MxMIndia

Tag: acquisitions

  • Soon after making the acquisitions of MarketGate and Istrat public, Publicis Groupe's Jean-Yves Naouri and Bertrand Siguier spoke with MxMIndia

    Acquisitions will continue: Publicis

     

    By A Correspondent

     

    This is Jean-Yves Naouri’s third officially announced visit to India. As Chief Operating Officer of Publicis Groupe and Executive Chairman of Publicis Worldwide, he has been the group with 19 years and knows perfectly well that India is a very critical market for the network over the next five years. Soon after announcing the acquisition of well-known consulting firm MarketGate and digital shop iStrat, Mr Naori addressed the media in Mumbai. He spoke to MxMIndia and a dozen other business and trade publications before flying back to Paris soon after midnight.

     

    Jean-Yves Naouri

    We had made a conscious decision a few years ago that Publicis will work with two strategic pillars – one is digital and the other is e-commerce. This is a long-term strategy that we have drawn out. So we are not considering tactical investments, we are moving forward using our previously devised strategy.

     

    When you talk about slowdown,  many countries dream to have the kind of growth that India has shown this year. We are very confident in the potential that India seems to offer and have taken some measures that seem to be promising. So we strongly believe in the potential of India going forward and by making investments we are not looking at the GDP numbers vis-a-vis the year 2012 but the longer implications that it would offer.

     

    Don’t you feel it would have been apt for you to have a one digital agency servicing all other agencies?

    This is not the approach that we have. For us digital is an intrinsic part of our vision and strategy and we want to make Publicis group the numero uno digital company. We want every single operation to become fully digital. This is a change of approach in order to better service our client. You cannot expect one digital agency to service all our clients not only because of cost reasons but also sometimes they do not have all the capabilities required to cover all areas. So we have made a choice to have a different approach where we want every single operation to become fully digital. We are consciously strengthening and adapting our every single operation and that’s how you see Indigo joining hands with Leo Burnett and participating in this transformation. Also, iStrat joining Publicis and Resultrix joining ZO… Saatchi has a very different organic approach where it is hiring digital talent to transform itself from the inside.

     

    So wouldn’t hiring hiring talent have been better?

    I do not think one strategy can be better; strategy is a result of the approach that we are taking or the conscious analysis of the best way by brands based on their contracts and situations and sometimes we feel it is better to do it organically and sometimes through acquisitions.

     

    How would you rate the performance of Publicis Groupe in India?

    Firstly, we have made India our true area of focus. As we’ve said, in the BRIC countries we have doubled the size of our operations in Brazil over two years, we are on the verge of doing the same in China and we continue to accelerate our efforts in India.

     

    And if you were to compare your network versus the others operating in India?

    I do not look at comparisons rather I look at our clients – that is what matters to us. This has been the driving force for us. When we announce our strategic plans the first element that we take into consideration is: what do our clients need and how can we take them to the next level? So the acquisition of MarketGate on the one hand that brings in some strong expertise in consulting to the CEOs and CMOs with undisputed talent is one such message. Also, the fact that we have announced our partnership with IBM in the area of e-commerce and have presence in China and in India is also a strong commitment to this domain.

     

    We also look at initiatives in the healthcare domain where India is very strongly placed.

     

    Is research something that you are looking at in a big way?

    No, we are not looking at research for some conscious reasons. We feel odd that a same company will be releasing a campaign and will also be judging its relevance through a market research company of its own. We see an ambiguity there and are not pleased with it. Secondly, there is a profound transformation of market research these days and it’s due to digital. It enables you to have access to the best sample of audience from around the world that can provide you immediate and more adequate reactions to your needs. So we do not feel comfortable investing in research.

     

    How active is Razorfish going to be in India?

    It is very likely that we will see some development of all our pure-play digital agencies.

     

    In 2010, you had mentioned that your revenue will double by 2015. Do you see that goal being achieved a bit earlier?

    If there is a surprise, I would announce it in due time.

     

    Any regrets on not bidding aggressively enough for Taproot India?

    We never look back; we look forward.

