Earlier this week, Flipkart announced its decision to bring Lowe Lintas Bengaluru on board. Interestingly, this doesn't mean the boat currently occupied by Happy Creative Services, Flipkart's on-record agency since 2010, will be unceremoniously rocked. It merely means the e-commerce brand now has not one but two agencies to work with. We learn that both agencies will work on this account for a monthly retainer fee each. Keeping this present context in mind, we take a fresh look at a story around the subject that was first published on afaqs.com on April 16, 2013.
Recently, when the creative head of a Mumbai-based agency called to discuss his new campaign for a leading commercial bank, my first question was, "Who lost the account?" The answer was interesting: "It's just a one-off project. The incumbent agency stays on board." As I wrapped my head around this information, it became clear that this was part of a growing trend.
Some recent examples include Airtel and Pepsi, both JWT accounts that work with Taproot on a project basis, Nestlé, a JWT account that assigned its recent 100-year anniversary campaign to Mudra, Star Network, an Ogilvy account that assigned the creative duties of Star Plus to Contract Advertising and Star World to Salt Brand Solutions, and Axis Bank, a Lowe Lintas account that works with Utopeia on a project-to-project basis for experiential solutions. And this list is far from exhaustive.
So, what has led to this flirting? There is more than one reason.
New rules: no rules
Firstly, the unwritten rules of the game have changed. A few years back, it was considered somewhat objectionable if a creative agency approached a brand that already had a fulltime partner on board. The term used for this kind of propositioning was 'straight pitch'. This is not the case anymore.
"Till now, our clients were perfect gentlemen. Now, the game has turned rowdy. The whole dilemma of 'How do I go over my agency's head and approach someone else?' has disappeared. Of course, they're civil enough to ask their AoR to pitch," smiles Shastry, insisting that it is not considered 'cheating' anymore. It is a rather well planned affair now. Also, brands that are dissatisfied with their globally aligned AoR no longer hesitate before choosing to work with other agencies on a project basis till the formal permissions and paperwork, to go in for a review, get approved.
Too much temptation?
Says Emmanuel Upputuru, founder, ITSA, "Startups are not besotted by legacy systems. Projects mean you do meaningful work and get out. Marketers are also becoming more 'solution driven' than 'relationship driven'." In fact, many marketers admit that the kind of attention their brands get from senior-most resources at boutiques is hard to find in a large agency. Clearly, it's open season for startups - the blissful 'other woman'.
Parle Products too has a unique model that involves large agencies. Four agencies - Ogilvy, Grey, Everest Brand Solutions and Thoughtshop Advertising - comprise the company's creative roster. Ahead of every advertising campaign for any of the group's brands (Parle G, Parle Wafers, Parle Monaco), all four agencies present their thoughts. The best one walks away with the mandate for that particular campaign and earns a commission for its work.
Explaining the advantage of such a model, Pravin Kulkarnii, general manager, marketing, Parle Products, says, "The motivation on part of the agencies to win the business is high, so I always get great ideas. I also get a fresh perspective each time on any given brand. It also keeps the agencies on their toes and complacency at bay."
Doesn't this 'internal pitch' system show lack of loyalty to one agency? "Yes," admits Kulkarnii, "I'm not denying that people may feel commitment to one agency is missing, but the pros outweigh the cons of this model," he argues, insisting that a polygamous model like this brings an opportunity for agencies to fulfill their aspirations to work on a particular brand. All they have to do is pitch when the next campaign comes around instead of waiting for years before the account moves.
A third reason for this practice is the need for a specific regional perspective that a local boutique is deemed better placed to provide than the brand's mainline agency. Consider the case of Nutrela. Ogilvy is the creative custodian of the entire portfolio, except the edible oil brands that are managed by smaller agencies. Utopeia Mumbai handles the creative mandate for its refined sunflower oil that targets southern markets while Kachhi Ghani mustard oil, targeted at eastern markets, is handled by Hammer Delhi.
"If I have to do a very specific activity in Tamil Nadu, my big agency will have the wherewithal to work on it but a boutique agency, born and bred with the insights of the local consumers, will bring more value to it," explains Sandipan Ghosh, associate vice president, marketing, consumer brands division, Ruchi Soya, the parent company of Nutrela. According to him, most companies' diverse portfolios make it "impossible for a single agency to address every sub-brand's specific need."
