Category: ADVERTISING

 

The common perception, that AAAI is only about organising events like Goafest is wrong. Veteran adperson and current President MG Parameswaran tells Pradyuman Maheshwari that there is a lot more that the apex advertising body does, from redressing disputes redressal to skill development. In this freewheeling interview, he also comments on the functioning of BARC, the fact that broadcasters have more stake than ad agencies and advertisers, on IRS, IAMAI and digital agencies and advertising education. Read on, but bring in a large coffee… this interview is some 4000 words long J

 

Most people know it, but for the benefit of a large number of our readers who don’t: what is role of the Advertising Agencies Association of India (AAAI/3As of I) as the apex association of ad agencies in the country?

AAAI is for the betterment of the advertising business. One avowed mission of AAAI is to improve professional standards in the industry, so we welcome anybody who is organising training, knowledge seminars and dissemination of information and knowledge to young people in the advertising industry. Whether it is Kyoorius, Afaqs, Exchange4media, Kulzy, MxM, Campaign India or IAA, all of them are welcome to provide affordable, valuable training for youngsters in advertising today. I’d say even older people in the industry need inputs; we don’t know everything.

 

AAAI was also set up to look at issues cropping up between advertisers and media owners, and resolve them. Do you think that the perception of AAAI, as the organiser of Goafest, has become bigger than the rest of its functions?

We do a lot of work which isn’t in the public domain, for obvious reasons — client agency disputes, issues agencies are having with the media etc. Unfortunately, what comes into the public domain at regular intervals is Goafest, which is organised by us. A lot of youngsters in advertising believe our job is to only organise Goafest, which of course isn’t true. We have a managing committee that meets every month for at least three or four hours, and Goafest takes up less than 10% of our time. About 80-90 per cent of the time is spent on other issues, a number of which also get tabled.

 

In terms of revenue, how much does Goafest contribute?

It’s significant.

 

Is it more than 50%?

Yes, about that much.

 

So since it’s a significant contribution to the AAAI coffers, it makes sense for you to host Goafest…

Yes, it gives us some surplus which we can then plough back into setting up a training centre, like we’ve done. The other thing is that it’s held in Goa, not in Mumbai, and people can fly in from all over the country to be here. Third, we do spend a lot of money to get good speakers, senior clients and to bring industries together. We’ve had to pay for some speakers, and some have requested that we contribute to a charity of their choice. We’ve done all that.

 

Do you think it helps to have a single, private organisation hosting an event? Internationally, we’ve seen that something like a Cannes is more successful than what industry associations can put together…

There are pros and cons. The private organization can charge whatever it wants to, and may be arbitrary about how much it charges people and how many free passes it distributes. As an industry body, we are audited. We have a 22-member managing committee that asks questions! Any event organised by an industry body has to go through a process of approvals, so we may not be agile when taking decisions, but we are transparent and fair. Second, the surplus we generate goes into the advertising association kitty and will get re-deployed into things for the industry.

 

Since Goafest is such a large event, do you think–

Are you going to talk only about Goafest?

 

No, I’ll move to other things. But then it’s so big and prominent…

It’s not. But it’s good if people think so…

 

Back to my question. Since Goafest has become such a large event and the 3As of I makes good monies on it, do you think the planning must start much earlier?

Last year, we started planning in October, which was early. I think it paid off and Nakul Chopra put his shoulder to the wheel to get the momentum going. In fact, he had finalised on the event agency in December. Obviously, you can plan even earlier. But having done this for many years, there will always be some last-minute cancellations and requests, so we have to juggle that.

 

There are people whose calendars are planned well in advance.

We’ve realised that sending a request in August for an event in April gets you no response. The right time to send a request probably is early December. Before people go off on their Christmas vacations. We’ve realised that sending requests in March is very late. Sending the requests in October is too early.

 

All of you’ll have day jobs and their pressures are tremendous. Everybody has international networks to answer to. Hence, the thing of whether there is a need for appointing someone within your team or outside of it to look at Goafest affairs?

I think there is a merit in bringing someone on board. Hopefully, we’ve got a very good event company on board this year. Hopefully, they’ll be able to add value next year as we go forward.

 

You mentioned various educational activities of 3AS of I. I remember you conducted a very successful copywriting course. What are the other activities AAAI does?

AAAI has four or five broad agendas. One is handling client agency issues, particularly to do with clients who don’t pay and run off to other agencies. A lot of our time goes in managing these disputes. We’re an industry body and 85 to 90 per cent of all advertising is through our members. So if a client parts ways with one agency and goes to another, we can put pressure to get the client to come to the table and talk. We spend a lot of time doing that.

