthen our capabilities in areas where we lack resources, and which are growing most quickly. Those areas are in digital; there’s growth in digital activation, search, creative CRM (customer relationship management), mobile, analytics, etc. Those are the areas we need to develop faster. We will look at bringing in global units and acquiring local units. We have acquired a company (overseas) last year called Phone Valley, a mobile activation company, a marketing company based entirely on the mobile platform. We also bought a search business called Click2Sales. We have already brought both into India under Zed Digital. Retail is also an area we are looking at.
Equinox is the subsidiary brand in ZO and it’s more the challenger brand that can also handle conflicts. We are looking to develop all of our units (Zenith, Zed Digital, Equinox) in India and globally. Click2Sales and Phone Valley are the more global brands that we are looking to scale up here in India.
On the entry of Newscast and VivaKi into India
Newscast is a content creation business that we operate in some markets. It’s there predominantly in sponsorship and some creative development. That’s not a business that we have here yet, and one that we are thinking of bringing into India.
India is going to be one of the top three development markets globally.
We have globally launched VivaKi, the business where we brought together three of the businesses in the group, ZenithOptimedia, Starcom MediaVest and Digitas. We are currently in internal discussions about how we can look at areas such as synergy, activation…particularly in the area of talent and digital nerve centre. It’s a way of harnessing the need to talk to some of the platforms like Google and Yahoo in a much more single-minded voice.
Publicis Groupe Media (PGM) is not going to exist in the future. PGM is the formal management holding group, which will be replaced by aggregation of Starcom, Digitas and ZenithOptimedia. The brands will still talk to individual clients; the clients will still have their contracts with one of those three brands or in some cases all three.
Between now and the end of the year, we will make announcements locally how this VivaKi brand will be managed and come to India, rather like when we launched IMX (joint media buying operations with Starcom MediaVest) when we wanted to develop a platform which was effective and customized to the market here.
In most Asian markets, we don’t have a Digitas brand in operation. Here we have a very strong brand, Digitas Solutions, and some shared clients such as Hewlett-Packard, which we share between ZO and Digitas, so we can work opportunities and benefits.
These would be predominantly in areas of keeping and retaining talent and developing tools and systems in digital units.
VivaKi will talk to Yahoo and Google here as well as globally. The idea is that we can use the scale of the digital platforms more effectively; global learnings or relationships and partnerships with Yahoo and a single active engaged voice. If you think in terms of technological assistance that we are going to get from India, it’s going to be a market where a lot of our support systems would be based. Talent in terms of client leadership as well as technology is already advanced here, so I think India is one of those markets where you look to capitalize on that (outsourcing). Would a VivaKi give outsourcing out of India an impetus? Yes.