When a market is in the middle of expanding or changing its ways, it is called an emerging market. In that sense, it can be argued that the Kerala ad-media industry is India's own emerging, or at least evolving, market. And, this is not just because the state has an urbanisation rate of more than 80 per cent.
Over the past year, several leading media and creative agencies have launched offices in Kochi. These include Dentsu (December '12), Carat (December '12), Mindshare (April '13) and Vizeum (August '13). Go back a bit further and names like Lowe, which entered this market in 2010, can be spotted. Agencies like DDB Mudra have been around much longer.
Even so, the recent batch of agencies launching Kochi operations is noteworthy. This trend is symptomatic of two changes: For one, Kerala-based brands are looking to expand beyond state/country borders (example West Asia that has a high Malayali population), thereby creating the need for media partners with nationwide/global presence. And from an agency perspective, physical proximity to the clients' headquarters helps.
Secondly, the Kerala market itself is undergoing some changes. For instance, it has become less relationship and more numbers-driven. Also, though still largely a market of entrepreneurs, second generation brand owners seem to have spotted merit in working with 'professional' agencies, as networked agencies have loosely come to be termed. Not that their local media partners are unprofessional, but the general sense is that the influx of these networked agencies has injected a sense of discipline in an otherwise disorganised market.
A look at both reasons in some detail:
In any demand and supply situation, it's usually the latter that is visible to onlookers. In this case too, we see media agencies flocking to Kochi but the 'why' is not as evident. Here, it is local brands' national ambitions that have generated the need for media partners with pan-India buying clout. From a volumes perspective, the Kerala market is saturated and to grow, geographical expansion is a must. "Aspirations of key players in the Kerala market have changed. Many brands like sari and jewellery players that have established themselves in this market now feel the need to go national because that's the next phase of growth for them," says Rohit Ohri, executive chairman, Dentsu India Group. The agency won the creative mandate for Jayalakshmi Silks, a Kerala-based textile retail brand, this July.
Before Dentsu, the mandate was with Kerala-based agency Very Local for a brief while, before which it was with Lowe Lintas. LMG still handles the media duties, prior to which the account was with local agencies Media Expressions (media) and Team One (creative). Raphi Davis Akkara, creative director, Team One Advertising, tells afaqs!, "Yes, while in a way local agencies may suffer when their clients go national and opt for national agencies, I choose to focus on the positive; today many brands also prefer working with boutique over networked agencies."
"Now that many small start ups have started seeing great success, they have begun looking for professional partners to bring in best media practices," says Joydeep Raha, senior vice-president and head, South operations, Carat Media, poised to provide services to clients looking to scale up their operations beyond the Kerala market.
"These national plans," says Haridas KT, head of Mindshare's Kochi operations, "require higher strategic thinking, better tools/processes, knowledge sharing of other brands in the same space and seamless execution at a national level," services networked agencies are deemed better placed to provide than local ones.
While Kerala-based gold/jewellery, textile, electrical and finance brands like Kalyan Silks and Kalyan Jewellers (Maxus), V-Guard (Mudra Max), Muthoot (Carat) and Manappuram (Maxus) began their push beyond state and region borders years back, several others are keen to follow suit. Jeejo PP, corporate marketing manager, Jos Alukkas Group, says, "We have expansion plans across the nation. Local agencies lack strategy and planning for regions outside the Kerala market. Only professional (networked) agencies can handle our innovations and media buying requirements outside Kerala. Besides, local agencies tend to handle three to four clients from the same category simultaneously. This is not the case with professional agencies."
The jewellery player has roped in Mindshare and Dentsu for its expansion plans in regions like Mumbai, Delhi and Punjab. And, for Jeejo, as far as bargaining with local media owners goes, a professional media agency acts as a "commanding third party" in the face of media owners that "compromise on space and size, especially when it comes to print ads." Clients therefore enjoy the clout and authority a networked media agency brings with it, something that helps them fetch a better bang for their buck when it comes to haggling with local media owners.
Another reason for opting for networked agencies is their perceived efficacy in handling digital media innovations, something brands in the region are taking to in a big way. Kerala-based manufacturer of Ayurvedic medicines, Dhathri Ayurveda, for instance, has upped its digital spends by 200 per cent in the past couple of years.
Dr. Saji Kumar, managing director, Dhathri Ayurveda, says, "We prefer working with professional agencies for our national/international media plans and digital innovations," adding however, "but that doesn't mean we are ignoring local agencies. We work with Mindshare for national plans but have local agencies (such as H&B Communications and Fertile-Isle) for local media plans."
Similarly, though Muthoot has Grey and Carat on board for national advertising and media duties, respectively, the brand continues to work with its Kerala-based agency Backdrop Advertising for local media duties. In general, for the local market, brands' creative work is either done in-house or is entrusted to local creative agencies, but networked creative agencies are preferred for national campaigns because the insights and visuals need to be revised for a national audience. However, unlike media agencies that need to be physically present in a given market, creative agencies can operate remotely. This is possibly why a larger number of media agencies are seen opening Kerala branches, say observers.
