Tobacco and lifestyle products major ITC has called for a pitch to sign up a new agency for its Rs 75-80-crore media account. The account is currently handled by Initiative Media. According to the last A&M Big Advertising and Marketing Spenders survey, the company was the third largest spender on advertising and marketing with an investment of Rs 185.09 crore. However, with the Government coming down heavily on tobacco and liquor advertising, industry sources say the company may end up slashing its budget to around Rs 50-55 crore this year.
While company officials were unavailable for comment, information available with agencyfaqs! indicates there are at least four agencies in the fray for the business besides incumbent Initiative Media. Among the prospectives are Madison Media, Lodestar, MindShare and Zenith Media.
These agencies made their presentations before the company brass last week and a decision by the company is expected by the month end. While the agencies in contention are also tightlipped about the whole affair, the pitch assumes significance when viewed against the company's recent drive towards aggressive expansion in new markets.
Even as it made it's first foray into the non-tobacco business way back in the 1970s with its hotels venture, ITC has been speeding up its diversification act in recent years, into areas as diverse as casual wear, greetings cards and gifts and branded foods. As things stand now, the Kolkata-headquartered company that started life as a cigarette marketer, is now fighting for a foothold in three of the more competitive markets in India today - lifestyle retailing (with Wills Sport), stationery products (with Expressions PaperKraft) and upscale ready-to-eat packaged foods (with Kitchens of India). Not just that, the company has recently jumped into the organised branded atta segment with the soft launch of its Aashirwad brand in Delhi and its neighbouring markets earlier this month.
While the company has worked out a wide ranging portfolio for the future to reduce dependence on tobacco (which now contributes as much as 85 per cent to its turnover), almost all the other diversified businesses contribute little towards the company's profitability at this point in time. The company, however, seems optimistic about the shape of things to come.
According to media reports, ITC hopes information technology, greeting cards (including gifts, stationery and accessories), and foods to contribute around Rs 250 crore each to its revenues by the year 2005. Including lifestyle retailing and hotels, ITC expects to add revenues of around Rs 2,000 crore from its diversified businesses by the year 2006. In effect, with a view to generating 40 per cent of the company's total revenues from non-tobacco business over the next two-three years, ITC has targeted to invest around Rs 2,600-2,800 crore in its diverse businesses.
The agencies in the fray are obviously hoping that ITC's adspends would also be hiked in keeping with its growth plans. As an industry professional admitted candidly, "You should try to understand the reticence of the agencies involved here against the implications of the whole exercise. With the company looking to consolidate the media account of its entire portfolio with a single agency whoever takes the business will be making a giant kill." © 2002 agencyfaqs!