It’s been a busy two months for 42-year-old Ajit Menon at Mudra, one of India’s leading advertising agencies. Menon, who joined the agency earlier this year, spends much of his time “hanging around” the office floor discussing work, career goals and interests with colleagues to understand their mindset.
While his new work profile is similar to that of his previous job, the nature of the industry is quite different from the one he served earlier. Menon spent eight years in some of the leading business process outsourcing (BPO) companies handling their human resource operations. At Mudra, he was brought in to fight a crucial problem: attrition. Indian BPOs have been grappling with it all along and now, even the advertising industry seems to be in its grip. “As head of the Leadership, Learning and Change unit at Mudra, my primary responsibility is to check attrition and help employees chart out a growth plan for themselves,” says Menon.
Unlike the BPO industry where it is the entry-level employees who usually quit, in advertising, maximum churn is being seen at the top level. Many a senior executive has, in fact, bid adieu to the profession forever.Some prominent names include Santosh Desai, the former president of McCann Erickson; C.V.L. Srinivas, ex-managing director, Maxus; Preet Bedi, former president and CEO of Rediffusion DY&R; Debraj Tripathy, ex-general manager, Maxus; and Lakshmi Narasimhan, national executive director central trading group, Group M.
To add to the industry’s woes, it is not attracting as many people as it is losing. “There was a time when graduates from the Indian Institutes of Management would give their right arm to get an entry into the advertising industry. But today, they are not able to lure talent even from the ordinary business schools,” says Srinivas, who decided to take a break after quitting Maxus three months ago. Indeed, something seems to have gone amiss in the industry, which was once considered the ultimate destination for the talented and ambitious.
Insiders say the industry is battling with far too many problems and for some of them, it has itself to blame for. “Thanks to media proliferation and evolution of new platforms, media consumption habits of consumers are changing by the day. Clients (companies), obviously, want their agencies to be on top of these transformations, but most agencies seem to be caught in a time warp. They are at a loss as to how to rediscover their business model,” says Meenaksh Madhvani, Managing Partner, Spatial Access, a media audit agency.
Many in the industry admit that clients don’t seem involved any more in the work that agencies do. Says a senior industry person who recently quit Grey Worldwide to join a publishing group: “There was a time when even the CEO of the company would attend the campaign review meetings, but not any more.”
A section in the industry, however, argues that the blame for this disconnect doesn’t lie with agencies alone. “Some of the marketing and branding heads in companies have totally unreasonable expectations from advertising. They want every commercial to lead to higher sales and also, need an evidence to that effect,” says Prathap Suthan, national creative director, Grey Worldwide. “The creative business is no more about good commercials that will win accolades, but about forays that will push sales,” he adds.
Some, however, also feel that misplaced expectations from their work may be responsible for the sense of frustration pervading the industry. Says Prasoon Joshi, executive chairman, McCann Erickson India: “Advertising industry is no more attractive to those wanting to make big bucks. Only the passionate ones can stay here.” But then, there aren’t too many who agree with him. In fact, even some of the clients say that the relationship between creative agencies and brand managers has changed for the worse. “Frustration in advertising is all about lack of job enrichment,” says Punita Lal, executive director, marketing, PepsiCo India. “The problem with some companies is that they treat their agencies like vendors, not partners. If we can enrich the work they do so they believe they can add value rather than obey orders, it will work out fine.”
There is a similar sense of dissonance in the media buying fraternity as well. Unlike creatives, media buying is not an intuitive business. It involves thorough research, number crunching, hard-core negotiations with clients and other strategic skills. “But the economic value that all these efforts produce is too small to justify them,” says Srinivas. Some of his peers agree. “Some obscure software companies, operating out of some corner of the country, are generating more revenues than the entire media buying industry,” says an agency head. Total advertising spends in 2006 stood at around Rs16,000 crore. Assuming that agencies still get a 15% commission (though it is a known fact that most agencies now work for a mere 3-4% fee), the amount retained by advertising agencies will be around Rs2,400 crore; media buying agencies get to pocket only around Rs500-560 crore of this. Though insiders confide that “it is no more than Rs200-250 crore”. Says Narsimhan, “It is matter of concern that an industry employing many talented and admired professionals generates minuscule revenues and that too at a time when every other business sector in the economy is booming.”
The problem he refers to has a reason and a ramification. It is a common grouse in the industry that client fee has been on a downward spiral for some time. Says Sam Balsara, chairman and managing director, Madison Communication: “Clients are not paying agencies adequately. They have to wake up to the fact that to attract and retain talent in the industry, the remunerations will have to be realistic.” Agrees Sanjay Naik, president of McCann Worldgroup, who thinks “low wages from clients is one of the biggest challenges facing the industry”. He says “in the absence of demonstrable and measurable value, it often becomes like a bargain between agencies and clients, which is not a good trend”.
Agencies are not able to offer attractive salaries to their employess simply because they themselves don’t get paid well. And this explains why they are not able to lure talent. Says Madhukar Kamath, CEO and managing director, Mudra: “In today’s time of economic prosperity, there are several new and better paying options for fresh talent. Why would they settle for something less attractive?”
In fact, opportunities outside advertising are not only luring away fresh talent but even those at the top. Desai, for instance, has moved to Future Brands, an outfit launched by Future Group’s Kishore Biyani to manage all the group’s brands. Similarly, Group M’s Narasimhan is moving to TV18 and Rediffusion’s Bedi has moved to Percept Picture Company. “The new opportunities are much more challenging and contemporary,”says Tripathy, who moved from Maxus to Sieger Media, an outdoor advertising and new ventures outfit launched by Deccan Chronicle.
Madhvani feels that agencies need to rediscover themselves to command client’s respect and attention. Many agencies, in fact, are trying to launch news services and platforms to service clients’ expectations and also to augment their sources of revenue. Some are taking remedial action to nurture and manage talent as well. The efforts should check some damage at least.