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High-level fallouts can impact agency image

High-level fallouts can impact agency image
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First Published: Thu, Aug 02 2007. 02 49 PM IST
Updated: Thu, Aug 02 2007. 02 49 PM IST
Mumbai: High-level ad agency spats are now in full public view. The past year witnessed a very public fallout between WPP CEO, Sir Martin Sorrell, and two of his Italian chiefs. Closer home, the public tussle between Lintas Pvt India Ltd’s chairman Prem Mehta and national creative director, R. Balakrishnan, continues. The vexed issue is that since Balki is a creative consultant, he will not get any of the proceeds from the employee-trust shares sold by Lintas to global holding company IPG.
The bigger concern, however, is that such high-level agency fallouts playing out in public can negatively impact an agency’s brand image, business or client relationships besides creating a dip in employee morale.
Reputation impacted
While at the international level, the damage seems to have been contained through court intervention, at the local level, it could create a dent in the agency’s public image. Says Mahesh Chauhan, CEO, Rediffusion DYR Pvt Ltd, “This has undoubtedly done some serious damage to Lowe’s internal morale and to its reputation and prestige in the market. It is also likely to create uncertainty amongst clients regarding their future.”
Adds film-maker Prahlad Kakkar, founder of Genesis Productions Ltd, “The biggest whammy has of course been to the reputation of the agency. This was once an agency known for iconic creative work, like the Lalitaji campaign.”
The larger fear among clients in such fallouts is that the steering force of the agency who is leading their brand’s strategy and creative, could well put in his papers. That could spell disastrous disruption in their marketing communication plans.
Uncertainty within and outside the agency
Explains Santosh Desai, CEO, Future Brands, Pantaloon Retail (India) Ltd who was formerly president at McCann Erickson India Ltd, “Advertising is a people-intensive business. The high-pressure job and close proximity leads to creative, financial and ideological differences. When there is a shift to a new order, the differences are magnified. There is a lot of uncertainty amongst clients because one of the two may exit the argument and the agency.’’
And what is the reaction of Lintas’ prime client, Hindustan Unilever Ltd? Says Rahul Welde, manager, HUL, “ I think that it is a personal matter, rather than a professional one. We do not want to actively involve ourselves in this, at least for the moment.”
Businesses often take a hit in such a scenario. An executive says that in the wake of murmurs of differences at ad agency McCann Erickson (India) Limited between Santosh Desai and regional creative director Prasoon Joshi, and Desai’s subsequent departure to the Future Group, the Tata Teleservices Limited advertising business was pulled out of McCann Erickson.
The network connection
Most Indian ad agencies are totally, majority or part-owned by international ad networks or their holding groups. Hence, nothing is a local spat anymore, says Desai. “International networks are impersonal in their working and they have little time for disputes and their decisions are often led by bottomlines.”
“I think that it is a fine spectacle when you need the Lowe Worldwide board to sort out differences between the Chairman and the NCD of an Indian agency. In my opinion, it is a reflection of Indian advertising as a whole, and certainly, it is a network issue,’’ remarks Kakkar. He however thinks that business may not necessarily be impacted.
Quite often, executive walkouts, if not differences, are inadvertently catalyzed by the international network. A classic case is the recent merger between WPP agencies David Ltd and Bates Enterprise Pvt Ltd, which precipitated leadership and other issues and finally led to the departure of top brass at David.
Also, there are scores of instances when murmurs of top-level fallouts had impact on the agency or its business, though it was never quite proved. Some agency executives say that reported disagreements between Euro RSCG CEO, Ishan Rain, and Ravi Deshpande, the then chief at its creative agency, Lemon, could have catalyzed the closure of Lemon. There was a phase when Lemon businesses like Cadburys and Zoom had to be temporarily housed under Euro RSCG.
At one time, the entire creative team of Law & Kenneth (earlier St Luke’s) reportedly resigned after a tiff with management. The last two may not have been in the public eye, but they still had an impact on agency fortunes, say ad men. So for public fallouts, the impact could be hard, though a lot hinges on the agency’s existing equity in the market place. Lintas’ is banking on this thread of hope.
anushree.c@ livemint.com
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First Published: Thu, Aug 02 2007. 02 49 PM IST