Next month, the Indian Newspapers Society (INS) will sit on deciding the accreditation of Motivation Advertising, an 18-year-old Mumbai-based agency that first shot into prominence about two years back. That is when lakhs of newspaper readers across the country woke up to full-page advertisements (many colour) of Wintech Computers and Zap Infotech carrying the key number of Motivation. Coming almost from nowhere, Motivation gathered terrific awareness, and business, before receding back to oblivion, all of a sudden last year. (For the record, the agency was nominated at the Abbys 2000 for press recruitment advertising.) Late last year (October 24), it was served with a notice by INS for defaulting on payments to most of India's leading dailies to the tune of Rs 6 crore. The notice period ended June 30, 2001.
"The INS may decide to either extend the notice period or disaccredit the agency after that," according to a senior INS member. INS disaccredits an advertising agency if outstandings exceed a certain percentage of monthly net billings (total billings minus agency commission). This is gauged from the monthly billings statements that all publications submit to the INS. Normally, all INS-accredited agencies are allowed a credit period of 60 days. To get an accreditation, an agency has to not only clear all dues but also provide a bank guarantee of Rs 10 lakh for provisional accreditation and Rs 20 lakh for full accreditation.
It was difficult obtaining Motivation's stand on the issue. For one, the phone numbers of the agency "do not exist", in the words of MTNL's automated machines. Ali Merchant (no connection to the Triton shareholder), Motivation CEO and son-in-law of founder Abid Lakhani, was not too keen on an interview once we managed to get through on his cellphone. "How will I gain by speaking to you?" he shot back. He did open up after some persistent persuasion. "I am going slow now," said Merchant.
He credits Motivation with the head-spinning short-term success of both Wintech and Zap, two computer-training institutes that came into public light around 1998. "My agency created them," he exclaims. Wintech was the flagship company of the Mithiani brothers - Arif, Abbas and Murtaza - in 1987. Zap followed later, inviting both prospective students and franchisees to part with monies around 1998. Full-page advertisements in the likes of the Times of India and the Hindustan Times were a good way of establishing credentials. The ads were created by Motivation.
"They approached me," recalls Merchant. "We were invited for the pitch, along with two-three other small agencies." The monies weren't huge to begin with, only a few crores. But by 2000, the spends displayed unhealthy signals. "Last year, the two were spending upwards of Rs 15 crore in print alone," says Merchant. Motivation was the agency handling all print and outdoor releases. As a result, the agency chugging along at 15-20 per cent growth rate, leapfrogged at 200 per cent plus in 1999 and 2000. "I was uncomfortable with their speed and told them to slow down," says Merchant. "But they said you needed to be fast in the IT business."
Too fast, to be sure. In May 2000, Murtaza Mithiani, MD, Wintech Computers, told the Financial Express that he had increased the company's ad spend by 70 per cent to Rs 42 crore. This coincided with the company's first forays into television advertising around late 1999. "Through the campaign, we sent the message across to the student community that your future is secure if you come to Wintech," he said about the first TV spot. A message board on apnaguide.com is a ready testimony to what students of both Wintech and Zap had to suffer. Franchisees had their own sorrows to narrate to the media. Wintech is said to have collected Rs 10-20 lakh from each franchisee and charged a student between Rs 15,000-30,000 for a single course. Wintech operated arms like Wintech Software Solutions, Wintech Placements and Wintech International.
Zap Infotech was inviting franchisees around May last year to pay Rs 8 lakh upfront to become a franchisee for its internet portal: jabchaho.com. The franchisee was then required to enroll at least 100 customers to form an 'internet users club'. Against his payment, he would receive 100 audio-video kits to be sold to the potential club members. Interestingly, Zap Infotech made news when it was bought by Sun Infoways last year in an all-stock deal valued at Rs 475 crore. It was seen as the year's second biggest merger of two software companies. Commenting on the deal, Ketan Shrimankar, director, Upstart Advisors, a venture capital and investment advisory firm, wrote in indiatimes: "All-stock deals are, as a wag observed, like two drunks trying to support each other".
The party ended some time early this year. Last March, Motivation "broke all connections with Zap and Infotech," according to Merchant. By end 2000, the two companies had also began using Rashtriya and Parichay, recalls Merchant. "I believe they have also been hurt to the extent of Rs 2-3 crore or so." So are some television channels, though we could not dig out exact figures on the same. But going by Murtaza's claim of an ad spend of Rs 42 crore in 2000 and Merchant's print figures of Rs 15 crore, the company may have spent at least over Rs 20 crore on television. "I remember they were doing something with Zee on Sawaal Dus Crore Ka," recalls Merchant.
Wintech and Zap closed operations around February 2001, he says. The promoters are absconding. Merchant is confident he will bounce back. "I am not doing any business presently," he says. "But I have a good team." The size has withered, from a high of 43 to a claimed figure of 13. "But I tell everybody, 'don't do any business with Zap and Wintech'". Merchant says he is fighting his former clients in court currently. "Nobody knows where they are," he muses. "Would the thief leave a trace?"
© 2001 agencyfaqs!