As per industry estimates, the Kerala ad-media market is pegged at about Rs 500 crore. Moreover, from a media spend point of view, the market has seen a 30-40 per cent spike over the past couple of years, say experts. This amount includes brands' budgets within and beyond the state of Kerala.
Expansion and outbound brands aside, the Kerala market itself has evolved of late, thus changing the role of media agencies. S Yesudas, managing director, Indian subcontinent, Vizeum, says, "By virtue of the fact that media consumption in the market, till sometime back, was primarily centred around just a couple of vehicles, the reason for media agencies to exist was the ability to offer discounts and credit periods. But the scenario is different now. Both, the consumer and the media dynamism, have changed a great deal and are still changing."
Experts say that though media consumption continues to be ruled by TV, print and outdoor, in that order, of late there's more genre-specific fine-tuning than there was earlier. Media plans for TV, for instance, are increasingly taking into account the genre, such as GEC, news and movies. "This has enabled the TV medium to play a major role in the growth of many brands here," says Raha, noting the recent change. Of late, radio and digital are also being used to drive retail footfalls.
When Vizeum announced its foray into Kochi earlier this year, Yesudas said the Kerala market is "yet to see real media specialists," that "some aggregators are operating in the market" and that there are several clients "whose resources are 'spent' today through gut feel decisions or computer algorithms" and not 'invested' in a prudent manner. Slowly but surely, this seems to be changing.
"Clients and media owners in Kerala have started talking about GRP and CPT/CPRP much more than they used to. Earlier, it was very 'rate-driven'; the discussion wouldn't go beyond 'what's the rate?' But today, the negotiating process has become more scientific as there is awareness about data and scientific systems such as spot monitoring, that are important to the media planning/buying process," says the Kochi head of a networked media agency.
He adds that earlier, the media business in this market was very relationship-driven and "emotional". Today, media planning here has become more systematic and numbers-driven. "And given the regulations set by TRAI and IBF, media owners also prefer dealing with professional media agencies as they're known for adherence to deadlines," he says.
According to Carat's Raha, Kerala's media market has so far been managed by "a handful of local players who mirrored advertisers' entrepreneurial nature and were more focused on short term deals to address immediate growth challenges of brands." He cites the need to bring a long term planning perspective to clients as a major reason for entering the market.
Moreover, many national and global brands are also starting to look at the Kerala market differently, thereby adding to its evolution. Last month, premium brands like Marks & Spencer and L'Oreal made their debut foray into Kerala.
Won't all these recent developments threaten local media agencies? Possibly. But if it helps organise the market then it's for the greater good, argue some. At a recent event, Bedraj Tripathy, senior general manager, marketing, Godrej Interio, when asked whether the imminent entry of global brands like Ikea threatens local furniture brands like his, said, "Yes, Ikea may eat into our consumer base but it will also open up avenues. Only 15 per cent of the local furniture business is branded and organised. Competition from outside will be good for the market."
Going by this logic, putting local agencies out of business is a small price to pay if the Kerala ad-media market gains global media planning tools; and if Kerala-based brands enjoy a nationwide/worldwide presence.
As per Census 2011 data, Kerala has a population of 3.34 Crores. As per a study done by McKinsey Global Institute, Kochi is one of the 28 Indian cities enlisted as the ‘emerging 440 global cities that will contribute 50 per cent of the world’s GDP by the year 2025’.
Kochi, the commercial capital of Kerala, is one of the most densely populated cities in the state and is quickly emerging as an economic and IT hub. Other key cities include Thiruvananthapuram (Trivandrum), Kozhikode (Calicut) and Thrissur. Interestingly, just like Mumbai, the port city of Kochi is the business, finance and trade center of the state. It’s where the Cochin Stock Exchange (CSE) is located. Therefore, Kochi is where those interested in making a career in advertising/media flock to. That’s why agencies make their Kerala foray by launching offices in Kochi. And like Delhi, Thiruvananthapuram is the capital of the state and a power hub known for its political clout. Of course, there’s always an exception to every trend; Bang in the Middle made its Kerala foray in February this year by launching an office in Trivandrum, not Kochi.
There are certain aspects that make the Kerala media market unique. For one, given the state’s high literacy rate, print has always commanded an important position in brands’ media plans. Secondly, high consumption of regional media in this market, across TV and print, has always made geo-targeting easy for national brands. Thirdly, the English print market in the state is largely dependent on national as opposed to local advertising, making evident the difference between the kind of patrons regional and English publications have in this market. Also, because it is a highly entrepreneurial market, rife with ambitious family-run businesses, there is a very high level of client involvement at the highest levels of media buying.