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Business News/ Industry / Media/  We have to aggressively think digital first: Tarun Rai
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We have to aggressively think digital first: Tarun Rai

CEO of J. Walter Thompson, South Asia on impact of social media, e-retailer clients, and need to hire people from multi-disciplinary backgrounds

Rai says social media is a nice tool to give one a sense of what’s going right, or not going right, and course correct. Photo: Hemant Mishra/MintPremium
Rai says social media is a nice tool to give one a sense of what’s going right, or not going right, and course correct. Photo: Hemant Mishra/Mint

Tarun Rai, chief executive officer (CEO) of J. Walter Thompson, South Asia, returned to advertising four months ago after seven years of steering Times Group-owned Worldwide Media that publishes niche magazines. Back at the agency, which boasts marquee clients like Nike, Pepsi, Nestlé, Godrej and Hindustan Unilever Ltd (HUL), among others, Rai expects to launch new brands in native advertising and digital, and lead the company to double-digit growth. In an interview, he spoke of the need for advertising agencies to employ people from multi-disciplinary backgrounds and to think digital first. Edited excerpts:

Are you bringing any learnings to advertising from your stint in publishing?

We ran a profitable magazines business and were making money hand over fist. The magazine industry is stagnant, but Worldwide Media grew at a CAGR (compound annual growth rate) of 20%. We started with four magazines and ended up with 15. The important thing was that we went beyond just the magazines: we built events and on-ground properties. Earlier, we had the Filmfare Awards. By the time I left, we had 30 properties. Our business was not just paper and ink. It was servicing communities—whether we did it through the magazine format or through events.

One learning I am bringing back is to create multiple sources of revenue in advertising like I did in the magazines. The agenda is to build revenue streams in three ways: by getting new business, getting new business from existing clients and by acquisitions.

Luckily, new business is coming from new players entering businesses like e-tailers. Existing clients are spending, but their marketing budgets are getting stretched across platforms as it is no longer just about TV, press and outdoor. At Worldwide Media, clients asked us to create content for them. Some asked for videos. We created these videos and content, and I thought it was an agency’s job. To my mind, it was a leak from the communications budget of the client which the traditional agencies were not getting. When I came back, I thought we must get this revenue.

Any specific categories you would like to add to your portfolio via acquisitions?

We acquired Hungama Digital Services, Social Wavelength and Encompass. Going forward, I would like to add design capabilities. We’re thinking if we have to get into shopper marketing, should we go into it with Encompass or not. We’re also looking at making the existing companies bigger.

Because of the acquisitions we have made, already 30-35% of our revenue is coming from the non-traditional media space as a group. I think in the next couple of years, this will be 50%.

J. Walter Thompson has also launched some global initiatives like Colloquial last month. I will fast-track its launch here. Colloquial is exactly in the middleweight content space that I have been talking about like the beauty videos for clients or other editorially driven content. The heavyweight content is advertising, middleweight content is editorially driven, and lightweight content is basically clips from ads and brand messaging that you put on Facebook and Twitter.

Colloquial is all about branded content. Agencies need to think it through carefully because we don’t think content, we think advertising and communication. Today the lines between advertising and content are fast blurring. In the digital medium, content is what people are looking for.

Mirum, a digital agency, was also launched globally last year. We will see how we introduce Mirum in India—either through acquisition or through Hungama and Social Wavelength. With these multiple revenue streams, to me a strong double-digit growth is not so difficult to achieve.

What is the group’s current growth rate?

It is slow. For the last few years, it has been single digits. It is a reflection also of global recession which started in 2009... Of course, competition in the industry has also intensified. Google and Facebook are also competitors in certain respects.

With the attention-deficit consumer getting bombarded with multitudes of messages, isn’t the environment becoming more challenging for advertising?

You can call them challenges or opportunities. The change in environment is a reality. We have multiple screens and attention deficit. So doing something out of your comfort zone is challenging. You have to gear up your skill sets and business models.

Yet, there is so much more to do. Today creativity has to be across platforms. Our role has become more important because, as communicators, people should turn to us to deliver their messages across mediums. They should not approach multiple communication partners as their message could get a bit fuzzy. Agencies like ours are in pole position to be the brand steward, keep the message consistent and deliver it across platforms.

What is the impact of social media on planning and creative?

Look, the basics of brand communication don’t change. We are still in the business of telling interesting stories. Those principles don’t change—you have to have the positioning and brand essence right. But when you have to reach a story through a different medium, then you should have the skill sets to be able to work in that medium. It’s no longer about adaptation. It is about generating and delivering interesting stories in that particular medium. A Twitter medium is very far removed from the traditional advertising medium.

The great news is that feedback from social media comes very quickly. That’s good for planning and creative guys. However, you should take the feedback with a pinch of salt as it’s not research. But social media is a nice tool to give you a sense of what’s going right or not going right and course correct.

Have new advertisers like e-tailers and m-commerce companies changed the fortunes of advertising agencies?

They have turned the fortunes of media companies, not ad agencies. We have some e-tailers as clients. They work differently, their attitudes are different, they are faster. They can take more risks.

Do they worry about brand positioning?

They do, but they are in a hurry. They work differently from the companies which have 50 years of history.

Have they revived outdoor as a medium?

I guess if you are in a hurry and want to make an impact quickly, that’s what you do. It varies from e-commerce to e-commerce company, but when you are flush with funds and in a hurry to build valuation, then for maximum impact you go to as many platforms as you can, and you do it at one shot.

How are creative people adapting to changes in the industry?

You have to think young no matter what your age. There is pressure on senior creative people not to just live on their reputations, but to be able to deliver in the current scenario, which is not a TVC (TV commercial), not a jingle and not just a nice print ad, but digital activity—doing interesting things in digital.

For my agency, I am looking for young creative people who come from multi-disciplinary backgrounds. I want people from media, from digital who are not advertising people. I want them to come in with their original sensibilities and experiences not necessarily embedded in advertising and brands. That will make our lives more interesting.

I tell people, we must think digital first. It doesn’t mean it is digital only, it also doesn’t mean it is digital-plus. We always say ideas should be platform-agnostic, but those are all platitudes. We have to aggressively think digital first. But organization structures take a bit longer to shift and change. And the biggest resistance is not in intention, it’s in implementation.

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Published: 24 Jul 2015, 10:01 PM IST
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