Blog

 

By Ravi Balakrishnan

 

Never mind the famous introduction to Charles Dickens’ A Tale Of Two Cities; digital agencies today can afford to stop at ‘It was the best of times.’ Because, there has been no better time to be in this space. For one, marketers no longer need to be coaxed into going the digital route. Also unlike mainstream advertising, almost every new campaign or assignment has the scope for interesting, maybe even ground-breaking work; considering best practices are yet to be carved in stone. And finally it makes a lot of business sense. Through 2012, independents in this space both in India and overseas are being picked at a rapid clip and the people doing the picking are some of the biggest names in the marketing communications industry.

 

The one player that’s yet to announce a key purchase so far, Omnicom, is said to be keenly watching the Indian market, with a representative visiting practically every month. An industry insider is confident of at least three more acquisitions being announced before the year is through.

 

Not bad at all considering that many of today’s hottest targets started life a little over a decade ago, as a ragtag bunch of entrepreneur driven specialist shops. Many of them began either before, during or immediately after the great dotcom bust of 2000. It seemed a quixotic endeavour. Through the early years, most mainstream advertising and media agencies opted to ignore the space entirely. Says Amar Deep Singh, CEO, Interactive Avenues, “Traditional agencies missed the bus while advertisers saw value in using digital media. They now find it easier to buy than to build. It’s a win-win for both, because it gives traditional agencies digital expertise and it helps digital agencies get scale.”

 

Today, even as ‘old’ shops like Indigo Consulting and Hungama Digital Services get picked up by the likes of Leo Burnett and JWT, agencies and their holding companies are casting the net wider. While Ignitee which has survived two name changes and 12 years in the business is an obvious choice, even the three and a half year old 22 Feet which has worked on Titan Fastrack, Kingfisher and Lenovo is being approached. Brijesh Jacob, founder and director of 22 Feet, admits, “Every offer is tempting because it’s either an agency you adored growing up or someone that’s done awesome work.”

 

In the fray are creative and media agencies, larger digital shops, holding companies and even IT firms. But among the first two, there’s a rivalry that’s as old as the days of unbundling. They have squabbled over who gets more face time with marketers and more recently over credits at award shows. And now, many senior practitioners on both sides are convinced that their firms are quite literally the best support system for a digital shop.

 

Media agency heads often argue that considering digital is a measurable, accountable, result driven medium, what better partner than a business that concerns itself daily with these very issues? Says CVL Srinivas, chairman, SMG, “Media agencies are ahead of the curve when it comes to digital. We hear this from clients and not just agencies.” Sudha Natrajan, founder of media consultancy, TMC and a veteran of Lintas Initiative Media believes, “The lines between creative and content, and analytics to chase, understand and convert consumers, do not exist. The talent and understanding in a media agency is more apt to capitalise on this, rather than a creative agency. Creative agencies have stopped understanding media a while ago; some are making a feeble attempt to understand the digital medium, but are failing.”

 

The creative agencies on the other hand argue that in the absence of ideas and content, there’s unlikely to be any consumer response worth measuring. Says Arvind Sharma, chairman and CEO, India subcontinent, Leo Burnett, “Agencies produce TV commercials and hand these over to media agencies who release them. But if you need to manage content on a live basis, just handing it over is not the future.” He believes media agencies can possibly work only in the short run and on specific clients where the communication is less dynamic.

 

Mr Sharma counters the media agency claim about being result driven with, “Human beings are persuaded by content. In a simple thing like door-to-door retail, change the message and the productivity levels are up from 20% to 80%. Around the world, who are the bigger winners of Effies, creative or media?” Madhukar Kamath, group CEO and managing director, DDB Mudra says a tad philosophically, “I disagree with the point of view saying either digital or activation should rest with a creative or media agency. It resides with whoever thinks like a full service agency; addressing brand issues.”

 

While pretty much everyone is speaking (or has spoken to) everyone else, a pattern is emerging where the more content and social media driven digital agencies find a space within a creative network and the more result and search engine optimisation focused shops opt for media companies.

 

It’s an arrangement that Atul Hegde, CEO, Ignitee finds essentially flawed: “They should be doing the opposite. Why shouldn’t a media agency acquire a strong creatively led agency? It will bring completely varied skill sets.” Some digital heads claim they don’t have a dog in the fight between creative and media. This is especially true since it’s quite impossible to go in for unbundling in digital. Says Chhaya Balachandran Aiyer, founder and managing director, BC Webwise, “It will have to be pure play; agencies are okay either continuing independently or merging with an existing digital arm.”

 

The agencies themselves have earned the right to be spoken to on their own terms. The offers are a lot less diffused than they used to be. While previous conversations were primarily about money, these days, companies attempt with varying degrees of success to draw a roadmap. And given how digital firms have grown in size and scale and the frequent inability of the acquirers getting richer, the founders can take pride in their creations continuing to exist as standalone brands for the foreseeable future.

 

Says Vikas Tandon, CEO of Indigo Consulting, “Being part of Leo Burnett gives us a chance to be at the table when a strategy is formulated at the top management level.” And yet he argues, “It would be foolish to not leverage the equity of Indigo.”

 

Gulrez Alam, COO, Resultrix says “We are the leading buyer of Google in India and Performics is the biggest buyer of Google worldwide. We will be representing Performics in India.” However the name remains unchanged even post merger with the Publicis Groupe firm – Alam says the only addition will be the line ‘a Performics company.’

 

There are others who have been in conversations for years and are yet to hear anything they really like. Mr Hegde admits, “There have been no compelling offers; no network that can add value to our growth plans. Being independent is our strength today, allowing us to work across agencies and brands. One of the biggest things about acquisitions is someone comes to you for what you are. Once they acquire you, they try to make you who they are.”

 

Besides, there’s a bit of scepticism about what value an acquisition really brings to the table. An industry insider believes Webchutney is pretty much unchanged and the same applies to Quasar. For the moment though, it sure feels good to be wanted. And digital agencies with their PC, Mac and Tab saturated offices, internet meme based humour and boisterous geeky staff are the unlikely belles of the ball.

 

Source: The Economic Times

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