Live Issue: Competition causing due diligence compromise?

With fragmentation of duties, Shubhangi Mehta wonders whether agencies are taking credibility lightly

Live Issue: Competition causing due diligence compromise?

Goodwill plays an important part when it comes to trusting a brand, whether it’s by the consumer or the agency pitching to handle the brand. But goodwill alone cannot suffice in a business environment. With businesses growing and fragmentation of responsibilities, has due diligence by agencies taken a back seat?

Fragmentation brings with it attendant problems, notes Arvind Sharma, chairman, India sub-continent, Leo Burnett, and president, Advertising Agencies Association of India (AAAI). He says, “Fragmentation of responsibility from one agency to a multitude of agencies has created issues for both client and agency. When there is one agency working on most of the work for a brand, there is more personal touch involved. Today we have a rising trend of separation of agencies. Therefore the in-depth involvement of any agency for a particular brand has become extremely difficult, giving rise to overlooking of over-the-top promises of a brand. Today the client gives a brief and agency works on that brief - no more, no less.”

He reasons that with more volume and spread of work an agency does on a brand, the higher will be its involvement in due diligence measures.

Lloyd Mathias, director, GreenBean Ventures, opines, “Most ethical companies do not work without sufficient research on their part. The level of due diligence also depends on the goodwill of a brand. The question of due diligence does not even arise when working for brand names like Procter & Gamble, Pepsi, Hindustan Unilever etc.”

He adds, “The onus of delivering according to the promises made (product proposition) always stays with the brand. An agency can look at some base level structure that looks into due diligence, but their work rests on the brief given to them. A little research on claims and promises made by the advertiser is all what an agency would really be able to do.”

Abhijit Avasthi, national creative director, Ogilvy India, does not agree that there is a lack of due diligence. He counters, “When an agency goes in to pitch for a brand, there is enough research and reading done on that particular brand. (On) The validity of the claims made by the brand? Well, that is subjective. Mostly the claims are accepted on face value. Yes, we do give suggestions when we feel that the claims are too far-fetched, but our due diligence is restricted to that.”
With consumers and agencies today being more aware, he notes that the level of due diligence all around is much more than it was earlier.

On the other hand, Pratap Bose, COO, DDB Mudra Group, holds the view that there is definitely paucity of due diligence. He explains, “With the intensity of competition, the agency is forced to deliver numbers especially in holding groups. In order to get a hold of new businesses there are instances where one takes a risk; at times a calculated risk. There are times when the risk pays back and there are times when it backfires. For example, in case of non-payment by client, the risk isn’t fruitful at all. Though this isn’t a pretty prevalent situation but yes, it does occur. In large holding companies, there are strict ground rules set for due diligence. But the question is, how strictly are they followed?”

He notes that the concept of due diligence also differs based on the state of an agency. While large MNC agencies have guidelines to be followed, it may not be the case for everyone, he points out. So it is the size of the business that makes a difference? “It’s not the size of the business that matters when it comes to due diligence, it’s the protocol that an agency follows.”

Abraham Alapatt, head – marketing, Thomas Cook, concurs. He says, “Most agency client management teams are populated by junior professionals who do not see the importance and value of due diligence and truly getting involved with the client’s brand and marketing challenges.”

 

  

Marketer

Abraham Alapatt, head – marketing, Thomas Cook

“Most agency client management teams are populated by junior professionals who do not see the importance and value of due diligence and truly getting involved with the client’s brand and marketing challenges.”

 

  

Agency

Arvind Sharma, chairman, India sub-continent, Leo Burnett

“Today we have a rising trend of separation of agencies. Therefore the in-depth involvement of any agency for a particular brand has become extremely difficult, giving rise to overlooking of over-the-top promises of a brand. Today the client gives a brief and agency works on that brief - no more, no less.”

 

  

Agency

Abhijit Avasthi, national creative director, Ogilvy India

“Mostly the claims made by the brand are accepted on face value. Yes, we do give suggestions when we feel that the claims are too far-fetched, but our due diligence is restricted to that. ”

 

  

Agency

Pratap Bose, chief operating officer, DDB Mudra Group

“It’s not the size of the business that matters when it comes to due diligence, it’s the protocol that an agency follows.”

 

 

  

Marketer

Lloyd Mathias, director, GreenBean Ventures

“The onus of delivering according to the promises made always stays with the brand. An agency can look at some base level structure that looks into due diligence, but their work rests on the brief given to them. A little research on claims and promises made by the advertiser is all what an agency would really be able to do.”

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3 October 2014