The 1980s and 1990s were exciting times for the advertising industry. A host of new agencies set up shop and some legends passed on the baton. With the corporatisation of the advertising industry you also had the cream of the crop from IIM-A and IIM-C, who could have got any job of their asking, opting to work in the world of advertising. These were young and talented people who were passionate about advertising and they evolved to build many of the agencies that are top of mind today.
If these are the names that built a large part of the advertising industry as we know it today, why are no ad agencies even invited to the IIMs? And no IIM graduate is opting to enter the advertising world. Today, we have a scenario where we are not able to attract the right talent to our industry. Talent is the single largest challenge that the advertising world has to face today. In the context of what I said, we need to introspect as to why this situation has come to pass.
However, when we talk about the advertising business, I am an incurable optimist. What I am seeing now is the resurgence of the entrepreneurial spirit that was seen as dying out. You have a slew of start-ups churning out good work. I sincerely believe that advertising is a people business and wholly dependent on those who give birth to it and those who nurture it. I am not too sure if scale has helped our industry or not. However, it is also a fact that in this corporatised world of ours, we are seeing all the exciting start-ups being bought out by large agency networks, which I don’t think is a bad sign. The entrepreneurs are now monetising the agency, but still able to retain functional autonomy for themselves. This will encourage more young and talented people to come back to advertising. I believe that there was no need at all for the 15 per cent agency commission system to have completely disintegrated the way it has. It was just insecurity on the part of the agencies which at that time decided to discount to be one-up over their rivals. That was all. In the Indian context at that time, there was no need for it. When we use the word globally, we actually talk about two-three huge advertisers. They are the ones who pioneered another way of agency remuneration. Those are the mature advertisers. We had no such alternative. We just cut the branch on which we were sitting.
Also, there’s a very large advertiser cluster in India comprising public sector companies, Central and state government. If you add up their spends, I can assure you that it will be a large part of the pie. These clients do not understand remuneration based on performance. They are accustomed to the tendering of business. If they have a benchmark like industry bodies saying agencies should get a 15 per cent commission, then they cannot rebate. They are happy to go as per the rule. When agencies compete among themselves and discount, it leaves this advertiser group confused and they go into ‘tender’ mode. Do you think agencies can survive on the wafer-thin remuneration?
Smaller agencies will be able to match larger agencies on creativity and other inputs such as advisory services, client servicing and so on.
But the moment you start to say that media and you have no rules, then the biggest man wins. He’s the one who has the clout to squeeze the media and get the most out of them. There smaller agencies do not have a chance.
That’s why some of the smaller agency start-ups do not get into the business of media releases. In a way after this tortuous phase, you will have a more streamlined affair, where agencies will get a fixed fee for their services.
You are seeing the maturing of the Indian advertiser. He is more knowledgeable and knows that there are different service providers and they are happy to acknowledge the presence of each. They have to pay to get value. To sum it up the ad industry can also say that ‘ Acche din aayenge ’.
(As told to Prasad Sangameshwaran)