Publicis Groupe had created ViavaKi as a strategic unit to leverage the combined scale of its media and digital operations. As India country chair, Srikant Sastri has been working with the regional and local leadership of Digitas, Starcom MediaVest Group and ZenithOptimedia. In an interview with Gaurav Laghate, Sastri spoke about VivaKi's next phase in India and why it is bullish on digital. Edited excerpts...
Vivaki is very different from other companies like IPG Mediabrands and GroupM etc. We are not just media agency, we are media plus digital plus marketing. That's one key difference. Within the VivaKi umbrella brand, we have two global media agencies: ZenithOptimedia and Starcom MediaVest Group; one digital marketing agency: Digitas India; and one marketing services agency from the Publicis Groupe.
If you see both IPG Mediabrands and GroupM, they fall in one category in the sense that the mother brand seems to be the main brand. They are the market facing entity, they are widely known etc. Whereas in our case we always had the philosophy that our individual agencies are the ones which operate in the market. So Zenith, Starcom, Digitas are our brands which we try and put in the forefront. Vivaki is just the catalyst, or support, to help these agencies grow.
What is the plan for 2013?
The big focus is on bridging the gap with the market leader. In 2012, we have grown substantially higher than the growth rate of the India media industry. we are growing faster than the market and picking up market share. Our media business has grown by 20 per cent. We will bridge the gap gradually.
But aren't the margins are under pressure in this kind of environment?
If you have a vanilla offering and the client is evaluating you only on rates and deals, margins will be under pressure. But particularly over the last 12 months, each of our agencies on the media side has tried to do significant things where it is not just about vanilla products. Each of them is focusing on a analytics, content and digital.
You have been bullish about digital. You also acquired Resultrix last year. How important is digital business in you scheme of play?
In 2013, digital will be contribute to almost one-third of our business in India.
We believe that by growing so fast in digital, we can overcome our late entry in the traditional media as well. We already have 400 people for digital solutions. This has been through a combination of acquisition and organic growth. Our organic growth in digital has been 98 per cent and the market is growing at 30-35 per cent. Apart from that, we have added the acquisitions of Resultrix (a digital marketing agency, in August last year), which is aligned to Zenith Optimedia.
So, a combination of organic growth and acquisitions has 400 people there. By early 2013 there will be 800 people in digital alone. With that kind of strength, we will be twice as large as anyone else in the market.
We expect that doubling of people will also help us to increase the revenues too.
But, don’t you think digital is still too small as of now?
There are various estimates for the size of the digital market, which range from Rs 2,500-4,000 crore. But the important thing is that its growing at five times the traditional media. So it will keep narrowing the gap and we have a dominant market share in digital.
Also, for clients, digital is the future and if they see that you have a leading presence in digital, you automatically occupy a different position in their mind.
And most importantly, now the traditional sectors like FMCGs have started getting hooked on to digital. They are the ones with the big budgets. Financial services, telecom, automobile these are the early movers to digital, but the big budget ones are FMCG and they have gradually started embracing and have actively built it into their agenda.
In current economic scenario, how many clients you think will continue putting their money on digital?
The flip side of digital being only Rs 2000 crores market, as compared to traditional media is that if economy does not look up, a client has to make big cuts in advertising. The big cuts cannot happen in digital. On the other hand, a lot of digital things are measurement driven and therefore it helps clients to be slightly more confident about putting their money there. So even in a tough year, digital still had decent growth.
What will be the role of VivaKi Nerve Center?
Like Vivaki Exchange today does buying at a group level in traditional media, Vivaki Nerve Centre will sit in the centre of all the digital businesses. That is the place where we will make our digital technology investmens at the group level. Zenith and Starcom will not be making investments individually in digital technology.