V Ramani, CEO, MPG, South Asia and Mediaturf Worldwide, is a head honcho who straddles the offline world of mainstream planning and buying, with the online world of banners ads and campaigns with ease. Ramani has been successfully leading the charge at MPG for the last twenty-two months, while Mediaturf has been his baby for the last four years. Both agencies have grown in size and stature under his tutelage, and in this freewheeling conversation with Viveat Susan Pinto of agencyfaqs!, he lists out his priorities for the two companies.

Q. How would you describe the journey of MPG so far? 2004 seems to be a good year for you with LG Care, Kejian Mobiles and Mother Dairy under your belt. What is the mix of clients you are looking at?

A. For me, the next in line will be categories such as automobiles, insurance and mutual funds. I don’t want to go beyond these categories. My current portfolio includes FMCG companies, IT, mobile phones and air conditioners. And let me tell you that these businesses are pretty exciting.

Regarding MPG’s journey so far, well, I am more than delighted with its performance. Let me put it this way. It has all gone as per plan. We were clear from the beginning that we would not spread ourselves too thin or dilute our energies across the country. We wanted to be focused about the markets we were targeting, and the clients we were looking at. Leaving aside Kejian Mobiles, which happened out of the blue, every other acquisition was planned in the first two to three months of setting up shop.

Most agencies today pay a price for hunting excessively and getting too many businesses, which may not adequately compensate them. Resources are allocated, people are put on these businesses, but there is no real take-home at the end of the day. On the other hand, when you go after a few handpicked clients, at least you are assured of some returns at the end of the day. You are not acquiring businesses haphazardly, but are going about the process in a planned manner.

Q. Considering that your billings are just under Rs 250-crore at this point, is the Rs 500-crore mark your next target?

A. I am not in the numbers game. I want my clutch of 25 clients. This number could either go up or down. But I am driven by the success of our clients and the way they appreciate us and pay us for our work. I am not driven by the fact that a Rs 500-crore or a Rs 600-crore company is better than a Rs 300-crore or a Rs 400-crore enterprise. I would rather run a Rs 400-crore successful company than a Rs 600-crore not-so-successful enterprise.

Q. What is the kind of effort you put in when pitching? How do you know which brand is most appropriate for the agency?

A. There is no scientific process as such. We look at the kind of names we would like to have on our roster. Frankly, it is purely fame-driven. We basically look at our wish list. That’s it. However, in some cases, we do target names that do not mean anything to anybody today, but could be big tomorrow. In fact, we have taken shots at clients that are dream-driven, who are small, but have a vision in place to make it big and are keen to partner with us to take that agenda forward. We love such clients.

Q. Considering that you are responsible for the topline growth of the agency, is it feasible for you to take-up “dream-driven clients”?

A. I do not do anything without a clear understanding with the client. These are clients that do not need five or six people to service them. They are quite happy getting strategic help from the top that too on a limited basis. I service these clients myself. And all it takes is an hour a week. That’s making significant value to them.

Q. Given the number of players in the media agency space, how are you differentiating MPG from the others? How does MPG International help you in this regard?

A. Differentiation can be viewed from various angles. If you are asking me about our tools and processes, then barring one, which is a significantly superior product, most of the others are on par with what other rival agencies have. The point is that these tools have not been customised to cater to the idiosyncrasies of the Indian market. As you are aware, India is a diverse market. Hence, the Indian tools operate the way they do in the UK, or the US, or wherever they are installed. To that extent they cannot produce the best possible results.

However in the last three-and-a-half months, we have begun work on customising two of our six tools to Indian conditions.

Q. But most agencies, who have an international affiliation do customise their tools to Indian conditions, so how different are you?

A. Actually they don’t. If you were to analyse the tools of a media agency across various markets in all likelihood you will find them to be just the same. There is hardly any customisation. We have actually attempted to adapt two of our tools to the Indian market, which makes us a first in the area.

Having said that, if you were to ask me about the time frame of completion of customisation, then I really wouldn’t be able to tell you when. It could take me two weeks or three weeks. It's an effort. I know I will be eventually ready. 'When?' is a question at this point.

Q. If one was to look at the break-up of MPG markets in the country, the agency is strong in Delhi, Bangalore and Chennai, while Mumbai is still a worry area. Why is this so? Are you looking to correct this anomaly over time?

A. Mumbai is not a worry area. In fact, we opted to go after businesses in Delhi because we were clear that we would focus on one market at a time as far as these two large centres were concerned. Bangalore and Chennai do not require too much effort. The question then was to choose between Delhi and Mumbai, and we went with Delhi first. That’s it.

If you ask me, I still need some more time in Delhi to exploit its potential to the hilt. I would need about a month-and-a-half before I can set my eyes on the commercial capital of India. I have begun doing my rounds in terms of meeting up clients in Mumbai, but there is still some more time I need to spend in Delhi.

