IAA Debate: Are agencies keeping pace with advertiser needs?

The second debate of the second season of the IAA Debates series, presented by Dainik Bhaskar, was held in Mumbai on 16 February. The topic was, ‘Agencies are not rapidly reinventing themselves to stay relevant to changing advertiser needs’. The debate comprised of four speakers: Sameer Satpathy, chief marketing officer, Marico; Ashish Bhasin, chairman and CEO South Asia – Dentsu Aegis Network and chairman Posterscope and psLive Asia Pacific; Shireesh Joshi, head –strategic marketing, Godrej Group and Sam Balsara, chairman and managing director, Madison World.

 

The debate was moderated by Anant Rangaswami, editor, Storyboard, CNBC TV18 and senior editor Firstpost.com

 

Satpathy and Bhasin spoke for the motion as Joshi and Balsara spoke against it.

 

Satpathy opened the session up by shedding light on the ecosystem within which this debate was set. He said, “There are some challenges that we as marketers are facing. First is modern trade, second is e-commerce, third is digital. If you look at modern trade, the way people shop, the way the supply chain works over there, modern trade is ready to stop the chain of our brands. Today brands theoretically can enter a market and don’t need ‘distribution’ as e-commerce gives them access. Competitiveness is going to increase. It is already happening in China. A decent part of the retail market there (15 to 20 per cent) comes from e-commerce. That changes the competitive sector very quickly for us. Digital is changing the way we consume media.” Today, he said, it is difficult to distinguish where the medium and the message begin and end.

 

“It is not about picking one medium over the other but about how efficiently you take your ideas across. It is changing things in a very different manner.”

 

He further stated, “There are advertising, media and insight agencies. I think the insight agencies are the most sorted out. Media agencies are a little better but creative agencies are completely out of whack. They have not moved at all. We have a sea of sameness. Low margins. Values are created at the interface in today’s interconnected world. The issue that also plagues the industry today is the lack of talent. The investment in talent is very lopsided. Creatives get paid a lot. The other guys don’t get paid as much. That is creating issues. The way Gutenberg opened up knowledge, the same way digital has opened up a TVC. Today, a TVC can be replicated at a very low cost.”

 

Joshi elaborated on the changes he has observed in the agency ecosystem. He said, “In today’s day and age things can move very quickly especially where agencies can respond very quickly. There are agencies that have presented a case study where they are so in sync with their client that they have field teams in every state in the country and at headquarters and they meet the client every month. They don’t wait for a brief from the client. They’re like a basketball team tagging each other back other where they are ready to respond right away. We saw this approach to speed in something as mundane as TV production. They were churning out the edits as the shoot progressed, so as soon as the shoot finished, they have the edits ready to go.”

 

Adding to the above point, “First action I’m seeing across agencies is the action on speed. Second is on capability. Every few weeks, if not months, we hear of an acquisition. This shows that capability is needed. Agencies don’t have the time to home-grow capability. So it’s not about just bringing in capability it is about moving it to the next generation. Third is the work flow. Working as a single window is also new. All of this has taken place in the last couple of years. If you look at media agencies, it isn’t just about placing your ad, the media agency is now creating content, generating ways of communicating a product, it is about creating a new age creative. Even in traditional media we’ve gone to a level of media analytics never seen before.”

 

He emphasised on the points made by him to state that there are so many examples where agencies have not only got it but taken action, acquired capabilities, taken action at a structural level, found ways of building new skills and expressions.

 

Bhasin countered, “Shireesh touched upon the aspects of speed, integration, all of which is exactly where we were thirty years ago. We must be a very funny industry as until a few years ago some of us strongly protested, we used to run seminars that said ‘advertising works’ which is like a doctor saying ‘surgery works’. We just haven’t haven’t reinvented ourselves and the earlier we recognise it the faster we’ll be able to do something about it.”

 

He also chided the agencies for not having long term vision. “All of us can see the digital writing is on the wall. What did we do with that knowledge? We started making nice powerpoint presentations to our clients saying digital is important. What did the rest of the areas peripheral to our industry do? A 20 year old kid went out, figured out what Facebook was, set up a social media company. Somebody else figured out how to set up a search engine marketing company. But what did agencies do? First they denied it. Then they put it on powerpoints and then when the new guys had really built it up, they bought their companies over which only says that ‘Join us and even you can stop reinventing yourself and we can all be the same’.”

 

“We’re smart people, we’re forseeing the trends, we’re living in denial but we just don’t have the courage to invent.”

 

Balsara reeled the debate into the core argument based around communication by saying, “The most powerful argument I heard in your point was about distribution. We’re in the communication business not in the distribution business. It seems to have become fashionable in many client circles to pass on the blame to agencies. And even agencies, without thinking are so ever ready to accept the blame. No other business in India has changed as much as advertising or the associate agencies have. Coming to media agencies, there are now highly specialized people in so many diverse aspects of communication. From a full service agency from as recently as 1995, Madison today offers ten separate specialize units of communication services. Advertising itself has moved from being mere information to engagement, conversation, storytelling.” 

 

Bhasin reiterated the issue about the issues with staying in denial, “It is not about change it is about reinventing yourself all the time to stay relevant. The problem with us an industry is that we start believing in the same garbage that we dish out. We’ve just stopped reinventing ourselves somewhere down the line. Accept reality. If you don’t accept reality, you of course will not reinvent yourself.”

 

Balsara, “In this debate, we’re getting a bit caught up with what is the client’s responsibility and area of operations and what is ours. While it is wonderful to say that we all operate in one continuum and there is no diving line, clearly, that is just a lot of hogwash. How many clients are resourcing their agency so that we can go to IIM or give a new business suggestion?” 

 

A questioned was raised to Balsara about who is responsible for an agency making profit. “The agency’s profitability is obviously the client’s responsibility.” 

 

Verdict

 

At the end of the debate, the audience, which had taken a stand at the beginning ‘For’ or ‘Against’ the motion, revised their positions based on the arguments made by both teams. Based on the audience’s response, Rangaswami declared the team speaking ‘Against’ the motion as the winner.