It’s all about relationships going cold—the relationship between advertising agencies and their clients, the creative and the media buying comrades, the leaders and their followers, the medium and the consumers, not to mention the infamous spat between two of the country’s biggest advertising industry associations. So, they decided if they had to break the ice, they would do it on a sunny beach. Well, that may not necessarily be the reason why the Advertising Agencies Association of India (AAAI) chose the beaches of Goa to host its second advertising award- cum-festival, called the GoaFest, but the association does plan to raise some pertinent questions facing the industry today and to look for their solutions during the three-day event which kicks off on 19 April.
The GoaFest is likely to see participation from more than 2,000 delegates from 100 organizations, including advertising agencies, media houses and companies. The festival will also see some high-profile guests such as Donald Gunn, the man behind the Gunn Report (regarded as one of the most credible statements on the globe’s top advertising agencies and their work); Trevor Beattie, the ad man famous for his FCUK and Wonderbra commercials (he now runs an independent agency called Beattie McGuinness Bungay in London); and Hermann Vaske, ad wizard, director, producer and writer. AAAI is already on cloud nine and touting the GoaFest as one of Asia’s leading advertising festivals, in terms of the number and profile of participants.
Yet for many in the industry, the three-day event, much like its rival—the Abby Awards hosted by the other industry association, Advertising Club Bombay—is a meaningless exercise. With two of the top agencies, Ogilvy & Mather and Lowe, staying away, the event is mired in controversy. “We never base evaluations of ourselves or our work on external awards,” says R. Balakrishnan, national creative director, Lowe. Balakrishnan is not as vociferous as he was some years ago about the integrity of the advertising awards in India, but it is well known in the industry that he and his agency decided to steer clear of any awards because they thought such events were not objective in evaluating people’s work. He is much more guarded in his response now, saying that he is not against such ceremonies. “It’s all one big game and, if you have to play it, you’ve got to do it wholeheartedly. If you decide to participate, then you better be prepared to work in all the major categories before entering an awards show,” he says. He is referring to award categories such as the Integrated Campaign of the Year, which, according to him, is difficult to enter unless one creates “scam” ads.
“It’s wrong to get clients to spend money on mediums they don’t need. It is wrong to work on projects that will only help you enter an award ceremony and win prizes,” he says, adding, “We usually try and participate only when we can enter work that has been used. Personally, I think it is selfish to win awards on someone else’s time and money.”
But many senior professionals in the industry are forthright in their views on the agenda behind the awards functions. “These are great places to party and network. And that’s about it,” says a senior creative director of a leading agency, which is participating in the event. He, obviously, doesn’t want to be identified. “At the end of the day, it is usually the seven big agencies and five creative directors who end up on every panel in different combinations. So, please don’t associate awards with a serious industry business. It is actually an exercise in futility,” he says.
To be sure, the GoaFest started off as a retaliatory move against Abby Awards. Its detractors allege the event was not intended to initiate a meaningful advertising event, but to get an upper hand over the Advertising Club of Bombay. “It is a battle for supremacy in an industry which is currently plagued by many ills,” says a top executive of a leading media company, who, till recently, was with a top advertising agency. There is a strong feeling within the industry that in the skirmish about who is the true representative of the industry in India, larger issues such as talent crunch, fee structures, audience fragmentation and the use of new media platforms, are getting overlooked. “This public spat weakens our case as an industry when we have to fight for larger issues such as agency remuneration, or pitch-fees,” says Prathap Suthan, national creative director, Grey Worldwide.
The advertising agencies face reduced earnings today even as the Rs16,000 crore industry grew more than 20% in 2006, riding on the back of a fast-growing economy. Thanks to growing consumption, there has been a remarkable increase in the number of advertisers across media platforms in the past four to five years, yet most agencies are earning less on each account than they used to. And the reason for this is the changed remuneration practice. Till early 2000, agencies commanded a fixed commission of 15% on the total advertising budgets of their clients, but with competition increasing, some agencies started settling for a certain fee, which, more often than not, was lower than 15%. “Some agencies, today, work for as little as 3-4%,” says an industry insider on the condition of anonymity. With the introduction of a fee-based structure, agency compensation was completely divorced from ad spends. “While the new structure guaranteed a certain fixed fee, it has reduced the earnings per unit of work put out by the agency,” says Santosh Desai, CEO, Future Brands and former president of McCann Erickson India Ltd. Today, most advertising agencies have to make do with a fee- structure where the client pays them for their creative inputs, while media buying and planning agencies are paid between 1.5% and 4% commission on ad-spends.
Another factor affecting remuneration is the exponential growth in the media. The availability of more advertising time and space has pushed rates down.
“So if a client is getting ad space at a cheap rate, it is really difficult to convince him to invest more on the creative,” says Jagdip Bakshi, chief executive officer, Contract Advertising (India) Pvt. Ltd.
Lower compensation has led the business into a downward spiral. Agencies now not only find it difficult to make investments in new research tools and technology, but they are also unable to pay their employees competitive salaries. The result is an exodus of middle- and junior-level employees to other industries such as media and entertainment, on the one hand, and the inability of agencies to woo fresh talent, on the other. “If you are not generating enough value, it will naturally stop attracting the right talent,” says Bakshi. “It is more worrying to see people leave for opportunities in other industries, and not for rival advertising agencies,” he adds. Suresh Seetharaman, a former industry veteran, who is now the president of the recently launched Virgin Comics LLC and Virgin Animation Pvt. Ltd, says the saddest part of the story is that advertising is no more about creativity. “As much as advertising was exciting, it is becoming more and more business-centric rather than creative,” he says. Suthan, famous for his India Shining campaign for the Bharatiya Janata Party-led government at the Centre in 2003-04, also rues the gradual death of creativity. “Advertising has become so technical that it is leading to frustration among those creatively-inclined,” he says. In the same vein, Hemant Mishra, senior vice-president, JWT India, says, “The depth of understanding which came with that experience is gone. Now it’s just about what the creative can deliver.”
AAAI, however, should get credit for trying to highlight these problems at its three-day event. It is getting the industry leaders, at least those who are available, to discuss these problems and look for solutions.
In an attempt to encourage young talent in the industry, AAAI has offered to foot the bill for participants under 30 years of age. It also plans to invite advertising students from next year even as it tries to steer the festival towards an international format. Whether it will succeed in achieving these objectives is something that only time will tell.