Seven months of the lockdown in India have has taken a toll on the advertising industry and with ‘normalcy’ still a long way away, research reports suggest the worst is yet to come. Last week, KPMG’s annual media and entertainment report
stated that 2021 is supposed to be a year when TV, print, radio advertising de-growing at staggering rates.
But, Tarun Rai, chairman and group chief executive officer, Wunderman Thompson South Asia, isn’t too worried as he looks to be optimistic rather than pessimistic about the future. The agency is now ‘digital ready’ looking to take on agencies outside the advertising space which makes Rai believe the worst is now behind him and the agency.
The last six months - how challenging have they been for Wunderman Thompson?
They have been challenging for sure. The pandemic has upended everything that we knew about work life, economy and how things work in general.
At the same time it also helped reinforce a lot of my beliefs about the organisation and people within it.
Firstly, one would think an organisation of our size with more than a thousand people, would be slow to respond to a four-hour notice for a complete lockdown. It took us 24 hours to move our entire staff into WFH mode. Within 48 hours we were fully operational. We also had a studio which had bigger PCs and we sorted that out too. Our studio people didn't have stuff like WiFi access and we got all of it sorted. I was very impressed by the agility of our organisation.
It was also about how quickly people adapted to work from home. It's not easy. I've always believed, even during my earlier stint at Worldwide Media – that it is always about output and not input. Back then it was about getting the magazine out.
We have had a flexible approach at Wunderman Thompson, even before this crisis. But not coming in on a day is one thing and 1,000 people working from home is a different kettle of fish. People responded quickly and responsibly which reinforced my trust in my people at the agency. It's not just me and the leadership team, but it was about the whole team. 95% of the people are self-motivated within the agency and don't have to be micro-managed.
Finally, I was most impressed by our leadership. They became more empathetic for sure. We've been raiding people's houses for meetings. It wasn't just about working from home - it's the challenges about working from home, during a pandemic. People had anxiety, children at home, no help for household chores coming. Despite all of that people managed their day very well. I'm impressed with the agility our organisation showed.
Has the agency opened any offices in India yet? How are you planning to return to the office?
There are plans for sure. But I'll tell you - we can work efficiently from home and luckily for us we are a knowledge based industry and in terms of tech we are fine unlike our clients who have production and manufacturing which doesn’t allow them to work from home. But, despite the fact that we were working efficiently, I wanted a sense of normalcy to return and that is possible, when we return to office. On 15 June, we opened our Bengaluru office. At that time the city had only 250 cases and 10 deaths. Some of our clients in retail and fashion had opened shops. So, we thought of returning to work. We told people it was voluntary and they could make their decision to come in or not. We had 10-15% occupancy for a couple of weeks and then Bengaluru started spiking and we had no option but to shut offices again.
We haven't put a timeline as to when we would open. It’s a fluid situation. Now we’re seeing bars and restaurants open in Maharashtra. We aren't in any hurry to open offices, because we are managing well but to get that sense of normalcy and get that energy around a coffee or pool table we want to get it started. Realistically, we believe it will be January by when we can start trickling back to office. It won't be full staff but I would be quite happy if we could make a 50-50 situation permanent - 50% working remotely or from home and 50% from office. Already, our new office in Mumbai was supposed to be an agile office. You expect 20-25% of your staff not being in office during any given time. They're either travelling, or at client meetings, or on holiday.
There are always advantages when works from home too. Our HR head has said work has exploded in terms, but then travel time has reduced.
Last week the Publicis CEO (Arthur Sadoun) stated that the group has exhausted everything that remote work could teach them - what's your POV on the same?
I don't know what he meant by that exactly, but to me, as I said it's reinforced a lot of things that I believed in. I see a lot more collaboration. One of my favourite slides to our leadership team and in pitches to clients has been a line which said ‘geography is history’. As long as we have the spirit of collaboration we can continue working from home. We were encouraging it prior to this.
We always told clients we’ll get them the best talent and we got them the best on their screen from across our offices. The clients had consultants on board from different countries too.
Suddenly, more people have benefited from Zoom. But Zoom was always around. So, the pandemic has been an accelerant to a small little fire which has now become a raging fire. It's about using these tools and people wonder why we weren't using them before.
Motivation and energy levels are still pretty high. It's been six months, when we thought it'll be three weeks when the lockdown began. We seem to have found our groove now.
According to our new business league, Wunderman Thompson bagged 40 account wins so far this year. In terms of number of accounts won, it places Wunderman Thompson on top of the table, but in terms of revenue it’s placed outside the top five. Are clients now paying lesser for retainers because the overall revenue in terms of new business wins has dipped by 40%?
