I'm glad we panicked in 2009

Armed with a management degree from IIM Ahmedabad, Arvind Sharma, chairperson and CEO, Leo Burnett India, spent the first few years of his career in marketing, at Voltas. He joined advertising in 1979 at Clarion McCann. In 1983, he moved to Chaitra as an account director. In 2002, Sharma was elevated as the chairman and CEO of the agency. He also had a hand in the creation of the agency's second network in India -- Orchard Advertising and the agency's media arm, Starcom.

Sharma has served on the executive committees of Advertising Club of Bombay, National Readership Survey Council, Advertising Agencies Association of India and Media Research Users Council. In a chat with Devina Joshi of afaqs!, Sharma discusses the metamorphosis of the industry over the years, and Leo Burnett's prospects in 2010. Excerpts:

Edited Excerpts

I have been in the Burnett system since 1989. Before that, it was Chaitra Advertising (I joined it in 1983). We have witnessed the evolution of the economy, the evolutions of brands and media. From being an Indian agency to the transformation into a multinational agency, Burnett has seen it all. Among our early MNC clients (with whom we continue to work) is P&G. When I came on as deputy MD, we were making Rs 10 crore in terms of revenues, and had 600 people.

Back then, client expectations from agencies were very different -- only some FMCG clients believed advertising had a direct correlation with business. The general belief was that one advertises for image/awareness. This kind of accountability -- that if I spend Rs 10 crore on advertising, I expect Rs 100 crore of additional revenue -- wasn't there.

Leo Burnett himself had an amazing understanding of people. If one talks of influential men in the last century, Leo Burnett and Bill Bernbach are the two names that stand out. We created Marlboro, Kellogg's, Heinz…we created campaigns that helped build massive global brands.

Leo Burnett was a dream agency to work in. The agency encourages brilliance; though it doesn't tolerate an awful person despite his brilliance.

What keeps a person going in a job? A constant flow of interesting things to do, and a match of values -- both of which Burnett has provided me with. The agency allows you a sense of freedom and independence. I have been an employee, then a shareholder, and then back to being an employee when I sold my stake in 2004. There hasn't been a single day when I have not felt, "This is my agency". Burnett does that to you; builds this spirit in you.

I haven't seen a better year than 2010 in my career. We are growing at 40 per cent this year, as opposed to 25 per cent that we were expecting to grow at; and a large part of it has to do with the new business wins we managed in 2009.

I must admit we panicked in the first quarter of 2009, thanks to market conditions, and went after new business aggressively. But in retrospect, I'm glad we panicked. We won Uninor, Samsung mobiles and Procter & Gamble's activation business.

Having said that, a third of our growth comes from existing clients. Despite 2009 being a tough year, our compensation from current clients, such as Heinz and Coca-Cola India, is up by 20 per cent. This is the best indicator to know if you're doing a good job or not: whether your current clients are willing to pay you more.

A third of our growth comes from other from mass media business such as Samsung and Uninor which I mentioned; while a third comes from marketing services such as activation and digital.

Uninor has come as a respite, but it has come by design, by being able to anticipate where big spenders are. We like to work with clients who have significant long-term potential.

I must add that over a period of time, an agency develops its own spirit, which is stronger than its CEO's desires or quarterly pressures.

Today, Google and iTunes have taken over your life. The change that was on the anvil 10 years ago is happening now. Clients are actually investing in non-traditional media. The real activation revenues are coming in now, with increased fragmentation in the market.

Today, if Rs 20,000 crore is spent on mass media, digital is worth Rs 800 crore (of which half goes directly to Google, I'm sure!); while Rs 1,500-2,000 crore goes to activation.

I am a great believer in digital. I don't think it is 3G through which the international revolution will come into India; it will happen when flat-rate broadband becomes truly accessible. The digital industry will be worth Rs 3,000 crore in the next three to five years.

Well, today, youngsters are far more exposed to things and more aware. Because of their general knowledge and awareness, they are good users of resources on the Internet. Today, everyone's trying to do more in less time. Client expectations from an agency have changed; so, a youngster's quick use of resources and knowledge really helps. At Burnett, we have this mechanism called Notepad, which helps our youngsters share planning resources. What has changed? Well, in pre-liberalisation India, there was this sense of "do the job that is available", which meant working 18 hours a day, even with clients that weren't a joy to work with. The current generation, while ambitious, is very aware of its choices. They won't tolerate much, or make the same kind of sacrifices that were a given with the previous generation.

One of the challenges in our business has been right scale. I think when any agency grows too big; it's a difficult task to make sure it's still running like an agency, and not a process- driven company.

If you have 700 people in the subcontinent, you will obviously not know everyone by name. You may run into someone at the airport and not know he works for you. Now, being big creates its own sense of barriers, and has its own kind of impact on culture -- on how free people are to express their ideas to the seniors. Being just the right size is more important than being large.

Having said that, of course, we want to grow twice as fast as the top three, and at some point in time, that will take us in the top three. (Chuckles)

Yes, Burnett is growing steadily, but steady does not mean slower than anyone else. I am very happy with our progress. This business can become a PR-centric game, where you are announcing every jewellery account win that amounts to Rs 5 lakh in terms of revenue.

For the last few years, we have been delivering to clients by creating long-term campaigns and winning big businesses. That's the kind of reputation we want.

Our ambition is to be a 2015-ready agency.