As far as Bangalore and Chennai go, we have signed up about 7-8 clients between these two cities. But these are players, who will get on to the horizon within a year. They include some significant retail names in Chennai, as well as brands that have the potential to grow in Bangalore. So it is not as if we have restricted ourselves to LG Care in Chennai, and Intel and Dell in Bangalore.

Q. What is your take on the agency remuneration system? Do you subscribe to a fee-based or commission-based system?

A. Whether it's a fee, or a commission-based work, it doesn’t really matter because the numbers add up to the same pie. At the end of the day, I will look at my billings, my total cost, and figure out how much I am drawing. If it is a decent margin, well and fine. However, if you ask me, the situation is definitely not so. Indeed, it is getting very tight not just for me, but for the industry in general.

I would say that some of us had drastically slipped in the sheer desperation of being in the business, not realising that it was a one-way street, and the moment you slip, everybody else does too. It’s a constant struggle to even maintain your numbers, leave alone make a decent margin. I have been a bit fortunate because we have a couple of clients who’ve been very transparent in their dealings with us. I don’t think there are many clients out there, who are doing that.

As an industry, the downward trend happened fifty years ago, when the first of the AOR companies were being set up, be it Zenith, Carat or MPG (MPG is the second-oldest agency in the world; it started in Barcelona, Spain).

The suits (that is, the client servicing/business professionals of an agency) sitting in UK figured out there was something wrong with the whole process. If media broke away from creative, it would affect their margins drastically. Their priority was to safeguard the interests of the creative side of the business, while media hardly mattered to them.

After some quick number crunching, they arrived at a 35 per cent costing for media, while 65 per cent was billed as the creative cost to an agency. What’s more? Media margins were fixed at 2.5 per cent to creative’s 12.5 per cent within the 15 per cent commission system. Which means that 35 per cent of media cost yields an income in the region of 16.67 per cent, while creative gets the lion’s share of 83.33 per cent against a perceived cost of 65 per cent. The discrepancy is there for everybody to see. And, we are paying a price for it for all these years. Today, the scenario is such that we have some very serious costs, but the revenues are not in line with the expenditure incurred.

The 15 per cent commission system was a well-formulated structure that took care of all agency expenses ensuring there was some profit at the end of the day. However, when media and creative became two separate businesses, there was no such emphasis to have a fair remuneration system as far as media went, with the result that media agencies have had to bear the brunt of having paltry margins.

This problem invariably is linked to the one, concerning talent. Today, one finds less talent getting attracted to the media business. Young media professionals prefer joining a channel as opposed to an agency because the pay scales at a media agency are much lower. When creative and media were together, talent still stayed in advertising. However, today the case is not so. People would rather join a creative agency than a media agency because they are remunerated much better at a creative setup. And, if talent goes elsewhere, sooner or later we will have to contend with mediocrity in the business. So we better do something about it.

Q. Tell us something about Mediaturf. What is the company’s turnover? How have you ensured that it is the premier online ad and marketing agency?

A. In an industry, which is about Rs 60-crore, Mediaturf is just above 50 per cent of the market. So we have a turnover of about Rs 30-crore. But that is just a number, a factoid. It does not excite me. I am not overtly worried about market share. The primary driver for us over the last four years has been that no six-month period has been similar to the other. We have constantly re-engineered ourselves on the basis of one or the other technology. Be it a creative-based technology or a lead management-based technology or a CRM technology, we have nine technology-based products in the market in all. Some clients have been using all nine products, still others have opted for a select few based on what suits them and what we recommend to them. So it's really a mix of both.

In terms of performance, all I can say is that in a purely rate-driven market, we took it on ourselves to provide value. That, in our opinion, is a big change. Our core competence lies in the fact that we have complete knowledge and understanding of what is happening to every exposure sent out in the market. In other words, I know on a live basis what happens to every exposure. And that too for a large segment of people.

If I know that a particular kind of communication is working well for a client during a particular time band, then that information becomes very valuable for me. I can change my campaign delivery to suit client needs or even make the best of consumer behaviour for that matter. A rescheduling option allows me to do that and this is how I have managed to scale up operations.

Q. What is your vision for Mediaturf? How would you want the company to evolve from now?

A. There are a couple of things on our mind. For one, we are not MEDIA. We are a marketing and technology solutions company. Some clients know about this, while still others are clueless.

Second, with marketing and technology solutions comes data. And we would like everyone to know that we are also into data.

Third, we are not Mediaturf, but Mediaturf Worldwide. This would mean that India would be one among the myriad markets that we would exploit. However, if you ask me, the situation has not been so – over the last four years. 90 per cent of our business emanates from India, while a motley 10 per cent are overseas assignments. This ratio has to change. Whether we would need people in overseas markets or remote control those markets will be clear in the course of time. I would imagine that it would be a mix of both. Some markets do require hands-on support and expertise, while still others can do without it.

August 23, 2004
Mumbai
You can write to V Ramani at
v.ramani@mpgindia.com