With the start of the new fiscal year in April, it’s time again for advertisers to review business relationships with ad agency partners. But, this fiscal, the intensity perhaps is greater than it has ever been: Ad and media buying agencies are faced with a deluge of pitch invitations, with advertisers either launching new products or categories, or wanting to change agencies in their quest for fresh creative and branding strategies and a chunkier market share.
Typically, this exercise extends into May and, sometimes, the entire first quarter of the fiscal. If pitch fever is more intense this year, it is because of economic volatility and client angst at plateauing, or even shrinking, sales and market shares, say ad men. Also, the slowdown in the US economy is forcing multinational advertisers to review and realign agency partners on a regional and global basis.
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Meenakshi Madhvani, managing partner at Spatial Access Media Solutions Pvt. Ltd, says a new fiscal year signals new partnerships. “It is also a time when there are several management changes in companies, and a lot of top marketing officials switch base. As a result, a new guy steps in and he questions a lot of what was being done on the brand. Result: The account goes up for a review.”
“Not everything is about the 30-second TV commercial,” says Abdul Khan, president of marketing at Tata Teleservices Ltd. “Agencies frequently fail to fulfil business objectives, and struggle to understand areas such as new media, grass-roots level, etc.,” he adds, explaining why so many brands change their ad partners around this time.
If the competition is stiffer, both sides are also becoming more selective: Advertisers are more choosy in their invitations; some agencies are more selective in what they pitch for. Interestingly, around 70% of all pitches since January have been for local businesses, and 30% for global businesses, says Madhvani. In value terms, global business pitches would have a bigger share, though. Of the local pitches, 20% were for new businesses.
One more change is the presence of more Indian ad executives on global pitch teams that present creative, brand or media strategy for clients such as Unilever Plc. and Mattel Inc.—India is emerging as a critical part of their growth plans.
Highly competitive sunrise categories, such as cellular phones, financial products, infrastructure, retail and electronics, have led in pitch activity.
Big-brand accounts up for grabs this season include Tata Indicom, BPL, Kingfisher Airlines, Kotak Retail Banking, etc., says Josy Paul, chairman, BBDO India. “Agencies are busy pitching for new business these days. They seem to wear the number of pitches that they are doing like it is a badge. I heard someone say, ‘Oh, we are doing six pitches this week. What is your score?’”
Most advertisers declined to talk about accounts since the process is still on. A high-profile pitch, and subsequent account movement, in April was Procter and Gamble India, which awarded its estimated Rs200 crore media buying and planning business to the new Madison-Mediacom combine. Earlier, the business was split among many media agencies—the buying business was handled by Madison group, and planning was divided between Starcom MediaVest Group and MediaCom India Pvt. Ltd.
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Hindustan Petroleum Corp. Ltd re-empanelled two of its existing agencies—Mudra Communications Pvt. Ltd and JWT—and replaced Ogilvy and Mather India Ltd with Leo Burnett India Pvt. Ltd. Says Arvind Sharma, chairman and CEO, Leo Burnett India: “April is the time when clients have their new business plans approved, and their targets set. It is normally the time when they are open to getting a new agency on board.”
According to media reports, Videocon Industries Ltd has put up its entire product range for a creative pitch.
Changing client communication needs and rising expectations have also reduced the average tenure of client-agency relationships from about five years to barely two years now.
The story is no different globally.
A 2007 survey commissioned by lead generation and business development consultancy firm Reardon Smith Whittaker in Cincinnati, shows that 50% of agency relationships do not last even two years. This is from a sample of 140 companies that includes brands such as Citibank, General Mills, IBM, General Electric and ESPN, with an annual marketing spend of at least $2 million (around Rs8.5 crore).
“It is a competitive world out there, and we needed fresh creative thinking on the brand,” says Khan of Tata Teleservices, explaining the recent pitch called for Indicom.
This is the second time Indicom is looking at changing partners in recent years. The account was jointly handled by McCann Erickson India Pvt. Ltd and FCB Ulka Advertising Pvt. Ltd (now DraftFCB+Ulka Advertising Pvt. Ltd), according to Khan. It was then consolidated totally with DraftFCB+Ulka. The pitch includes agencies McCann, Contract Advertising (India) Pvt. Ltd and Grey Worldwide.
M.G. Parameswaran, executive director, DraftFCB+Ulka Advertising, says the aggressive growth targets of clients, increasing employee turnover and stiffer competition have put tremendous pressure on agency-client relationships. “We believe that client-agency relationships cannot be campaign-to-campaign, or year-to-year. It is a partnership, and the more each partner invests in the relationship, the better it gets.”