It's all about the money
A fourth reason is economics. Deliberately keeping certain brands out of the mainline agency's scope of work is often a hardcore business decision. Explains Nutrela's Ghosh, "Edible oil is a commodity that by nature calls for cyclical communication. I don't want to keep a mainline agency and pay them a retainer fee for working on a brand that requires seasonal communication only. Instead, whenever required, assigning the campaign to a boutique agency as a project is a more efficient system."
Speaking of economics, even service brands like telecom, banking and insurance that communicate perennially, are coming up with innovative ways to divide the creative mandate between their AoR and other agencies. Consider life and general insurance player, Future Generali, that has Ogilvy on board for its mainline creative duties including major campaigns across TV, outdoor, radio and online. Water Brand Consulting handles what the brand calls "the smaller creative jobs" including collaterals, point of sale material, corporate brochures, audio-visual sales films, sales kits/tools and adaptation of creative ideas on-ground. Interestingly, both agencies are on a retainer fee. How does this work?
"Frankly, if I include everything in Ogilvy's scope of work, the retainer fee would be very high. Also, this system gives me the independence to give my mainline agency a 'vacation' for a few months when my budget is tight. When funds flow in, I can always resume the association with them. If not, I can assign a project to them for one high impact ATL campaign," shares a senior marketer at Future Generali. In the meanwhile, the brand's other agency, that's on a more affordable retainer fee, continues to ensure all the other creative work doesn't stop despite budget constraints.
Similarly, life insurance player, Aegon Religare, also has Ogilvy as its creative AoR and has assigned a portion of the duties to Water on a retainer basis. Apparently, the tables have started turning. Assigning intermittent projects to larger agencies and keeping boutiques on a more affordable retainer, is a byproduct of this trend.
While the marketer gets the best of both worlds and the hot-shop owner enjoys his time under the sun, this trend leaves many a large agency head seething. While one may argue that most of the leading multinational agencies may be too big to be affected by this trend, there is some cause for concern. As the head of a leading networked agency puts it, "Soon, all the 'dal-chawal' creative work will come to us large agencies because logistically we're big enough to handle all the 'household maintenance work' for a big brand, while smaller agencies are walking away with the sexy campaigns, awards and glory." Earlier it was the other way around; thematic campaigns were the big agency's forte while one-off, product-based, tactical campaigns were given to smaller agencies as projects.
There are other concerns. Some feel the brand stands to appear disjointed if more than one pool of creative talent works on its creative duties over time, as the creative language and tone tends to differ from agency to agency. Others are worried about the way this trend is positioning the industry at large. "Agencies used to be 'partners' for marketers. Now, we're becoming mere suppliers," voices the creative head of a Mumbai-based agency. Moreover, set-ups like the one Parle Products has in place pose another frightening question: Are mainline brands going the public sector way with such empanelment models creeping in?
The day that happens in a buyer's market like this one, the marriage will truly be an open one.
(Based on additional interviews with Priti Nair, co-founder, Curry-Nation, Vandana Sethi, founder director, Water Brand Consulting and Mahesh Chauhan, co-founder, Salt Brand Solutions)
A Note From the Editor
There was a time not too long ago when the agency-client relationship was like a marriage. It didn't last a lifetime but at least there was no philandering: while it lasted, the two partners were faithful to each other.
This is no longer the case, as this issue's cover story demonstrates convincingly. Marketers have arrived at a whole variety of arrangements with their creative agencies. This allows them to play the field with other agencies even as the original relationship stays intact.
How has this come about and why?
In the old days, marketers were extremely paranoid about what the brand conveyed and worried about consistency in every form of communication. That has changed with the rise of digital media. Online has given a voice to consumers and marketers are learning to live with the idea that they don't alone own the brand; consumers have a say as well. Having accepted that, marketers have become less paranoid about controlling every aspect of the brand-consumer interface.
The idea of experiential marketing has struck strong root. Thanks to that, a marketer may well approve a whole bunch of activities ranging from activation to the use of social media, instead of a single TV commercial. Because the activities are scattered, and divisible, a whole range of agencies has come into play. And once marketers got used to the idea of several agencies, getting an alternative agency in to work on even mainstream media such as TV and print was just a last step away. This has been happening across the world, and has now hit India in big measure.
Another reason why this has been hastened is the rise of service brands. By their very nature, they are more likely to have activities that go beyond the TV commercial - for example, telecom service brands swear by activation. Service brands are also more likely to have special projects or initiatives which allow another creative agency to join the party.
And lastly, the loosening of client-agency relationships is a reflection of the informality that is evident in all kinds of relationships, both professional and personal.