afaqs!

WPP may play a larger role in LG Ad

By Anushree Bhattacharyya , afaqs!, New Delhi | In Advertising | June 10, 2011
The Korea-based advertising agency that set up base in India last year, has won a couple of important businesses of LG Electronics in the recent past; the aim is to handle the complete portfolio in the next two-three years.

For LG Ad, there are multiple ways to function, and one such preferred route is through partnerships. The agency is thus looking at a global collaboration, for which talks are on.

Currently, LG Ad has three options - the first is allowing WPP to increase its present stake of 36 per cent that it bought through Ogilvy and Young & Rubicam, and merging its business under the umbrella of the advertising conglomerate.

The second option available is to join hands with one of the WPP agencies with global presence, including in India, and form a joint venture.

The third option open to the agency is joining hands with any other (non-WPP) agency that has a global presence.

LG Ad aims to close the deal sometime next year.

Going ahead, the agency is also open to handling non-LG clients, but for the time being, it's about consolidating its presence in India, by consolidating all LG Electronics businesses under its roof.

The Korea-based LG Ad is also venturing to turn itself into the master agency for consumer durables and electronic goods manufacturing company LG Electronics, in the next two-three years. The agency currently handles a chunk of its business, including the entire home entertainment (HE) range, which includes all audio-visual products and televisions, apart from the air-conditioner and water-purifier accounts that it bagged in the last one year.

Currently, the pitch is on for LG's range of microwaves and washing machines. However, rumour has it that both the businesses are likely to move to LG Ad.

Speaking to afaqs!, A J Lee, senior vice-president, global account division, HS Ad (as the agency is known in Korea), says, "In countries like China and Korea, we handle almost 95 per cent businesses of LG Electronics. We want to follow the same path for LG Ad in India, as well."

In 2007, the WPP promoted Y&R had won the global creative mandate of LG Electronics. Since then, LG Electronics has been calling both the agencies to pitch their thoughts on various businesses, following which the creative business goes to either of the agencies on the roster. The electronics major has a Global Marketing Office (GMO) in Seoul, South Korea, from where all major decisions are taken, which are then followed by the rest of the offices across the globe.

Lee explains, "In 2007, when Y&R bagged the global mandate, we had very limited presence. It was after we started expanding almost two years ago to places like India and Dubai that LG Electronics called us to handle the businesses in other countries, as well. However, it was not an easy deal as we had to fight through competition in terms of creative pitch."

The agency is stronger in countries such as China and Korea, and now, India (with a bulk of the businesses moving from Rediffusion-Y&R), but in the United States and South American countries, it is Y&R that is handling the majority of the businesses.

As part of its expansion plans, the agency, which currently has only one office in India (in Delhi) is also looking at establishing offices in the other metros, including Mumbai, Chennai, Kolkata and Bengaluru, by early next year. According to Lee, the next level growth will involve expanding to other cities to ensure its presence in all major centres where the client is present in India.

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