     

    Can we expect any more acquisitions in the near future?

    We will continue to explore possibilities and again, I use the word acquisitions in different ways. It’s a acquisition of talent, of companies etc.

     

    Are you looking at acquiring more creative agencies?

    We have no limitations in the areas that we are strong in. India is important for us and we will continue to strengthen our focus around it.

     

    ***

     

    The advertising business is not like Bollywood: Bertrand Siguier

     

    You could mistake him for a pensioner sipping his cup of coffee and reading the papers at the India International Centre or the Indian Merchants Chamber. At the media interaction at Mumbai’s Four Seasons Hotel last Friday, he was quiet looking around occasionally to figure what was happening.

     

    Bertrand Siguier has a rather long title: Special Advisor to Maurice, Levy chairman of Publicis Groupe. He was Executive Vice-President of the group till 2009. Mr Siguier has been overseeing India operations for a while and is familiar with the market here. Soon after the announcements of the twin acquisitions of MarketGate and iStrat, and as the mediapersons made a beeline for Jean-Yves Naouri (interviewed above) and MarketGate CEO Shripad Nadkarni or IStrat CEO Navneet Singh Sahni, MxMIndia caught up with Mr Siguier for a quick, freewheeling chat.

     

    Bertrand Siguier

    Wouldn’t it have been better if you would have had one digital agency that services various creative agencies rather than three that the Publicis Groupe has acquired this year?

    It is one of the ways to go about doing business but we have chosen to do it the other way round and that’s because of our agencies. For example, given that Leo Burnett is quite big and that it prefers to operate in a certain way, we didn’t want to twist their arms and force Arvind Sharma to follow a certain model. That’s one of the reasons that we acquired Indigo, which is one of the biggest and best digital agencies in this country. If you ask me whether Indigo would work with other companies in our group I would say, yes.

     

    Do you think the issue of fiefdoms or egos is an international trend or is it just limited to India?

    It’s an international trend I would say except a few countries. Like say India, which is a priority and a large market and has potential, we can yes. But in other countries that is not the case. It may be okay for India, Turkey or Germany.

     

    What about Saatchi & Saatchi? It’s still not up there in India?

    Saatchi will be back; we’re not going to let Saatchi go down. Saatchi has a huge history and we need to have a strong Saatchi in India, which hasn’t been the case for some time. It will be the case starting next year. There has been a change in leadership already last year with the coming in of Matt Seddon who is not Indian but has done a terrific job in restoring order in the organisation. It is not an easy job to do….

     

    What about Publicis – are you content with the way the agency is doing in India?

    Oh, yes, we are very happy with Publicis; altogether it is doing very well. If you ask me, I am not pleased with anything but given the overall picture Leo Burnett is doing well, Publicis has made a lot of progress but I still want to see more in terms of creativity and visibility. For example, we were not present enough in Goafest so, that is one area that we need to work on.

     

    But Publicis is not considered a sexy agency in India…

    You may be right but you have a very Indian focus. I do not know why this market is obsessed with stars – the advertising business is not like Bollywood. I know that in India some creative people are considered as stars. You see them in newspapers, you see them with beautiful ladies, you see them trying to film things for Bollywood…we are not in that league. I think we could do a bit more.

     

    With low margins, is it profitable to stay in the Media agency business these days?

    Low margins on big business can produce some satisfactory results. If you play legally and in a straightforward way and if there are no funny things going around and under the table, it’s a low-margin business.

     

    Will the doubling of turnover for Publicis happen sooner than the prescribed timeline of 2015?

    I only have a guesstimate and I think we can achieve that before the set timeline. It would be good if that happened.

     

    Are you looking at hiring more talent across creative agencies here in India?

    Yes, there is a possibility. It is a question of opportunity; I do not want to make a big declaration. If we come across companies that we feel are exceptional and have exceptional talent then why not…

     

  • The Anchor: 4 reasons why digital media’s mergers and acquisitions are a good sign

    By Rammohan Sundaram

     

    #1 It is a sign that the market has matured:

    It shows that India as a market has matured. All these agencies which have been acquired are at least 10 years old and these are the people who have done all the hard work – whether it is Communicate2 which was acquired by Aegis Media or Hungama Digital acquired by JWT, etc. It’s a natural progression and these are things which happen when businesses are scaling up.

