Madhukar Kamath, managing director and CEO, Mudra Group, has just been appointed president of the Advertising Agencies Association of India (AAAI). In his 25 years in the business, Kamath began with Clarion McCann Advertising Pvt. Ltd and later joined the Cordiant Group to help bring Bates Advertising Pvt. Ltd to the country.
He speaks to Mint about the issues facing the ad business, such as pitch fees, payment systems and censorship, and the tensions between AAAI and the Ad Club over rival award functions. Edited excerpts:
What are the challenges you face as AAAI president?
High on my agenda is burying the controversy that AAAI and the Ad Club work at loggerheads. These are not two separate camps. AAAI doesn’t stand for awards and upmanship; it stands for the industry as a whole. There are bigger issues before us—retaining talent, maintaining standard compensation levels, sorting out payment issues with advertisers and the Indian Broadcasting Federation (IBF), etc. Over the last few years, the importance of ad agencies in the value chain has been marginalized. AAAI has to forge relationships with important institutions such as ISA (Indian Society of Advertisers), CII (Confederation of Indian Industry) and Ficci (Federation of Indian Chambers of Commerce and Industry).
To sum it up, my main objectives are:
# Restore lost respect and stature of the ad industry
# Bring cohesiveness and unity of purpose
# Raise compensation levels
#Project advertising as a viable business and attract new talent.
These issues have existed for years. How do you plan to tackle them differently?
I am a great believer in persuasion and the powers of co-creation. We have to co-create solutions by taking all parties into discussion, like the ISA, for instance. There can be equitable compensation levels for all parties, and these will be based on established norms. It only takes dialogue to set the process in motion, whether it’s on pitch fees, continuation of the 15% (commission) or raising compensation levels.
IBF had initiated a system of billing advertisers directly, thus cutting out the 15% commission for agencies. Your reaction?
AAAI has vehemently opposed this move. The net rates model is against the charter of our constitution. AAAI has also identified why rates have to be differentiated for AAAI members and non-members. The net rates system is detrimental to the interests of member agencies.
Your election is seen as a triumph of the moderate forces. Does this mean there are more chances of Ogilvy & Mather India Pvt. Ltd burying the awards hatchet and participating in the AAAI Ad Fest?
I don’t think of myself as the moderate face but, yes, it is my intent to bring everyone to the same table and bury individual issues. AAAI is not about brownie points and how I am better than you. Everyday, employees come to ad agencies to work. Our reward is sales and an increase in market share. We don’t walk in every morning with the intention of bagging awards. I think about a splendid commercial such as HappyDent White and I am reminded about what it did for the brand in the market. I don’t think about the number of awards that the commercial won. Or Incredible India, which showcased this country as a wonderful destination. There is a reason why the government and political parties woo ad agencies. Because we package a product well. And awards are not the only thing we are seeking. We want consumers’ acceptance of the product.
Agencies are still not paid fees by advertisers for presentations made during the new-business pitch. Your views?
There was a formula (a fixed amount) that was being worked out as pitch fees. Unfortunately, the implementation suffered. We are going to begin afresh. On a conceptual level, an agency should be chosen on credentials, conviction and passion. For all presentations made to a possible client, the ad agency should be remunerated, irrespective of whether it is panelled or not. If you need a parading of talent or ideas, you have to be willing to pay for it.
Content regulation is gaining ground with two commercials (Amul Macho and Lux Cozy) taken off the air recently. How do you see the situation unfolding for member agencies?
The two commercials yanked off air are more the exception than the rule. We are all governed by an ASCI (Advertising Standards Council of India) code for self-regulation. If the client and agency or broadcaster is transgressing established lines of public behaviour and if this could result in repercussions, then I think yes…the concerned parties should be penalized.
The information and broadcasting ministry is also talking about supervised time-bands within television airtime. All content would be listed and certified, like ‘A’ and ‘UA’. These are progressive steps taken by the government.
In an AAAI-IBF meet, it was proposed that data on viewership provided by research bodies should be ruled out since some TV advertisers quote such figures to default on payments. So, should broadcasters or IBF provide data to advertisers for the purpose of billings?
We share an excellent relationship with IBF and INS (Indian Newspaper Society). The discussion was about the process of billing and the need or otherwise of a third-party system. There are a lot of monitoring/billing/back-end systems in place as far as the broadcasters go. Their mechanisms are far superior.
So if IBF as a collective body certifies that the accounting, billing systems of each one of its members are of the highest standard, then why rely on third party data? These are the views expressed in the last discussion. The two bodies will have to jointly convince the client (advertisers) about this new system.
Today, back-end billing mechanisms that most TV channels have in place are exceptionally good. As the industry progresses, we have to relook processes. It was a positive question asked by IBF. And we are in the process of coming up with an answer.