Happy days for Bengaluru ad agencies, courtesy e-commerce
Resurgence after a lull of almost a decade comes as city-based e-tailers step up advertising spending
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Bengaluru: In 2007, Kartik Iyer and Praveen Das launched Happy Creative Services (India) Pvt. Ltd, an ad agency.
It started small, and did some of the first ads for a then, still unknown start-up launched by two young men who used to work for Amazon.com Inc.
The company was Flipkart.
Today, Happy Creative Services is, er, happy. It has 80 employees and about 65% of its business comes from new economy companies and brands—Ola, MobiKwik, Myntra. Since January, the agency has hired 25 people.
“They come with a budget and talk to consumers on a national scale,” said Iyer.
Happy is representative of the resurgence of Bengaluru’s advertising industry.
Larger advertising agencies such as Lowe Lintas+Partners, Ogilvy and Mather, and J. Walter Thompson(JWT) which built sprawling teams in the southern city in its boom days in the early 90s to service large consumer accounts like Britannia, Titan, Lipton and Brooke Bond, have all grown both their business and teams in recent years after a lull of almost a decade.
The 1990s boom tapered out by the end of that decade. Media buying and planning became more centralized; many consumer brands preferred to run their marketing and advertising out of Mumbai, the centre of gravity of India’s advertising business; and local IT services companies simply didn’t need to advertise.
Several ad agencies exited the city altogether; others downsized operations.
The second wave of new economy companies that emerged in the late 2000s changed all that.
Flush with venture capital, firms such as Flipkart, Myntra, Ola and Hector Beverages Pvt. Ltd, seem to have brought the zip back into the market.
One top ad executive claimed the ecosystem has “changed dramatically” over past two years.
The market, said Poran Malani, the president of Ogilvy and Mather South India, “has never been this important”. Ogilvy services both domestic and international clients out of its Bengaluru office.
The new consumer brands emerging from Bengaluru have grown the business for the agency that works with MTR Foods Pvt. Ltd, ITC Ltd and Allen Solly, he added—so much so that Bengaluru is now the agency’s second biggest office, by billings and employees, after Mumbai. The agency has also signed on some e-commerce firms recently, Malani said, without divulging details.
The script is the same for Lowe Lintas, which first opened shop in the city in 1987 to service Lipton; start-up action in the last two years has allowed the agency to grow rapidly, said G.V Krishnan, president, Lowe Lintas + Partners, Bengaluru.
The agency handles advertising for brands such as Flipkart, Hike, Myntra and Paper Boat (Hector Beverages); many of these accounts were won in the past two years and added to ones such as Tata Tea, Tanishq and Britannia that were already being handled by the agency’s Bengaluru office.
Krishnan said hiring has gone up by a third across planning, creative and brand management in the same period.
Ad spending in India is projected to grow at 12.6% to touch Rs.49,000 crore in 2015, according to a report by media-buying and planning firm, GroupM.
Advertising by e-commerce companies will grow the fastest, the report added.
Current ad wars are between top e-commerce retailers, such as Flipkart, Snapdeal and Amazon, whose advertising budgets range anywhere between Rs.100 crore and Rs.300 crore a year.
Amazon promised to invest $2 billion more in India’s consumer market last year.
Some of the e-commerce firms “are willing to spend Rs.20-25 crore (on marketing and advertising) just to introduce their product”, said an advertising executive, who did not want to be identified.
While Lowe has mopped up significant business from start-ups in Bengaluru, executives at JWT are meeting new start-ups every month.
“As an agency we are definitely talking to clients, who are far younger,” said Joy Chauhan, head of the agency’s Bengaluru office. The branch already works for clients such as Nike Inc. and Commonfloor.com. Chauhan, an old JWT hand, was transferred to the city six months ago with the mandate to focus on new business.
“We are aggressively going after new business whose needs are very different from that of established brands and this also translates into the kind of work that is done for them,” Chauhan said. Hiring, he said, is happening in tandem and across verticals. “We are pooling resources from Delhi and Mumbai offices to cater to this market,” he said.
Indeed, everyone is scrambling for a piece of the e-commerce pot of gold.
Sandeep Goyal, former chairman of Dentsu India, was in Bengaluru on 13 July meeting large e-commerce companies.
His current company, Mogae Media, with its team of 30 in the city, is hard-selling its mobile ad platform to e-commerce firms.
“There have not been any new Rs.200-500 crore ad accounts that have emerged in the country over the past few years, except from Bengaluru and Gurgaon,” said Goyal, explaining the revival of interest in Bengaluru.
He expects the Bengaluru ad market to be as large as Mumbai in the next five years, if the current momentum is sustained.
The city is now third in the pecking order, after Mumbai and Delhi (including Gurgaon) despite the potential it held out in the 1990s.
Fali Vakeel, now chief operating officer at Lowe Lintas, was part of Lowe’s growth in the city in the 1990s. There was so much happening back then, he recollects—new businesses, new launches.
Then, the city’s ad business plateaued, he added.
Now back in Mumbai, Vakeel sees a radical revival in Bengaluru’s ad business, thanks to more contemporary brands.
“They’ve brought the boom years back.”