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Advertisers shift accounts for cost efficiency, better service

Advertisers shift accounts for cost efficiency, better service
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First Published: Wed, Apr 29 2009. 12 55 AM IST
Updated: Wed, Apr 29 2009. 12 55 AM IST
Mumbai: Some high-profile advertisers have either moved their accounts or are calling on new media agencies to pitch for their business, seeking to cut costs as the economy weathers the downturn.
The Aditya Birla Group recently moved its Idea Cellular media planning and buying business from Lintas Media Group, estimated to be Rs100 crore in billings, to Mindshare, the media buying arm of GroupM India Pvt. Ltd, said a senior GroupM executive who didn’t want to be named. Mindshare had been already handling accounts of other Aditya Birla firm such as Birla Sunlife Financial Services, Grasim Industries Ltd and Birla Cellulose.
Such consolidation is expected to bring cost efficiency and operational synergies, say experts. Even though moving or reviewing accounts costs advertisers a competitive disadvantage in terms of costs and time, relatively stable businesses are still switching agency partners. Some are scouting for media agencies that can offer them better cost efficiency, skills or negotiating clout, and some are in quest of better service.
Agency-client relationships are anyway shorter in India, at an average of 3.6 years versus six years in the West, according to global marketing agency R3.
The Kishore Biyani-owned Future Group recently moved its Rs100 crore media account out of Starcom Mediavest Group to Percept Ltd’s media specialist Allied Media, according to a senior Future Group marketing executive. The shift happened although Starcom had created a separate agency called FutureWorks to service the group.
In parallel, a brace of big-ticket advertisers are reviewing their relationships and inviting rival agencies to pitch for their business. Cellular phone company Nokia Oyj is reviewing its media-agency relationships across markets, including India. Its media agency is MediaCom Worldwide globally while in India its business is being handled by Maxus, a GroupM India agency.
Various agencies are pitching for this big-budget account in India, say two media buyers close to the development and a radio station executive. According to the senior GroupM executive, the pitch is happening globally and not locally.
Biscuit maker Britannia Industries Ltd is reviewing its five-year relationship with Maxus and called a few agencies to pitch for the business, say two other media buyers close to the development and an advertiser. Meanwhile, Videocon Industries Ltd is looking for a planning partner, says a media buyer who’s pitching for the business.
A spokesperson for Nokia India Pvt. Ltd declined to comment. Sunil Tandon, vice-president, Videocon Industries, declined to comment. No comments were available from Britannia at the time this edition went to press. Britannia’s media coordinator V. Srinivasan was contacted by phone and email.
Advertisers such as Abdul Khan, adviser to the managing director and head of global system for mobile (GSM) services at Tata Teleservices Maharashtra Ltd, say that with the current market slowdown, reviews and movements in big media business are increasing.
“What clients are trying to figure out is, what’s the value for the money they are spending? The question is, how many media agencies are delivering value for money? The ad and media industry is not impervious to downturns and even they are cutting down on people etc. An advertiser may not get the same calibre of people as he was getting earlier.”
Sandip Tarkas, president, Future Group, says advertisers are now demanding more accountability from their media partners. “The media business is no longer seeing the kind of loyalties from clients it did earlier and that’s because the nature of the business itself has changed. Media has become commoditized.”
This sounds a clarion call for agencies to reinvent themselves. Just as advertisers are giving enhanced value to their consumers, agencies must do the same for advertisers, he says.
Some industry executives such as M.G Parameswaran, executive director and chief executive officer, Draftfcb+Ulka Advertising, say the hectic pitches and hard-nosed negotiations of today will only lead to poor servicing and repeated rounds of pitches a year or two down the line.
Media pitches are actually a cyclical process and most advertisers review their relationships with agencies as a matter of course, and this could be the reason behind the Nokia review, says L.S. Krishnan, president of Radar, part of the Mudra Group.
Still, there is no denying the fact that advertisers are getting acutely conscious of returns on marketing budgets and are looking for greater cost efficiency and impact, he adds.
And, of course, there are stray cases of advertisers calling for a pitch just to get ideas for free, without intending to shift their business, says Khan.
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First Published: Wed, Apr 29 2009. 12 55 AM IST