BackLines between advertising, content, entertainment blurring: JWT’s Tarun Rai
Tarun Rai, CEO of J. Walter Thompson, South Asia on the need for better packages at advertising agencies, key consumer trends and acquisition plans
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New Delhi: When Tarun Rai, chief executive officer (CEO) of J. Walter Thompson, South Asia, returned to advertising in 2015, he set about growing the agency’s revenue. “With the fragmentation of clients’ communication spends, the traditional agency’s share of the pie was shrinking. My focus was to develop new capabilities at JWT so that we do not lose money," he said.
JWT has multiple agencies in the non-traditional sectors including two digital companies—Mirum and Hungama Digital Services, experiential firm Encompass, shopper and rural marketing arm Geometry Global, design arm Design Sutra and social media arm Thompson Social.
Currently, Rai is busy building non-traditional revenue streams, hiring talent and offering integrated solutions for close to 1,000 clients including blue chips like PepsiCo, Nestle, Airtel, Aditya Birla Group and Hero MotoCorp, among others. In an interview, he spoke of the need for better packages at advertising agencies, key consumer trends and acquisition plans. Edited excerpts:
What would be the focus area for JWT in 2018?
Content is a huge revenue stream for us. Today, the lines between advertising, content and entertainment are blurring. I came from a pure content company (Times Group-owned Worldwide Media); therefore, I know the power of content. Design continues to be another big revenue stream for us. Below-the-line (BTL) is also a crucial area because there has to be on-the-ground execution of brand ideas. Traditional agency model which was heavily skewed towards television and print has changed. Therefore, we are focused on driving aggressive growth by developing multiple revenue streams in the areas of content, design and below-the-line.
What kind of talent are you hiring?
In 2018, our mandate will be to hire people from non-agency background to drive diversity. We are hiring people from content, films, data analytics, and design, along with psychology as well as statistics majors. Our focus is to continue hiring people with digital background.
There’s renewed focus on planning which is all about understanding the cultural shift which impacts consumer behaviour. Currently, this shift is tectonic. JWT invented the planning discipline and next year, we will be celebrating 50 years of Thompson planning function. We plan to double our planning team, which is 55-people strong, by next year.
What are the key consumer trends that are changing the way advertising agency business functions?
The key consumer trend is the explosion of choice in every aspect of life. When it comes to entertainment, there are hosts of new over-the-top (OTT) platforms like Netflix, Hotstar, SonyLiv and Amazon Prime along with television. So, viewers now have a choice of appointment viewing on television and binge watching on OTT platforms. It was also surprising to see a social media platform (Facebook) place bids for Indian Premier League broadcasting rights.
The way consumers are consuming content puts more pressure on creative people working in agencies to create organically viral content. It has to be engaging enough to be shared. Gone are the days when brand message could be pushed by interrupting people. If we talk about creating content, then we have to take a collaborative approach to creating content which can work on multiple platforms. While the media landscape is undergoing a major change, technology is also disrupting the way we communicate. From voice recognition technology like Alexa to smart homes and electric cars, the speed at which technology is moving from a concept stage to a commercial viable product and application is dizzying.
Is television advertising still effective?
We have all kinds of viewers consuming different type of media in the country. Television and print command 75% of ad spends and it’s growing at between 9% and 11%. Digital, which is growing at 40%, commands 15% of the total ad spends. Television is still powerful because the experience of television viewing is communal in contrast to OTT platforms which are individualistic. If an experience cannot be duplicated, the medium will continue to thrive.
While media is getting fragmented, I do not believe that any media is going to disappear anytime soon. The dominance of one single media platform will get reduced with time. Hence, agencies and marketers have to deliver across platforms. Many agencies talk about creating ideas which are platform-agnostic; I believe ideas should now be platform-specific.
Any plans for acquisitions in the digital space?
We will be acquiring two new companies in the area of technology and below-the-line in the first quarter of 2018.
What’s the biggest challenge for agencies today?
Our biggest challenge is to acquire talent. We are competing with the likes of Facebook and Google which is quite tough as these companies offer lucrative pay packages to candidates. I feel there is an immediate need to re-look what agencies pay to their employees. In turn, there needs to be a new narrative from the client side on agency remuneration which should get better so that we can hire diverse talent to deliver truly integrated brand solutions.
What are your growth targets for 2018?
In 2016, JWT South Asia witnessed 24% revenue growth. However, 2017 was an aberration due to reforms like demonetisation of high-value currency notes in November 2016 and the rollout of the goods and services tax (GST) in July 2017. We saw single-digit growth (between 6% and 8%). I’m optimistic that 2018 will be a better year with demand from the client side going up, which will help us to get back to strong double-digit growth.
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