Publicis Groupe’s newly appointed chief operating officer and Publicis Media CEO Steve King was in India last month to meet senior leadership and clients. With a focus on future-readiness, Publicis Groupe made a $4 billion acquisition of data-driven firm Epsilon, which also has a strong base in India. “Our business is doubling in India every three years. We have grown from 200 to 1,500 employees strong in the country," he said.
A burgeoning middle class, globalization, digitisation and strong growth in local businesses are driving Publicis’s business in India. As the third- largest media buying agency in the country, Publicis handles both big multinationals and new-age businesses such as Ola, Nykaa, Zivame, Reckitt Benckiser and Motorola.
In an interview, King talks about India being its fastest-growing market, and how word-of-mouth is driving purchases among millennials, while ‘voice’ becomes a big digital trend. Edited excerpts:
How has this year been in terms of client wins, capacity building and investments?
Our business is doubling in India every three years and we have grown from 200 to 1,500 employees strong. The Indian economy is much more vibrant as compared to the global markets. Media spends have doubled in the last 10 years here. We have seen huge growth in the time spent on the internet. The internet spends have gone up 20 times in the last 10 years. We realized that our core business is really being challenged and, therefore, we decided to pivot to digital five years ago, when we acquired digital agency Sapient. We have made the biggest acquisition in the history of Publicis Groupe by investing $4 billion in acquiring Epsilon, which will help deliver solutions around data, technology and engineering. Epsilon comprises 2,000 India-based engineers and has a strong presence in the country. Over the last six years, we have recognized that we have to make the next big change in our operations partly because of the changing economic and media landscape, which is increasingly becoming data-led.
What is the percentage revenue that Publicis Media gets from the digital platforms?
More than 55% of our revenue is coming from digital platforms in India. Earlier, we used to have a digital department in every market and a global digital head, but we no longer have that. Digital has become the oxygen we breathe. Everything is being touched by digital and media buying is becoming programmatic, and that’s a market trend everywhere. Digital is providing us with the opportunity to target a small cohort based on the known behaviour through addressable digital channels in a highly effective way.
How do you negotiate with big media platforms such as Google, Facebook and Amazon, which are eating into your revenue pie?
We have made transformational acquisitions locally through companies, such as Resultrix and Convonix, which made us a leader in performance marketing (an online marketing model in which the advertiser only pays for the results achieved). Together, we now control 70% of the country’s performance marketing spends, with clients such as Uber, Ola, Lenovo, Hotstar and Zee5. However, I must add that without digital platforms, such as Facebook, Google, Amazon or Tencent, these businesses wouldn’t survive. We are the market leader in performance marketing so we need to have these platforms as partners. We definitely do not call them an enemy or even a frenemy. Our clients use them because they get good return on investment (RoI) on these platforms. I would say these platforms are a vital part of the changing ecosystem but clients, in some cases, find these platforms intrusive and competitive as many of our clients are trying to sell directly to the consumers and, in that case, Amazon becomes a competitor. That’s a huge challenge because our clients will not have direct control over consumer data or pricing.
If you had asked this question 5-10 years ago, Google and Facebook were not such a big threat that they are today. Clients are saying that these platforms are becoming so strong that they are being used as a gateway to distribution. Actually, we have a concern that these companies are getting too powerful for us, so our role is to advise our clients which media platforms are best for them to reach out to the target consumers. There’s never going to be a day when we are not going to be hugely reliant on these platforms, but many of our clients are taking a more cautious view, particularly the e-commerce platforms.
Millennials are difficult to convince to buy products or services. How are you using advertising to convince this cohort?
Interestingly, millennials are getting influenced by what friends and family are recommending than by a mass 30-second television commercial. Therefore, the role of influencers, social media, reviews and customized content is so much more valuable among this set of consumers. Uber, a cab-hailing app immensely popular among millennials, became successful because it has built its marketing communication leveraging social references and influencer- driven endorsements. Therefore, I feel using a combination of different media channels continues to be an effective way even to reach millennials.
Has mobile become the go-to medium to reach out to consumers in India?
Mobile has already become the go-to medium to connect with consumers. We are seeing an immense amount of uptake of this medium among Indians, which is creating huge ad inventory on mobile platforms. Mobile-led advertising has accelerated in a big way, especially in the last two years after the Jio launch. Apart from cheaper data, the affordable smartphones and intuitive mobile interfaces have further fuelled this trend.
What are the big trends that are defining the India market?
Voice, vernacular languages and videos are the three big trends which are defining India market. This is in line with what the Indian population needed. Voice is important because not everybody is comfortable with English/Hindi, videos work because people love entertainment and vernacular offers deeper engagement and connection. By 2023, India will see digital video viewership growing by 31.5%. The mobile internet users will grow by 43.6%, while smartphone users will grow by 36.4%. All this data further strengthen the key trends that are defining the India market today.
Is influencer marketing declining?
Influencer marketing has worked really well for categories such as beauty and fashion in the past few years. It is reaching a plateau, therefore, influencers are being questioned around their authenticity and reach. I still believe there is room for this kind of marketing because there are still a bunch of influencers who are doing good work. However, consumers are getting smarter by each day. They can see through a brand plug easily.
How will advertising shape up, especially on digital platforms?
We will see the use of data and technology to create customized content, which is non-intrusive and creates impact. Our goal is to create a future where we can use artificial intelligence (AI) and data to create custom messages (predominantly videos) to a specific set of audience, who have shown an intention to buy a particular product or service. Internet is an avalanche of unwanted messages, which is where the digital media platforms should show responsibility by filtering such messages. People are choosing ad blockers because the ads that are being served to them are not relevant and intrusive. I think consumers do not mind advertising as long as it is relevant and engaging.
What is the next big thing to happen in communication technology?
I feel 5G will redefine the way we communicate and the speed at which we receive information. It would be 10x faster than 4G, will power everything from virtual reality (VR) to smart cities and self-driving cars. By 2021, the number of 5G connections is estimated to reach between 20-100 million, with projected spend on 5G mobile infrastructure to be $2.3 billion. It would be an exciting opportunity for brands and their communication partners. Over next five years, digital reality, blockchain and cognitive will become as important as digital experiences, analytics and the cloud are today.