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| Small, mid-sized ad agencies lose accounts to larger ones |
| Seema Sindhu / New Delhi Oct 03, 2009, 00:16 IST |
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Some see the development as an indication of the market bouncing back after a downturn.
Over the past few months, the advertising sector has seen a huge churn in accounts, from small and mid-size agencies to larger ones.
Consider these cases. Ogilvy & Mather recently got Mother Dairy, which was with Saatchi & Saatchi, VLCC from Equus and Usha Shriram from FCB Ulka. And beginning this year, TBWA/India lost Sony Entertainment Television’s (SET) Max channel, Platinum Guild, American Tourister and Samsonite. Another mid-size agency, Grey Worldwide, lost the accounts of Cholayil Pvt Ltd’s Medimix and Cuticura brands.
Gaurav Seth, vice-president, marketing, SET Max (which moved to JWT from TBWA/India this August), says: “There were many reasons. However, the prime one was that we wanted to refresh our brand. Every few years, the thought processes get saturated. A new agency then introduces new ideas. Moreover, the IPL (cricket) season was near. So, we wanted a brand new perspective.”
Some agencies say that, traditionally, in a downturn, advertisers move to large agencies. Rohit Ohri, Managing Partner of JWT, reasons: “In tough times, advertisers come to large agencies as they are in better position to deliver results despite the difficult market, due to their muscle power and resources. In a downturn, small agencies get affected very fast, as they are dependent on one or two big accounts. If one moves, the agency is in trouble and they don’t have cushion for others.”
JWT, for instance, added Apollo DKV from Mudra to its portfolio. Ohri says the company was looking to hire some small agency but looking at the JWT pitch, it changed its mind. However, Sanjay Thapar, group president, North and East, Ogilvy & Mather, differs. “The answer probably lies in not small versus big, but which the client believes is best-equipped to provide solutions to their current challenges. One is increasingly noticing a trend wherein clients look at communication agencies to act as business partners. Maybe that’s why they move to larger agencies.”
Others say it’s a natural business process. Madan Mohan, COO–West, TBWA\India, says, “That’s quite natural (advertisers tend to change agency after few years). If TBWA has lost some, it has also added some (doesn’t name any citing confidentiality issue).” He admits that the accounts have moved away, but refuses to talk on specific accounts, saying:”We have very good relations with them.”
Another reason behind some of the movements is consolidation. During recession, many advertisers started looking to consolidate their accounts with fewer agencies for better returns and more integration.
JWT’s was the biggest acquisition this year so far, with the Sony (consumer durables) account being a case in point. Parts of the account were with Hakuhodo, Percept and Law & Kenneth and the company was looking to consolidate the account for better returns on investment. Another such example is GM, which has brought in Wieden+Kennedy as the creative agency for its yet-to-be launched Cruze vehicle. Alongside, it has done some consolidation among the new agency (W&K) and the roster agency, Leo Burnett, ending a three-and-a-half year deal with McCann.
Another perspective is that it’s an indication of the market bouncing back, as Arvind Sharma, chairman & CEO, Leo Burnett India, puts it: “Often, when clients substantially upscale their marketing plans, they look for a stronger agency. The converse is also true. When clients substantially downscale their plans, they move to smaller agencies to save on fees.”
Sharma adds there are signs of some advertisers, who had stopped advertising, coming back. Real estate players are an obvious example. Mohan concurs: “The light at the end of the tunnel is visible now. As new clients are coming back, hopefully those who had stopped advertising will also join.”
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