POV: Can standalone digital agencies remain independent?

By Anindita Sarkar , afaqs!, Mumbai | In Digital | March 08, 2013
Looking at the trade-off between staying independent and getting acquired by a multinational agency network.

Over the past year or so, international advertising agency networks have acquired about half a dozen digital agencies in India. And now comes news of Interactive Avenues being snapped up by IPG Mediabrands. Does it mean that independent agencies no longer have much of a future in India?

Sidharth Rao, CEO and Co-Founder, Webchutney

Sidharth Rao

Vikas Tandon

Staying independent or getting acquired, both have their own sets of pros and cons. One needs to really evaluate this in the context of timing, where their business is, where the founders' or the management's minds are. Independent shops are culturally rather than financially driven. . At the same time, a networked digital agency stands to gain access to the network business, know-how and centralised tools and capabilities on being acquired by a large network.

At some point in the next couple of years, my sense is that a lot of 'older' independent agencies will explore their options with networks. And at the same point, a lot of exciting independent agencies will crop up. All in all, in the Indian context, the next few years will be exciting. There will always be room for large network agencies as well as for independent agencies.

Vikas Tandon, managing director, Indigo Consulting

A standalone agency has its own advantages such as nimbleness and speed, and similarly being part of a larger independent group brings its own benefits of global expertise and learnings. However, this cannot be looked at solely from the stand point of whether or not standalone agencies can continue to stay independent. A large number of brands - services and products - are global or going global and digital is becoming an integral part of overall marketing efforts.

Keeping the above in mind, aligning oneself with a larger international network can help an agency to scale quickly and offer a complete 360 degree marketing solution to the client. So yes, standalone agencies can continue to stay independent if they are so inclined. The question is what their vision is for themselves, what scale they want to achieve and what kind of services do they want to offer.

Vivek Bhargava, CEO, iProspectCommunicate2

For me, the question is not whether independent digital agencies can survive in the long run but whether independent conventional media agencies can unless they acquire digital expertise.

Vivek Bhargava

Chhaya Balachandran Aiyer

Kiran Gopinath

Digital has become the spinal cord of most organisations. It is not only critical for customer acquisition but plays a role in brand building, information dissemination, cross-up-selling and understanding consumer trends. Experienced marketers have realised that unless digital and mobile are given their due importance in marketing plans, business goals will not be achieved. Given the context, it is paramount for each media group to strengthen its digital expertise to ensure long term growth.

Meanwhile, joining a large media group definitely encourages independent digital agencies to draw symbiotic synergies from the network. The network brings in accelerated learning of a large organisation and the opportunity to tap into the expertise of many individuals with specialised knowledge.

Advertising is getting very complex; it is true that large enterprises are looking at a single media group that gets the best specialist agencies under a single umbrella. And, such enterprises have acted like catalysts in many digital agency acquisitions.

Chhaya Balachandran Aiyer, CEO and MD, BCWebWise

In an agency structure, with multiple investors/ownerships widely distributed, the need for mergers are largely related to valuations and exit strategies, a reason why Madison has probably not sold out yet. It is owner-driven from a shareholding point of view but very professionally run otherwise.

While GroupM, with multiple agencies, has 40 per cent share of mainline advertising, Madison as a single agency without any global alignment manages to control over 12 per cent of this market. This speaks volumes about the future possibilities for independent agencies.

Our agency has my very close family as investors. There is no pressure from anyone for an exit.

We have great clients/brands with whom we have fostered relationships for over nine years now. Some of the brands have global alignments. It has not affected our relationship. What will affect our relationship is the quality of deliverables. That alone will determine our future or that of any independent agency in the long run. Remember we probably work harder at our job because we don't have any global parent, no global alignments to protect us. We have to ensure full client satisfaction.

Talent can be retained, clients can be signed up, and value can be built simply because of the product you can finally deliver. So long as an owner can run and wants to run the business, any independent agency can thrive and flourish.

Kiran Gopinath, founder and CEO, Ozone Media

Currently, the top five trends in the advertising space are: the digital world is a living organism and will continue to change shape at a fast pace; agencies which can help advertisers understand and interact or communicate with a fast-changing consumer mindset and behaviour will prosper; growth of self-serve platforms will challenge large network agencies as pure trade desks; technology solutions that provide a targeted relevant audience will drive digital spends and partnerships and alliances will drive end-to-end solutions to the advertiser.

So yes, digital agencies can continue to stay independent if they can carve out a niche for themselves in the ecosystem by identifying their strengths and building on them (exclusivity, technology solutions, audience and data); move away from the comfort zones of the past and take stock of the crowded marketplace; invest in building products that feed on audience data, interests, and all segment slices (the mantra is reach, relevancy, results); explore alliances/partnerships to become an end-to-end solution provider and people will continue to be the backbone of their existence (good account managers with a consultative approach).

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