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Management and Strategy | India as a safety vest

Management and Strategy | India as a safety vest
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First Published: Sun, Nov 09 2008. 10 14 PM IST

Photograph: Harikrishna Katragadda / Mint
Photograph: Harikrishna Katragadda / Mint
Updated: Sun, Nov 09 2008. 10 14 PM IST
Maria Luisa Francoli Plaza / MPG
The world economy is slowing, but India is still growing
During its four years in India, Media Planning Group, or MPG, the media agency of communications conglomerate Havas, has preferred to maintain a low profile but all that is now going to change, says the agency’s global chief executive, Maria Luisa Francoli Plaza. “Now that we have consolidated our position in India, the time is right to reach out to advertisers and tell them what’s on offer,” says Plaza, who was in India in October. When she talks about the time being right, she also means that India has now emerged as a priority market for the agency that is battling stagnating spending on media in Western markets due to the economic slowdown.
MPG India contributes Rs600 crore in billings annually to the $13 billion (about Rs62,010 crore) firm. Of this, nearly Rs300 crore was earned in the last one year. “The numbers of clients have increased considerably and a lot of new categories have been added,” says Anita Nayyar, chief executive of Havas Media India.
The company launched its sports marketing arm, Havas Sports, last year, and plans to strengthen it in the next six months. With the successful debut of the Indian Premier League earlier this year, the sports space offers the prospect of plenty of sponsorships and Havas plans to bring its expertise to India.
MPG India claims to be the fifth largest agency in the country in terms of size, having earned new businesses worth Rs250-300 crore in the last one year.
Plaza plans to strengthen MPG’s India operations further by investing in new digital technology and bringing its mobile marketing arm Mobtext by next year. “This country is going to have a much bigger say in the world—so, if we want to be ready for the future...,” says Plaza. Edited excerpts:
Since MPG debuted in India in 2004, it has been very quiet about its operations. Why?
India is a very different market for us, it is growing, yet (it is) very diverse and the complexity of communication reality is enormous as the culture is very strong. You really have to learn about the culture and the people to make it.
Photograph: Harikrishna Katragadda / Mint
At MPG, we wanted to take our time in understanding this market. In 2007, Anita (Nayyar) joined us and elevated the management (team) for our India operations, which followed key developments such as the launch of our online vertical Media Contacts in 2006. Also, traditionally, we are a very quiet company, but we plan to change that now and get active in our communication as we have a lot of good things to offer.
Do you feel you may have missed out on business during this wait-and-watch phase?
We did get a late start and I don’t think we missed out on clients but yes, we have realized that if we remain low-key, we will lose out on business in this competitive market. We have value-added to our business and advertisers will soon start seeing that.
What are MPG’s plans for the coming year?
As a group, we are looking at a more organic growth rather than acquisitions—our main investments are in people, so we will be focusing heavily on training our existing team and scouting for new talent. The power of word of mouth (marketing) for a media plan is increasing, so we are looking at developing new tools that monitor this.
Also in tune with our growing focus on digital media, we are looking at bringing our mobile marketing division, Mobtext, (to India) in the first half of 2009. Although I can’t give more details on the plans, I can say that we will be investing on bringing new digital technology for the digitization of traditional media as well.
How would you compare the media planning industry in India to that of other countries where MPG is present?
Media planning industry in India is very complex but there is still a lot of room to grow here compared to other markets. Look at the number of launches in magazines, radio and TV channels—the media landscape is vibrant and just taking shape while most other markets are stagnating.
So, India is a very important market for us and for everybody because India is still growing at a time when the rest of the world’s economy is slowing down. This country is going to have a much bigger say in the world—so, if we want to be ready for the future, it’s best we understand the key players, of which one is India.
So, are you saying that India’s advertising industry remains unaffected by the slowdown?
India is in a good position. Yes, the rate at which the industry was growing even a year ago may have slowed down but it is not like global advertising markets which are seeing huge cuts in billings. India’s stable situation is, in fact, helping (us face) recession in other mature markets.
In the West, (ad) spends are shifting to the Internet and every sector is getting hit but, here in this country, there is a sense of differentiation (in opinion) setting in around what’s good and what’s not—so, advertisers are spending but are just getting cautious about where their money is going. Also, smaller players are not advertising as much as they were but the big companies are still enough to keep the industry growing.
Is this why MPG is looking at India more closely now?
At MPG, we saw a clear pattern in global ad spends during the second and third quarter this year and we’re here because if you’re a global company, you have to have diversified risk. So, India is a safety vest for us.
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Charles Courtier / Mediaedge:cia
The world will be relying on India and China more than ever before
Mediaedge:cia Worldwide Ltd, or MEC, the global communications planning and implementation agency of GroupM, part of WPP Group Plc., is relying on India to secure its future as the current financial crisis engulfs economies around the world, squeezing their advertising and media expenditures. “I think I’d be lying if I didn’t say we were relying on you (India) as the future for all businesses,” said Charles Courtier, global chief executive of MEC, in an interview during his visit to New Delhi in October.
The $19 billion (about Rs90,630 crore) agency, which reported billings in excess of $200 million in 2007 from its Indian operations, is investing heavily on strengthening existing businesses as well as bringing its other Western verticals to the country. In the last one year, the agency has set up two of its business units in India—MEC Interaction, the digital unit, and MEC Access, the sports and entertainment unit.
It is now planning to add two new divisions—MEC Retail and MEC ROI (this unit measures the response to advertisements)—to its business in India by the end of 2009. Edited excerpts:
Compared to markets abroad, how has India’s media and advertising industry coped with the financial crisis?
India has handled the crisis very well. India is a market that is growing compared to that of the US and Western Europe, so while I will not say it is not affected by the slowdown, it remains comparatively secure.
Photographer: Ritam Banerjee / Mint
The financial chaos has thrown itself on every sector and has affected consumer confidence and so, media spends, severely.
But it affects you less—that is why the world will be relying on India and China more than it has ever done before. I think I’d be lying if I didn’t say we were relying on you (India) as the future for all businesses.
How have Interaction and Access performed so far in India?
Access is very new as we launched it just this April, but it was accidentally timed brilliantly with the IPL (Indian Premier League), so we got a great start to our operations (MEC handles the account for Hyderabad’s Deccan Chargers and Citibank India, one of the official ground sponsors of IPL).
For us, sports and entertainment has always been a fast growing division globally as the spectrum is very wide, and in India too, many of our clients are increasingly moving into sports sponsorships and branded entertainment.
Plus, we are integrated with media agencies of GroupM to offer clients a wide range of services. And MEC Interaction is the future of our business as digital media will eventually touch everything and become a part of every media plan. The digitization of us (advertising) as an industry is crucial, and ensuring we have the right digital skills is our focus.
In an interview in January you mentioned you were open to acquisitions in the digital space. Are there any developments on this front?
We are still open to acquisitions but a good digital agency is hard to find. So, we are strengthening and building MEC Interaction as of now.
What are your plans for India?
India is a priority market for us in terms of clients, geography and product. We are focused on the diversification of our business and while we are investing in our businesses around the world, Asia-Pacific is where the growth is and India and China, in particular, are getting the lion’s share of these investments.
By the end of 2009, you’re going to see continued growth and diversification. The big focus will be on MEC Interaction and Access, (both of) which will grow (by) four times.
There is a huge potential in MEC ROI and MEC Retail and I think by then (the end of 2009), there will be greater capabilities for ROI and plans in place for MEC Retail.
priyanka.m@livemint.com
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First Published: Sun, Nov 09 2008. 10 14 PM IST