Firstly, the number of client wins is definite and a fact. The revenue is an estimate. It depends on how people fill in the estimated revenue. Having said that what is happening is that the very big pitches have actually been postponed. We saw this specially in the first three-four months of the lockdown. Now, they're starting to take place.
We are also seeing stuff like marketing directors under lockdown because of Covid. So, it's largely been an issue that bigger pitches are taking longer for decision making or the bigger pitches have been postponed.
For Wunderman Thompson, after the merger we got a huge amount of tech in. So between Wunderman Thompson and Mirum, we get called for major pitches which include martech and e-commerce now. We're not competing with other agencies but companies in the tech space as well. We're pitching to CTOs now and not just CMOs. The number you mentioned has now reached 50. I think, what I admire again, is that during the pandemic we partnered our clients, and also had it in us to go after new business pitches. Pitches drive motivation and celebrations for sure.
I'm hoping we reach the number of 100 again this year.
Despite the fact that we're working in these challenging times, we have been also been entering and sweeping award functions.
The IPL has seen a major influx of advertising. Now with the festive season also upon us - do you believe brands are open to spending more?
For sure. I've been maintaining and telling brands during the peak of the crisis, not to go silent. There's enough data and Wunderman Thompson global has also published reports. This is not the first recession we have faced. Since 1923, we have had 16 recessions in the world. We have come through them and we'll come through this one too. Six of the 16 recessions were pandemic linked. So we have seen them before, albeit not on the same scale. We've been through swine flu, SARS, bird flu etc. We will recover definitely and when we get past this we want consumers to feel that brands supported them during this time. While brands and companies are challenged, consumers are challenged more. So we have to be more relevant and empathetic.
Now, when we believe the worst is behind us, and whether it's a V-shaped, U-shaped or W-shaped recovery, it will depend on the industry the brand operates in.
Cricket has started. The festive season is upon us. If clients and brands do not spend adequately, they’ll be lost. As it is, 40% of the advertising action takes place from September to December, so it's the time to maximise spends and that's what we're advising our clients.
In a crisis all companies and brands in a category are in the same spot. The difference between smarter brands and the rest will come into play when we come out of a recession. So this depends on what we do with the consumer during the crisis and what we do after it. Brands that have spent during this will recover nine times faster according to a study. It translates into a huge gain of market share. So, our advice to brands is, that the worst is behind us and things will only get better.
While you’re stating that the worst is behind us, according to a recent KPMG report - advertising revenues on TV, print, radio, film, OOH are going to dip further next year. Do you agree with this?
I saw that report too. It's anyone's guess and they're talking about the year 2021. But we at Wunderman Thompson are no longer dependent on ad revenues. Mainline growth is challenging for us, but our digital growth is in double digits. We expect to end the year with digital contributing to 40% of our total revenues. And then if that's the case even with the KPMG report, which reported digital advertising will grow, we will continue to grow.
I don't want more of our clients’ ad and communication budgets, I want a greater share of their entire marketing budget which includes data, tech, e-commerce and the likes. Clients are spending lesser with traditional agencies and more through their other spends. That's where Wunderman Thompson can help. The other thing that's happening is that clients are seeing the need increasingly to be more efficient with their spending. Gone are the days when clients have the luxury of working with 10 partners to send their message to one consumer. In a lot of cases, we've been asked whether we can handle work of clients that other partners were doing. So, consolidation is happening. Even from a cost POV it's more efficient.
As an economy we can't afford lockdowns and we need to be resourceful and careful. We're lucky as an industry we can still operate from home. We've seen tragedies in the last six months it's been a huge human tragedy. But, we have two options - be optimistic or pessimistic. I rather be optimistic and the trends are there for me to back that. If cricket can be played abroad and get those staggering viewership numbers, we can all figure ways of doing things.
In a media interview last year you stated that the group wanted to grow at 15% this year. Given the pandemic, how far are you from that growth figure?
Overall, at a group level we have single digit de-growth. There are a few months to go before the year ends. Because we're no longer a conventional agency, we're in a better position (than the others). It will be tough and we don't know whether we will be in the positive when the year ends. Some of our large clients work on a commission based revenue too, so, we need to wait and watch.
Any other trends and learnings you could share?
It's no longer about products, but product solutions. Consumers are looking at stuff that's as basic as how can the product reach to them. So it's about product solutions.
Interestingly every business is a health business now. When you're travelling, flying, hiring a taxi, buying a product, everything is revolving around health. Hotels are also mentioning the SOPs for health while booking rooms.
Also, there are trends which were visible earlier that are just getting accelerated now. Wunderman Thompson's biggest strength is retail. Only 5% of revenues were coming from e-com.
Everyone knew it was the next big thing but people weren't paying so much attention to it. Now every client is talking about e-com.
It's strange to say it's a silver lining because of the human tragedy, but if there was one, we're doing things today that we should have done yesterday.