Speaking at the IAA Knowledge Conclave on 26 October on the theme ‘Emerging Agencies: Taking it to the next level', CVL Srinivas, CEO, GroupM, South Asia, said that more or less all the agencies are in the same boat and that ‘the advertising industry needs to be regenerated’.
He then spoke about the experience he gained in his 20 years across media agencies. "I worked for 20 years across media agencies but went into exile for three to four years in the middle. In those years on exile I learnt more than I did in my 20 year career. One of the dangers people face in large agencies is that their lives tend to become superficial and they need to worry about it. People working in smaller agencies are more down-to-earth and connected," said Srinivas.
Five big waves
Srinivas then spoke about the five big ‘waves’ to be kept in mind by smaller agencies, which could help them grow. The first wave he cited, was the digital one. He asked, "Is digital all hype or is it real?" before going on to state some numbers.
"Digital only contributes to seven per cent (Rs 2,500 crore) of the total ad spends, but still 80 per cent of the conversation time is consumed talking about it. Clients are no more talking about print or television, because they're a given now," said Srinivas.
Keeping with digital, he added, "Digital is growing at 35 to 40 per cent according to projections for the next five years. TV and print are growing, but they're only growing at a single digit number. Digital is already the third biggest medium. FMCGs increased their advertising (on digital) by 45 per cent last year and estimates for the next year say that it'll increase by 60 to 70 per cent. That shows the pace that it's going to grow at. 150 million (12 per cent) of the people in India are connected to digital. According to a study conducted by McKinsey, it'll increase to 450 million in the next three years."
"India has the second largest userbase of Facebook after the USA. 12 million people log on to Facebook everyday in the country; compare that to the 7.5 million people who read The Times of India. This is one of the causes for organisation structures changing and the youth are being empowered as they're the ones tuned into the space. And this gives opportunity for smaller agencies as larger ones carry a lot of baggage," he added.
Srinivas then spoke about an example of a client that's taking digital seriously - Nestle. He referred to Nestle’s social command centre, the physical space inside its office, with screens displaying real time information from social media about its brands as well as competitors. A hybrid team from Maxus and Nestle is tasked with sending out real time replies to queries or complaints on social media.
Explaining his second point, ‘democratisation’, Srinivas said, "If you look at the number of agencies, it has gone up and a lot of different type of agencies have been created. Agencies that provide content for mobile, only search, only social media, only social listening etc. are being created. This means it's getting fragmented. No longer is it a game of only four-five players as a lot more specialised units are being created."
Srinivas pointed to winners at the Big Bang Awards to substantiate his point – where creative and digital victories came from small agencies formed just three or four years ago.”There were young kids in their 20s going up on to stage to pick up awards. I see larger agencies are fearing these smaller agencies because of the competition they could provide," he added.
Rebundling and consolidation
Srinivas' third wave was a reaction caused by ‘democratisation’.
"Clients say that the advertising world has become very complicated. One client of mine has 12 agencies working for them. It has benefits for a client because they're getting specialists, but at the same time because it's such a wide spread across agencies they're not being able to get their RoI figures. So clients are now moving back to one agency. Diversifying services will help smaller agencies," said Srinivas.
Talking about GroupM, Srinivas noted that its specialist agencies are contributing significantly. He said, "There are 10 units under GroupM in India - five media agencies and five specialist agencies. These five specialist agencies are providing GroupM with more revenue than the traditional media agencies."
Srinivas then explained how smaller agencies should look at specific markets. "There's a lot of activity happening in smaller markets. Kerala is an example of a smaller State which has a lot of advertising. Parts of the North and East are following suit. Larger agencies find it harder to cater to these markets because of mindsets and they're not framed to take on the entrepreneurs in these markets. Smaller agencies from these markets can do that as they could understand them easily," said Srinivas.
The fifth and final ‘wave’ in Srinivas' talk was technology. He said, "Technology is proving to be disruptive. Every business today is effected by technology and it's reshaping every industry. In India there are a lot of technology companies now providing media solutions - Amagi Solutions being one example. We're moving away from demographics and TG to targetted audiences. Data is being made available that helps clients target a specific audience. There are even talks about split advertising on television in certain markets."