While most ad folk want to believe the worst is over, there is this feeling that things will never be the same again
The year 2001 was one that the Indian ad industry wants to forget in a hurry. True, there are instances of agencies that did pretty well for themselves - even managing double-digit growth, and putting campaigns out for their clients - but the uncertainty that the slowdown bred has had an enervating effect, on the whole. So much so that many ad folk are wary of making predictions about this year, despite "early signs of the market picking up".
Financially speaking, 2001 was disastrous on quite a few counts. Slashed ad spends resulted in increased pressure on the agency bottomline; clients channeled budgets earmarked for advertising into non-traditional media; fewer brand launches happened across product categories (an exception being automotive), which led to fewer campaigns being released; and projections went awfully awry when the so-called New Economy sector self-combusted.
Naturally, this also took a toll from a people point of view. With less revenue coming into the agency, increments were put on hold. And when that didn't help, layoffs started, severely impacting employee morale. And with more and more clients doing promo-based advertising, there was also the collective frustration (especially among creatives) of not being able to do 'meaningful advertising'. Also, aggressive pitching and counter-pitching by agencies - in a desperate bid to meet targets - created an atmosphere of flux and insecurity, which, perhaps, subtracted from the focus that would otherwise have gone into existing business.
While there is a broad feeling that the worst is over, there is this thing of things never becoming quite the same again. Better, yes… but not necessarily on those terms that agencies have become so used to. So what exactly are the challenges that ad agencies face, and what are the pitfalls to look out for? What are the long-term issues for both the agency, and the brands it handles?
"Both agencies and clients should understand that 2001 was like no year before, and that it has set in motion a new dynamic," says Sorab Mistry, chairman and CEO, McCann-Erickson India. "Both have to realize that the very cycle of a good year followed by a bad year has been redefined. What you will now see is the emerging of a cycle where you have two good months, followed by three bad, which is again followed by a good three. Agencies and clients should accept this change and prepare for it. Agencies must be able to anticipate a downturn and react to it much faster."
Echoing a similar thought, an account director with a Top Ten agency says, "Agencies and clients must not panic every time the shadow of a slowdown falls on them. Yes, you must be on your toes all the time, but the realization that short-term measures cannot substitute for long-term brand building has to dawn. You will now have to woo the consumer on two levels. One, through relevant promo-based efforts where the promo adds value to the brand, and two, through classical brand building." He cites the example of Taj Mahal's 'Ustaad's Challenge' to make his point. "What Taj Mahal did in its promo was leverage the brand's association with Ustaad Zakir Hussain and his trust in Taj Mahal in a manner which reinforced the association in the consumer's mind. Yes, it gave away gold (in the form of a tabla), but made an engaging story out of the whole thing."
Parveez Shaikh, creative director, Contract Advertising, feels the biggest challenge for agencies will be producing cutting-edge creative. "When spends are low, you have to produce work that is much more creative and hard working. While no agency willingly makes a poor ad, the knowledge that spends are going to be low will weigh on the minds of agencies. So creativity will continue to be the key."
Promo advertising might be ridiculed, but there is a general consensus that promos are here to stay. And there is also an opinion that the format of classical advertising will change. "What agencies did last year was tell the client that we'll come up with five new promo ideas," explains Anil Nair, vice-president, Quadrant Communications. "This was fine by the client because he had to quickly liquidate inventories - in fact, last year's promos were not as much sales-led as they were about clearing choked pipelines. However, now clients are focusing on brand building, but in a very long-term manner. This tendency of cracking one three-ad press campaign or doing one TVC and showing it to the client is not on. Clients want complete, comprehensive solutions, whereby the agency cracks a brand idea that is simple, enduring and long-term. And one that works across all forms of media, and is stretchable even to things like events. 'The Axe Effect' is one such idea. Very simply put, you will not see any more short-term Digen Vermas. Agencies have to crack extended and extendable brand ideas."
What this also means is a renewed focus on offering integrated solutions. "There is no doubt that agencies that do not offer total integrated solutions run a big risk of going under," says Mistry. "One, the client's needs are more diverse, and agencies have to realize that, and cater to that. Two, his spend has splintered, and it is in your interest to offer him as many solutions as possible. Also, agencies must realize that the consumer profile has changed drastically. They have to accept that their advertising is not just talking to people in the metros, but also the Sholapurs of this world. The communication has to be tailored accordingly."
This certainly calls for a restructuring in agency thinking. "You have to reset the entire KRAs (key result areas) of all your employees right now," Nair insists. "You cannot have people functioning on old parameters." And that means talking to employees. "Agencies have to take its people along," Nair feels. "The poor account executive does not understand the macro picture. He sees changes without even understanding it."
Internally, agencies have to have a comprehensive plan about how to deal with change, and its effect on employee morale. It is the agency's job to tell its people that this is not the time to panic, but to take the baton and run. And this is where good stewardship comes into play. "We need agency heads who are true leaders," says Mistry. "People who can lead the agency out of the depression. This is the true test of an agency CEO's mettle."
Shaikh insists that motivating creative people is half the battle won. "The advertising business is all about people. And for us - creative people in particular - the motivation to do good work overrides everything. Last year being what it was, it was not surprising seeing so many people shifting from one agency to another. Creative people cannot be motivated by money alone. All they need to be told is that the agency will back their work. That's enough incentive to do good work."
Of course, in these testing times, it is easier said than done. In the anonymous account director's opinion, agencies have been far from courageous in putting forward their point of view. "The threat of losing business has kept many agencies quiet on the creative product," he says. "Forget the creative product. In these hard times, where revenue is so critical, agencies have hedged asking the client for money that is rightfully theirs. Outstandings is another thing that agencies have to address. And something that clients should understand is vital for the agency's health."
Talking of agency health, Mistry points out that agencies will have to continue keeping a cap on expenses. "Cost-cutting is a must. Gone are the days when you could go overboard with expenses. In fact, I say that if 2001 was revenue minus expenses equals profit, the mantra for 2002 should be revenue minus agreed profit equals expenses." Â© 2002 agencyfaqs!