SMG: An action-filled 2012

In a quick interaction at the agency's Mumbai office, afaqs! catches up with Thierry Jadot, executive vice-president, emerging markets, Starcom MediaVest Group, and chief executive officer, Starcom MediaVest Group, France, John Sheehy, president, global operations, Starcom MediaVest Group, and CVL Srinivas, managing director, LiquidThread, Asia-Pacific, and chairman, Starcom MediaVest Group, India.

The trio spoke about the power of the digital media and SMG's plans for the coming year, amongst other things.

Excerpts:

afaqs!: In mid 2011, when Jadot was appointed to his current role, the general plan was to divide the global scene into emerging markets (markets with potential for growth), dynamic markets (mature markets that already have high volumes of business), and core markets (stable markets with mid-sized volumes and some potential for growth). Explain how India fits into this mix.

afaqs!: How has this plan worked out for you so far?

Jadot: In India, we experienced 20 per cent growth in 2011 as compared to 2010. What is interesting in India is that we are developing capabilities and revenues in digital and content, and not just in traditional media. In China, things are going well because we are experiencing steady growth. Among other markets, Russia is going well, but is not at the level of growth in China or India. Also, the east European market was suffering a little because of the crisis in Europe. And, West Asia, of course, has been a bit hit by the turmoil in Egypt.

afaqs!: Your specialty markets are India, China, and Russia. Explain the similarities and differences between these markets in terms of media spending habits, behaviour of brands, and communication priorities.

Jadot: I think what is common to all these markets is that the consumer in each is rapidly entering the digital world. In India in particular, the percentage of people with laptops is very low, but the percentage of people with mobile phones is very high. So, it's a country that's going directly from 'not many devices' to smartphones! It is a country that will increasingly consume digital content through mobile phones. This is something we're experiencing in Russia as well, but what is interesting in Russia is that it is a country where social media - mainly the local players - is very strong. They are not an English-speaking country, so all the big players (such as Google and Facebook) in Russia have very low market shares there, and in China, thanks to legal reasons. In India, on the other hand, these big players have a strong position in the market.

afaqs!: In India, 2011 has been about brands realising the power of digital, and making sure they have some presence on this platform. 'Digital' was like a buzzword last year; all brands ensured they had a Facebook page. Please comment.

Jadot: I wouldn't say Facebook is the main thing. I'd say social media has become strong. Facebook is just a part of it. But yes, belonging to a community is something that is becoming increasingly strong in every market. Note this interesting fact: The country in which the community of women is most connected to social media is Saudi Arabia! One may think that people in those markets are not that connected, but in reality, they are strongly connected. It's the same in India and Russia, too. I think the future for this market (that is, India and other emerging markets) is mainly mobile and mainly social.

afaqs!: But, is just 'being online' enough for brands?

Jadot: Are brands doing enough in this matter? Of course not! This is because they still feel that traditional media (especially TV ads) is the strongest way to deliver the brand message to their audiences and reach all target groups. But, we are in the process of demonstrating that social media and digital media in particular, can help reach the target more closely. We, as a human experience company, feel that if a brand wants to be engaging and make consumers 'live experiences', then social media is the key place. I don't mean to say TV is dead, or print is dead. I just mean that every media has its role in engaging the consumer. An integration of TV plus digital is also very important.

afaqs!: Which media platform will rule in 2012? Will it be digital or a combination of OOH (out of home) and digital? We've seen some interesting examples of the latter last year, such as Bing's 'Decode Jay Z' innovation and Tesco's 'virtual grocery store' in Seoul's subway trains.

Jadot: I, personally, am a great fan of OOH. I feel that if you want to be closer to the consumer, you have to be on the street! And, street could mean OOH advertising or even street marketing. The medium is especially important today because consumers have all the devices that can integrate different media channels and keep them connected with out of home creatives. Every brand challenge has its own solution - the solution may be 100 per cent TV, 100 per cent OOH, or a combination of the two.

afaqs!: We hear that SMG is planning some major acquisitions in India in 2012. Share some details about this.

Basically, we're trying to see how to expand our business in line with our strategy. Our strategy, as you know, is based on three pillars: Insights and Analytics, Digital, and Content. So, whether it's in terms of acquisitions or partnerships, we want to get the right kind of talent and skill sets. We're looking at ways of fast-tracking growth in these three areas.

afaqs!: Tell us about your plans to set up a 'Centre of Excellence in Analytics' in India. We hear this will be an Indian effort, but in collaboration with SMG's global team.