     

    #2 Large agencies bring large clients:

    When large agencies acquire a standalone agency, it comes with large clients and as a result, it helps the standalone agency maintain continuity in the business, especially for clients attached to the agency that they have been associated with over the last several years.

     

    #3 Standalone agencies are allowed to retain vision:

    It is important for continuity in the business, and there is no reason why the standalone agency needs to change post-acquisition. While operational and financial processes will inevitably change, how you run your business usually doesn’t. This is so that there is a continuity of the vision that first started the standalone agency and has ensured the continuation of its growth.

     

    #4 Brings more talent to the agency:

    The companies which are successful today are those that have got tremendous talent. In order to build talent, loyalty and attrition rates which are lower than any other competitor is the key to success for an advertising agency in the business today. This is what most of these agencies have managed to do and that’s the differentiator.

     

    Rammohan Sundaram is CEO and MD, NetworkPlay Media Pvt. Ltd

     

  • PR also lacks enough qualified people, says Ketchum Sampark's N S Rajan in a refreshingly frank interview with MXM, on life post-acquisition and mid-slowdown.

    PR must look up to advertising: N S Rajan

    By Johnson Napier

     

    With foreign players taking a keen liking to India, the PR industry is poised for a quantum leap. Not the one to miss out on the race, Ketchum Sampark is doing everything right to stay on track and be counted as a contender worth the deal. In conversation with Johnson Napier of MxM India, N S Rajan, Managing Director of Ketchum Sampark outlines his agency’s plans to be counted amongst the best and why quality, and not numbers, will be the differentiator in the race to win and retain more clients. Excerpts:

     

    Q: It’s been some 7-8 months since the much-hyped tie-up with Ketchum. How would you analyze your journey post the acquisition?

    There has been no change as such at the ground level but yes, processes have changed, reporting has changed – it is now more in terms of financial and MIS reporting and not so much in operations. Also, what probably has changed and helped us is the access to information, access to best practices, access to case studies… so it is a win-win situation for us while we continue to work the way we are.

     

    Q: Could you elaborate on your choice of shortlisting Ketchum as your foreign partner?

    We have been working with Ketchum for more than three years now so this tie-up is actually a formalization of our relationship. We have been very comfortable with the cultural match. I think philosophically, Ketchum and Sampark have always had the same focus in terms of client deliveries, choice of clients, etc so there were a lot of similarities between us.

     

    Q: Come to think of it, the venture looks like Omnicom’s reply to making its presence felt in India – just the way Publicis did with Hanmer. Your thoughts?

    I think this is something like a process of evolution. We have been working with them for 3-4 years, and it just happened that the timing is now. It did take time for us to tie the knot as there had to be a comfort level on both sides. We probably got into a JV at the opportune time as the media is opening up and India remains a good market for bringing a foreign partner where we are able to service global clients in India and also open up our offices and network for Indian clients wanting to go abroad.

     

    Q: On the growth perspective, how would you analyse the year 2011 for your agency?

    I think we have done well. We have grown by 25 per cent and this has come on the back of 30 per cent growth that we recorded last year. Also, we signed on a lot of good clients. This apart, we just recently announced Ketchum Sampark Digital and also set up specialised verticals in healthcare and infrastructure. We believe this tie-up will take us to the next orbit in terms of skill-sets, information flow, etc. More importantly, what we have learnt from this venture is best practices. We have to understand that the market dynamics are changing and people are looking for specialised services in each of the areas. I think there is a lot of comfort at the client level if you are able to bring in value in each of the domains. That’s because clients are also looking at core focus, specialisation, skill levels, agency background, etc. So to that extent healthcare and infrastructure remains our focus areas because a huge growth is predicted in these areas. Another important area for us is crisis communications; we believe a separate vertical would be good to go with for crisis.