 

The other issue is between media agencies and print and TV organisations. We set up a good system to manage disputes between television channels and media agencies. Every month we have a committee meeting with the IBF. If the client hasn’t paid, they bring the client to the meeting. It has been working like clockwork. In case of print, we’re talking to the INS for setting up something like that.

 

A lot of business now goes directly from clients. Even media companies deal with clients directly too.

You’d be surprised! At least in the last 2, 3, 4 years where I’ve been seeing stuff… whichever agency brings a dispute to the 3S of I, we’re able to find a solution. Even big issues are being sorted out.

 

In terms of media companies where they try to bypass the media agency… they go to get a client directly… that’s where a lot of disputes also exist. Right?

Client-agency issue is one. The other issue is between our media agencies and the various media organizations which is print & TV. Actually, we’ve set up a pretty good system to manage disputes between television channels & media agencies. So every month we have a committee meeting with IBF. If the client hasn’t paid, they bring the client to the meeting. It has been working like clockwork. In case of INS, again we’re in dialogue with them for setting up something like that.

 

INS is obviously a well oiled machinery.

Yes, but even with them, there is a talk that we need to setup some process in place to handle wrong reporting, incorrect reporting etc. INS, of course, has a long history behind it. So, the issues with INS are different in nature. But, with IBF, we’ve covered a lot of ground. One is client-agency issues and 2^nd is agency media issues. A lot of our time & effort goes in handling these things. It may look small to you… but these are money issues.

 

That’s why people are members of 3S of I.

They come to this body for that and that’s the role we have to play. In the last 3 years… AAAIis a body that’s involved with media research and in the last 2,3 years, we’re very heavily involved with BARC. Members of AAAIon the BARC board are adding value to BARC. The Comm chairman again a AAAInominee. Hopefully, BARC has started and it will be…

 

Are you happy with the way BARC is performing?

Yes, I think so.

 

Do you think the fact that BARC is still 40% not 60% owned by broadcasters is a little flawed?

Look at the economics of it. For every Rs 100 spent in media, over 85 goes to broadcasters. And if you look at the old rating system, more than 90% of the revenue from the old rating system went from broadcasters. In a sense, broadcasters having 60% equity is lower than what they actually pay, in terms of data. They pay for about 85 to 90% of the cost of data. It was set up as a joint industry body between IBF, ISA  and AAAI and I think we it worked out what I feel is a fair shareholding agreement which is 60-20-20 though the technical committee chairperson is from 3As of I.

 

Will it always be so?

As of now it is. The shareholders will take a call when the current chair’s term expires. I think ISA and AAAI would obviously want an AAAI nominee. But it’s up to the Board to decide finally who it will be.

 

But conceptually, for the future health of the process, is it fair to let broadcasters have the upper hand?

The board composition in 60-20-20 and any major decisions will have to go to the Board. In the Board, you need a 76% vote to pass anything. I think it’s a nice balance of power.

 

In South Africa or some place there’s a small fee levied on all advertising spends that should go for research or measurement. Do you think that’s a better way to do it?

Each country has it’s own system of managing it. There’s nothing like a perfect system. So, with BARC we’ve evolved a particular way of managing how IBF members, media agencies will pay. This system will get iterated because currently, we’re at 15,000 meters… it will go to 20,000… 25,000 in the next few months. It’s already at 17k I think, now. I think at the end of the day, all of us have been somewhat involved. I’ve only been involved for the last one year. But, people like Uday Shankar, Puneet Goenka, Shashi Sinha and Vikram Sakhuja before that have produced a great product. It’s a world class product. We keep discussing that can associations create products… do you need quick decision-making? But, in this case you’ll see actually three associations actively involved. Bharat Patel has been involved right through. It’s admirable they’ve created a world class product! Will there be some niggling problems? There will be. but, we’re committed we’ll ensure these problems will be solved.

 

When the BARC report was out, everything appeared to be topsy turvy. For instance, Zee had been at No. 3 for long and suddenly was at No. 4 even though at primetime it was still in the Top 3. The reaction to it was dramatically different from what we saw last year in the IRS…

I don’t think it’s fair to compare IRS with BARC. Maybe in the case of BARC, we had the power of hindsight. As a result, we put some precautions in place which helped us to avoid the pitfalls. Having said that, it’s still early days for BARC, and I believe the IRS will get it together. Because we need a good readership measurement system; 45% of advertising spends depend on old data.

 

With growth of print going down, more than ever before, the industry needs a good readership study.

Absolutely! Which is probably the reason we need to start putting it on the top of agenda soon.

 

If a media agency comes to you and says ‘How do I take the right decision to advertise in print?’, will the AAAI do anything about it?”

As of now, no media agency has approached us. If they do, we’ll discuss it and we’ll give them an answer. We won’t do anything proactively.