Sheehy: Most of our clients are asking for ways to measure and understand the basic change in terms of how media vehicles impact communication. Analytics sit at the core of what we do. Increasingly, the demand for analytics is going to grow so our goal is to create a 'Centre of Excellence' and leverage that analytics capability here in India as a hub. We also want to leverage the same in other different markets. Given the talent that exists in India, it's the right market for us to explore for that opportunity.

afaqs!: Jadot has improved France's digital practices resulting in a significant increase of digital revenue in the recent past. How do you plan to apply your learnings from the French market to India? Are the learnings transferable?

Jadot: First of all, I feel that experiences (that is, consumers experiencing the brand up close) can work in both markets. Recently, some experiences that were implemented for Samsung and other big clients in the Indian market can be implemented in France. Consider what they've done on TV for their tablet - they made a commercial within the tablet and one sees the tablet on the TV screen. It's a great idea.

I think where we (that is, SMG) can help is to show how we integrate digital with other media in a country where advertisers are mainly consuming traditional media. Today, multiple screens are talking to each other. Digital is not something that has to be managed in solitude any more. We have succeeded in explaining this to some of our FMCG clients who mainly invest in TV. We are also demonstrating how online search can be managed with SEO, and how we can decrease investment in SEM. Also, online search also has to be combined with TV because when you see a commercial at 8:00 pm on TV, you know that the request on Google will increase sharply in the very next minute. So that's why the two media have to be combined. That's the experience we have in France, and that's what we can do in India as well.

afaqs!: Brand MediaVest is hidden in the shadow of SMG. What's the roadmap for MediaVest as a brand in 2012?

Srinivas: Actually, 2011 was the year in which we pulled MediaVest out of the shadow of Starcom. We expanded our footprints into Delhi, and we now have a couple of clients down South that are a part of MediaVest. Of the 18 businesses we've picked up in 2011, almost half have been won by MediaVest. So, MediaVest is our growth engine, going forward. In terms of how we're going to differentiate the two (SMG and MediaVest), well, each has its own pedigree, own positioning in the market, and each has its own globally aligned clients. We will build on the strengths of each of these brands. You'll be surprised to know that in the US, MediaVest is almost as big as Starcom and has a similar market share. And, I'm sure a day will come when that will be the case in India, too. It is a conscious decision to do so in India. And, I think there's enough opportunity in the market for a network like ours to have two strong brands in India.

afaqs!: Starcom has many verticals and offerings. Does this perception of being a jack-of-all-trades agency enhance or hinder the way the agency is perceived? Does it prevent clients from perceiving Starcom as a 'specialist' agency?

afaqs!: In India, the agency revenue model is creative-led as ad agencies have more margins than media agencies do. Do you see this change in 2012, given the kind of specialist verticals that media agencies are now venturing into?

Jadot: Yes, I see this changing in the days ahead. Like I said, we had 20 per cent growth in India in 2011, and we can see that the growth is due to diversification. The growth was not just about traditional media and winning new business, but mainly thanks to digital and content. So, this is the future. And, what is happening in India is exactly what is happening in the rest of the markets and this is where we're pushing hard to make it happen. We are investing in talent and strong management, particularly in digital and content.

afaqs!: Are you bullish on winning new clients in India in 2012, or will you focus on growing existing businesses?

Jadot: We have to do both because we are living in momentum here. We got 18 new clients in 2011, and we hope to have more in 2012, but we have to help the existing clients on the portfolio to go into diversification of their investment, through engagement. We have to create content for them. We have to use all possible media including digital, to go deeper into this relationship.

afaqs!: Is the typical media agency getting more creative these days?

Jadot: Yes, and it is because media agencies invest a lot in human understanding and data and analytics. So, media agencies understand perfectly what the consumer is expects, DNA of brands, and the affinity between the brand and consumer. Because of this, media agencies can build experiences that fit in perfectly. Thanks to data management, media agencies are less intuitive in terms of creativity, unlike advertising agencies, and I think it is important for advertisers to have a rational approach and consistent insights. This is why the creativity, in terms of experience, is more efficient. In the 'new world of media agencies', we think and elaborate on the creative content, and this can't be done without the media eco-system. The industry and media agencies have both evolved.