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Consolidation bug bites digital media

Consolidation bug bites digital media
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First Published: Tue, Aug 07 2007. 06 44 PM IST

Updated: Wed, Aug 08 2007. 11 08 AM IST
Mumbai: Advertising is entering the third wave of consolidation globally. International marketing communications holding companies such as the Omnicom Group and Publicis Groupe are pooling their digital communications units under single banners, after consolidating their ad agency and media-buying networks across markets. These digital units create and buy ads for the Internet, mobile and gaming space, social networks, etc.
Many of these digital companies should launch here in due course to tap an anticipated exponential growth. By 2010, more than two-thirds of all media will be accessed via digital technologies, according to data from global media agency Carat, which is represented in the country by Carat Media Services India Ltd.
Digital accounts for 7-8% of ad spends in developed markets and a mere 2-3% here, but this is expected to leapfrog. “Digital media isn’t just about new media channels like the Internet and wireless - it reflects all media. TV is going digital. Radio is going digital. Even outdoor/out-of-home is being affected,” states a Carat report. Consumption of all media will thus increase over time.
Digital scale would empower media agencies to negotiate better ad rates, and share insights and resources across regions, especially for multinational clients.
How it’s coming together
The consolidation moves of these global players could click here, sooner or later:
# Publicis Groupe acquired Digitas Inc. for $1.9 billion (about Rs7,600 crore). It is one of the world’s leading digital marketing and media companies that help global companies develop, engage and profit from their customer relationships. Publicis also recently formed Denuo to focus efforts in digital communications on platforms such as the Internet, video games, mobile phones and iPods. Denuo offers strategic consulting, developing new solutions and investments in partnerships. It provides solutions from one centralized hub, though it has yet to work through its agencies in the country.
# The Aegis Group, which owns media-independent Carat, is developing new digital infrastructure across its various agency networks to ensure advanced technology solutions. As proof, Carat USA has just merged with Carat Fusion, its interactive shop, and the top two fusion managers will lead the full-service agency. “We can’t have a client lead for traditional and digital. The worst thing for a client is when there are two voices,” its CEO, Sarah Fay, told members of the international media.
Aegis’ existing Isobar is the world’s largest digital network of agencies and offers a full range of digital services, says Barney Loehnis, network director Asia Pacific, Isobar. “In India, the opportunity is just beginning to emerge as a mainstream (medium). But, as companies look to India to drive some impressive growth, there is an increasing urgency to develop digital skills in traditional agencies,” he says.
# Omnicom recently started an umbrella entity called OMG (Omnicom Media Group) Digital, which only deals in digital media buying. It oversees $2 billion in ad spends and shelters all the digital units of Omnicom’s media specialists like OMD (Optimum Media Direction), PHD; Next, the holding company’s emerging-media practice, and all digital acquisitions. “OMG Digital will be extended to India in time,” says an Omnicom official.
In contrast, IPG is reportedly disbanding its IPG Media Group overseas and seems intent on aligning media with creative more closely in its re-structuring. Lynn de Souza, director, Lintas Media Group, says: “I am sure that IPG has strong interests in developing the digital capability of its agencies here. Whether as part of creative or media or integrated, it’s still too early to say.” Also, the WPP Group has its massive GroupM Interaction, but its digital units are still not globally consolidated.
Benefits of digital pooling
Consolidation will help media agencies get behavioural insights on how consumers use digital media and create new ways to interact with each other. Says Isobar’s Loehnis: “Through those insights, we can develop campaigns that will best serve clients because they will engage consumers, excite them and get them talking about our brands.”
He believes that their role is not to “buy time” but to “create time” between consumers and brands. In this endeavour, media is a secondary aspect; the primary challenge is to figure out how to create an experience that will engage consumers. Then look at where to buy media to help increase the reach of the communication,
Ravi Kiran, CEO, South Asia, Starcom MediaVest Group
Loehnis adds.
The deeper issue is that agencies need to change their whole culture to work around the way consumers think, and the truth is that consumers in most markets have fully embraced the digital world and continue to do so, says Ravi Kiran, CEO, South Asia, Starcom MediaVest Group, the media company of the Publicis Group.
The only downside of consolidation in an emerging market such as India is that the market is very price sensitive and with agencies judged on price alone rather than the quality of their insight and communications planning, it can be a struggle to build a sustainable and high-quality service, says Loehnis.
Media men like Shashi Sinha, chairman, Lodestar Universal Pvt. Ltd—the media company of IPG—are, however, sceptical. “Business is expected to leapfrog but, then again, it’s like chasing a pie in the sky. Talent is not there, clients don’t want to advertise via this medium,” he says.
Sinha points to another question often asked about digital media buying - should it align itself with the creative agency or the media agency? “The ground reality in India is that Quasar Media and Web-Chutney are the big players in this market. Digital media is barely being used. At least not to its optimum level,” he says.
Still, if a large global digital name comes into the Indian market, it could unite the very fragmented digital market and help use resources better, says Chandradeep Mitra, president, Optimum Media Solutions Ltd, media unit of the Mudra Group. “The market growth has been gradual for this sector. But the numbers are coming in. Mobile on Internet, broadband content, social networking, Bluetooth technology, are driving digital investments in the region.”
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First Published: Tue, Aug 07 2007. 06 44 PM IST