 

What about digital? How many members of AAAI’s managing committee are active on digital?

All the members have digital arms and the AAAI has an agreement with Internet and Mobile Association of India, and meets with them every quarter to discuss disputes. Unfortunately, the IAMAI doesn’t have full control over some of the big digital players. So we’ve been trying to persuade them that it’s in their interest to join the IAMAI and get into a dialogue with us. In a country like India, even the biggest of players will need an association [to support them].

 

When I look at the managing committee of AAAI, you have agencies who have digital arms, but, there are no specialized digital folk there…

This is why this year we’re in the business of setting up digital forums. One forum is the outdoor forum where we will get outdoor arms of all our key agencies to sit together and discuss issues. The next on the cards will be a digital forum where, to start with, we will have the digital arms of all the key agencies sit in. If you look at it, several large digital agencies today are part of a group. It could be IPG… they’re all part of the group. They’ll all start coming, attending and contributing.

 

For instance a Leo Bennett or a Publicis have digital arms, but the digital guys don’t come and attend the meetings.

Exactly, which is why the thought is you set up a digital forum, create a forum which meets once in two months to start with; purely digital people. You set up a forum of purely outdoor people who sit & discuss issues concerning outdoor agencies. So, only issues concerning digital agencies. What are the issues?

 

Can digital outdoor agencies become a part of AAAI?

We have three categories of members: Full service agencies, Creative agencies and Media agencies.

Even creating these 3 categories took us a lot of time. For a lot of time, we were not sure who to let in & who not to.

 

Is there a resistance, like the Rotary Club had towards women until the 1980s?

The reason is simple. If you become a member of AAAI, a media member… you automatically get credit from IBF, you automatically start being eligible for some credit from IBF. Which is why, we have to be careful to not let in someone who will us the AAAI to run off big bills and tomorrow we’ll be held responsible.

 

No, but for instance, I’m an advertising agency in digital.. can I become a member?

You can become a creative member. Nothing stopping you from becoming a creative agency member.

 

In the digital space, everyone is full-service

That’s the thing. If we get an application from a pure digital agency, today we can admit them as a creative agency. We can’t admit them as a full-service agency because they won’t be able to get credit from IBF or IRS etc. etc. So, it’s a little complicated. I think, in the not-too-distant future, we’ll have to expand the member category and we’ll have to look at that. Maybe, in a year or so.

 

The media landscape is changing rapidly…

The fact is that so many creative agencies are being acquired as we speak. They’re all becoming a part of GroupM, IPG and Publicis.

 

Given the fact that mobile has become the biggest media, it’s unfortunate IAMAI is unable to become as big as the IBF.

That’s the problem. If IAMAI can bring all the digital, media, mobile vehicles under one roof, it’ll solve our problem.

 

Like, for instance, as a digital publication, MxM isn’t a member. The fees are so high! Why should I pay Rs. 25,000 to IMAI where for my magazine activity I can become a member at just Rs 5,000-odd a year?

But then tomorrow, if IAMAI tells you that you become a member and I’ll ensure agency money will come to you in 90 days or 120 days… won’t you? Why did IBF happen? There was a benefit for everyone concerned. That television channels bill correctly, on time… which helps agencies and as a flip agencies therefore tell their clients to pay in a particular time. It helps the whole ecosystem. You bill on time, bill accurately, you get paid on time. And everyone has to start doing that. Today, we are not.

 

Obviously, I shouldn’t advise you what you should be doing… but, isn’t there a need for more aggression for making AAAI more inclusive and all of that?

 

We are planning to do three or four things. One is will collaborate with the Subhash Ghoshal Foundation to have the Subhash Ghoshal memorial lecture every year. The other is, we’ll use the facility in our new office to start offering specific training useful for industries. For example, in June, we’ll conduct a one-day course, using international experts, in negotiation skills. We’re in talks with Rajan Nair to scale up his copywriting course. AAAI used to have a copywriting course run by Jameel Gulrays, Larry Grant and Neville Gomes. We wanted to convert it to an online course. The advantage is, you can be anywhere in India and participate in this course. This should, hopefully, help us create other online courses which we might seed-fund through scholarships.

 

We want to create an ecosystem to bring in more talent to the industry. The advertising agency business in India is a 100 years old, and a lot of Indian industries which have come up later (like radio and TV), have borrowed much from it. The CEOs of most television and radio channels have an advertising background. Today, lot of new talent in Bollywood does too. Advertising is a great industry which grooms talent and, as an industry body, we will try to do whatever we can, to further that.

