New Delhi: Mindshare, the flagship media buying agency of GroupM, part of WPP Group Plc., the London-based marketing communications group, will create dedicated divisions for large clients that will service all communication needs across media platforms, instead of providing media buying services only.
Mint Marketing Editor Archana Shukla on Mindshare's decision to create dedicated divisions for large clients
In India, Mindshare services around 100 brands. It has already created dedicated divisions for big-ticket clients such as PepsiCo India Holdings Ltd, Vijay Mallya’s UB Group and the country’s largest private bank ICICI Bank Ltd.
“Besides the usual media buying, these independent units will manage all aspects of marketing communication at their end. These will include strategic planning, consulting, business analytics, activation, below-the-line initiatives as well as digital communication, among others,” Ragothaman said, adding that the “divisions will be treated as separate business divisions and they will be accountable for their profit and loss accounts.”
This model will eventually be extended to all Mindshare clients, Ragothaman said.
This is not the first time Mindshare is creating a dedicated team for a company. Hindustan Unilever Ltd (HUL), the country’s largest consumer products company and the biggest advertiser with spends in excess of Rs1,000 crore, has enjoyed the privilege for more than a decade. Mindshare Fulcrum, the division handling HUL brands exclusively, was created in 1995 when both the client and the agency felt that with an increasing number of brands and soaring ad spends, the company deserved undivided and specialized attention.
“When Mindshare set up a separate division for HUL, it was justified as their communication needs were significantly bigger than other clients and they also spent a lot more than most other marketers,” said a media specialist who did not wish to be identified.
“But today, even though HUL still remains the biggest spender, brands such as Vodafone, Nokia, Airtel, even the colas are becoming quite aggressive both in terms of their communication needs and the readiness to spend,” he added.
According to several independent industry estimates, advertising spends in the country grew around 20-22% in 2007 to between Rs17,000 crore and Rs20,000 crore. According to two top media buyers, who did not wish to be named, big advertisers such as Airtel, Vodafone, Coca-Cola and Pepsi are spending more than Rs100 crore on TV advertising alone.
“With increasing ad spends, clients today have become much more demanding. Today, CEOs and CFOs want (an) explanation on how ad bucks are spent and insist on return on investment,” said Ajit Varghese, managing director, Maxus, another media buying agency that is part of GroupM.
The change will also mean more revenue generation possibilities, said Ragothaman. “Providing (a) one-stop shop for all media needs will help us move up the value chain and tap new opportunities of revenue generation,” he added. Media buying fees (or commissions) have shrunk from 15% of the value of the advertising space or time bought to 3-5%.
“In this scenario, advertising and media buying agencies need to look at business development opportunities. Providing clients more services beyond media buying is a winning proposition for both the brands and the agencies,” said Vikram Malhotra, general manager, marketing, Kingfisher Airlines Ltd, part of the UB Group.
Companies seem happy with the move as it will help them integrate all their servicing needs with one agency. And Mindshare has promised to keep all information confidential.
“The strategy ensures privacy and data confidentiality for the clients who trust much of their company’s internal strategy and spends on media with the agencies. Besides, it will save us the running around in employing different agencies for different functions,” said a senior executive at ICICI Bank who didn’t want to be named.