     

    As for our agency, we are divided into four verticals – brand, corporate, technology and financial services. Healthcare and infrastructure would continue to be separate verticals but could probably be clubbed under corporate. This apart, sports is another area that is huge for us. We have handled some very big marquee properties across India ranging from cricket, golf, football, etc. So that would continue to remain a focus area for us. We also engage in organising festivals like the Jaipur Literary Festival which witnessed the gathering of more than 400 authors and many media professionals from around the world.

     

    Q: How according to you will digital change the way PR functions, say, in a few months from now?

    According to me, the game changer in 2012 for the PR industry will be digital, as its significance and importance will be largely felt. The traditional way of communicating today will probably go direct-to-consumer with the help of digital. Also, with digital, there is a lot of opportunity for content, for social media, for gathering traffic to your site, to build conversations around content and also monitor them, etc. With Ketchum being one of the global leaders in digital I think we have a huge advantage in terms of assimilating knowledge much faster, so we will be able to scale up very quickly.

     

    Q: You’ve mentioned a growth rate of 25 percent plus; does that translate to occupying a fair market share as well?

    While we figure amongst the top 5-6 agencies in India, our emphasis has always been on quality. We would probably be happy if we were perceived as an agency known for its quality. I may not be the No 1 in terms of size, but I certainly will be No 1 in terms of quality. We would love to earn the respect, trust and long-term partnership from our clients. Also, we would like our employees to be happy. If in the process of doing all this we improve our ranking, we’ll be happy with that.

     

    Q: Despite the low-warning signs, how are you warming up to the current economic situation being tagged as ‘tough’?

    While on the slowdown, let me tell you that during the 2008-09 recession, when most agencies lost business, we were the only agency that grew that year – even if the growth was single digit. So there will always be some amount of hardship so long as clients believe that you will be able to deliver value to them. In our experience, our clients have retained us during the tough times as well. The challenge for any business is to see through the bad phase and that is possible when you are focused on quality, people and such attributes. But if you are chasing to be the No 1 player then there are chances of you losing out.

     

    Q: Do you plan to scale up operations across other centres in India?

    We are currently present in seven cities and we do have aspirations to roll each of the practices in each of the regions. We just hired a senior person to handle our office in the South so we are taking all steps necessary to grow all our offices. Also, we have an SBU concept where we encourage and handhold all our businesses to be profitable and contribute to the growth. So that process is happening. Finally at the end of the day, it is important for each SBU to contribute to the overall growth of the agency.

     

    Q: Where the industry is concerned, what can be done to make it more organised than the state it is in now?

    I think it should begin with individual agencies taking the onus and coming on a common platform to address the woes of the industry. It is important for the PR industry to look up to the advertising industry which, despite having its share of problems, is much more organised. Today, one is not even sure what is the exact size of the industry. If you put the top 10 PR agencies together I think they would be estimated to be around Rs 300-400 crore whereas the unorganised industry would be around Rs 150-200 crore. So the total industry size could be anywhere between Rs 500-600 crore. Also, the problem is compounded by the fact that compared to other markets, our fees are a little lower. Our fees are 30-40 percent lower than even that of China. There are too many players in India leading to the fees being compromised. But having said that there are clients who are willing to pay a premium if they are convinced about the quality of the service being offered.

     

    Q: What is the way forward then?

    I think in the long term a lot of agencies would opt for the consolidation route. What is happening is that companies here are also realising that they need networks that will lead them to get more organised, have access to better offices, skill sets, etc. All this is possible with a larger network. While pop-and-mom stores will continue to exist they too will increasingly take the consolidation route.

     

    Q: Any other attributes that need to be paid greater attention to?

    One attribute I think needs more attention is people. I think we don’t have too many qualified people. Also, the good PR professionals are not adept at running a business – a lacuna that needs to be bridged. This is possible with effective training programmes. We have our own in-house training programmes and we hope to train our colleagues on this front as well. Also, we plan to have a fixed number of hours for training our staff. At the end of the day, being in the services industry skills and people are important attributes that one needs to pay adequate heed to.