 

When it comes to accepting agencies as members, we have certain criteria because we often take up for them in a dispute with clients. So we need to make sure the agency has a clean record. We insist on a lot of paperwork — balance sheets for three years, profit and loss statements, income tax returns, letters from clients and media etc. Unlike an Ad Club, which is an association of professionals and doesn’t mediate in industry-related disputes.

 

Given that a lot of digital agencies are new, they can’t become AAAI members for a year?

No agency can become our member in Year 1. We ask for 3 years balance sheet and profit & loss. We can let you in as a provisional member, but, we’ll watch you and make you a full member. We have to be very careful and sure about the person’s financial standings.

 

I was there at an event two years back where some small agencies suggested an association or grouping of smaller ad agencies. It emerged from there that there is a sentiment among small agencies that AAAI is an agency for the big ‘agencywallahs’

I think it’s a good point. We have small agency people. There is Vinod Nair. Every year we do one or two small agency meetings outside Mumbai because this year, we’ve done a meeting in Delhi. We’ll try and do meetings in Bengaluru. We’ll definitely do meetings in Delhi. I think we need toi make this more collective.

 

You have such a terrific Ad Club in Chennai!

Small agencies one day have to become big. Small agencies will only be able to solve small problems. If they want to solve big problems, they have to come and sit with them. It’ open! We write to our members every month asking them if they have any problem with any broadcast bill, any INS member. We’ll go to battle for you. Right now, we’re helping someone from Chennai who’s client has been playing truant, including confidentially talking to the VC firm which is funding the client. Sometimes, there are allegations that this is a big boys club! It’s not! There are 24 people.

 

Isn’t there need to be more inclusive, for some amount of spreading of the message. Because, increasingly advertising is growing and new agencies are surfacing throughout the country. AAAI, it appears, doesn’t represent more 25% of ad agencies in the country?

But our throughput is close to 80-85% of the total advertising spends. The largest amount spent is through AAAI agencies.

 

There are a lot of clients and a lot of publications. INS and IBF members today are approaching clients directly. Given the economic conditions over the last few years, many agencies find they haven’t been paid. Do you talk to an ISA or clients to advise them to do business only through agencies, or is that not really your problem?

Our stand is clear. We cannot stop any media owner from approaching a client. Our only directive to media owners is, please tell the client to route the business through the media agency. It’ll help them both, and we can ensure the money is paid up. But there are complexities in the media business, like barters which cause their own problems. It’s then left to individual media agencies to handle it with the individual clients.

 

In case of sponsorships, the deals are done directly…That’s difficult to manage, right? It’s all directly done! Which is why, today as we’re seeing, the industry is getting more organized. Television is, print is, digital is a bit disparate, outdoor is a bit disparate, we expect outdoor to get organised in the next five years. We expect digital to get organised in the next five years. Hopefully, all these associations will become strong and therefore we’ll have a clear association-association understanding.

 

Do you think five years is a decent window?

I’d like it to happen in two years. Five years is a bit too long.

 

What else do you plan to do with AAAI during your presidentship?

I’d definitely like to give a thrust to skill development, which is why I’m trying to drive this negotiation skill and copywriting workshops. These are things I think the association should do on a regular basis.

 

There’s not much research done in advertising. You’ve done a doctorate in marketing. Is there any encouragement from agencies to educational institutes on this… whether it’s the IIMs or or Symbiosis…

NMIMS had started a two-year course which used the surplus from the AdAsia 1982 to fund that. But, they’ve collapsed that into their regular MBA programme. We haven’t done anything until now. Recently, someone sent me a proposal for a PhD on doing a comparison across multimedia, effective as a multimedia channel and they said, “Can AAAI partly fund it?” We haven’t looked at it, yet. Those are the kind of things we may… for example, create a best research award to people who do research in the area of advertising.

 

Given the fact that advertising has been there for a long time… education in the field hasn’t really picked up very much across the country. There are various advertising schools and programmess but quality is very suspect.

That’s why we’re trying this online experiment. If this succeeds, we’d probably like to do this more and more & you may be doing MBA from whichever business school in India, but you can go online and do this course on strategic planning, creative judgment or on media planning.

 

Online is fine, but nothing to beat classroom teaching!

Nothing to beat classroom, but, where is the faculty?

 

From your own agency…

Agency people are working very hard. The clients won’t let you go into such things. Online is one solution, that may not be the only one, but it’s a very powerful solution. We’re trying something. Let us see how it goes!

 

One last question: when you move on from the AAAI President’s job, what would you like to be remembered as having achieved?

That I gave a thrust to skill development. When I was in Ad Club, we had 10 programmes on Ideation, Strategic Planning. Marketing Research and other topics. I’d like to do that if possible in AAAI, through a mixed online, offline approach.

 

A shorter version of this interview appeared in dna of brands dated June 1, 2015