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However, there is also a feeling that an agency bears the brunt of its client’s failure in the marketplace.
Santosh Desai, managing director and chief executive of Future Brands Ltd and former president of McCann Erickson, says clients often run out of ideas for their brands, and the agency is the fall guy. If the brand is not doing well, the easiest thing to do is to fire the agency, he says.
Marketers are driven now by quarterly results and don’t have the time to wait for long-term results. That means more pitches and broken relationships. “It is a far more competitive market today and, if the brand doesn’t deliver, mistakes are not forgiven, especially those from the agency’s side. Brand teams spend far less time on one assignment,” says Spatial Access’ Madhvani.
Ravi Deshpande, chief creative officer, Contract Advertising (India), says there is no real investment from the client’s side in maintaining long-term relationships. “You feel a lot more for the brand if a relationship is in place. There is so much more that you want to do.”
Agencies, too, are becoming more discerning; they aren’t pitching for every contract. Presenting a creative or strategy pitch against a long line-up of agencies means investing time, money, resources and top-drawer talent at the expense of servicing existing clients. An ad agency chief, who did not want to be identified, says he has turned down pitch invitations from at least eight big advertisers in recent times.
Most agencies do their homework on clients before making a pitch. For example, agencies are not paid for pitches but an advertiser may use a pitch idea presented by an agency in campaigns done subsequently by a rival agency. Agencies try to avoid such clients.
Madhukar Kamath, managing director and CEO, Mudra group, says every pitch requires high-powered teams and weeks of preparation, along with regular agency work. “We prefer to go in for selective growth rather than widespread, undernourished growth. The pitches that agencies go in for are far more selective today in terms of the categories that they want to associate themselves with and the resources and strength that they have,” he says.
“When we get invited for a pitch, we do our due diligence before committing resources for a pitch. And, we never let a pitch divert our attention from our clients’ work,” maintains Parameswaran. Both Kamath and Parameswaran do agree, however, that the number of pitches is on the rise.
Advertisers are also becoming smarter. As R. Balakrishnan, chairman, Lowe Lintas India Pvt. Ltd, puts it: “What is significant is that clients realize that calling 8-10 agencies for a pitch is a jamboree. They are far more selective in (terms of) who they want to invite (they have their own A-lists).”
Would pitch consultants help?
In overseas markets, pitch consultants and agency brokers help advertisers evaluate a pitch and choose an agency.
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Ravi Deshpande, chief creative officer, Contract Advertising (India), says part of the frustration is that prospective clients don’t know what to expect from the agency. “It would be ideal if the client knew what creatives (and brand of creativity) came from what agency, and how it would suit his brand image. Levi’s had a good idea of what it wanted, and that is why it went to Bartle Bogle Hegarty.”
But, there are two views on whether pitch consultants can make a difference. Meenakshi Madhvani, managing partner at Spatial Access, is a consultant who sits in on pitches and helps clients articulate a brief. She recounts how some agencies use unscrupulous means to swing the pitch in their favour. “In one pitch I was sitting in on, a particular agency professional made a presentation but it turned out that he wasn’t an employee of the agency at all but a freelancer who was hired to swing the scales for the agency. And all this without the client knowing.” Madhvani says such practices are far more common than clients would like to believe. The star performer who swings the pitch and impresses the client may never be seen on the account again.
Says an irate client who does not wish to be identified: “The agency comes with high-powered teams at the time of a pitch and, after winning the business, the people who actually pitched for the business are no longer visible on the account.”
Madhvani says clients often get too involved in brands and products, and don’t know how to articulate a marketing problem. That is one area where consultants can help. Other areas include managing client-agency relationships, helping clients set realistic targets, advising them on ongoing relationships, performance appraisals and performance-linked remuneration.
Agency executives disagree. Deshpande says that the minute pitch consultants come in, the whole pitch becomes process-led rather than intuition-led. Some ad men even believe a consultant’s advice could ending up hitting their fees.
Arvind Sharma, chairman and CEO, Leo Burnett India, doesn’t see any justification for hiring consultants in India. His reasoning: The advertising phenomenon in the US has become very complex because all kinds of specialist units are spread across different regions. In India, clients know who the major players are, since marketing services are developed under major ad networks. In that sense, a pitch consultant’s role is very limited, he says.