'Ad spends will increase over coming quarters'

Lintas Media Group (LMG), a media management company that plans, buys and evaluates strategic solutions for more than 100 clients, has seen a rising number seeking discounts in ad rates. In an interview with Pradipta Mukherjee, LMG’s chairman and CEO, Lynn de Souza, talks of the year gone by and the one ahead. Edited excerpts:

Marketers are looking to cut costs all around, including agency fees. What kind of client pressure is Lintas Media facing?
During January-March, marketers were worried about advertising spends. In fact, all our financial clients took minor cuts in ad budgets. However, since April, most clients are willing to increase ad spends. But all of them, across sectors, are looking at a 10-25 per cent drop in media rates while advertising in a medium. So, while advertising volume and spends may increase, all clients are looking at discounts in media rates.

How has advertising being impacted?
If the January-March 2009 period is compared with that of last year, ad spends have actually increased by 14 per cent, a bulk of which happened in March, due to festivals as well as because of ongoing polls and the Indian Premier League (IPL). Although television and newspapers are heavily dependent on ad revenues and appear worried in the short term, ad volumes for newspapers or TV have not dipped at all, while in value terms they have increased.

What is the outlook for the next few quarters?
The April-June quarter is likely to show a 7-8 per cent growth in ad spends this year over the corresponding period last year. For the next few quarters, too, IPL and polls will dominate advertising. A lot of money is going into news and business channels, and general-entertainment-channels are also planning new soaps. So, ad spends by media are also going to increase over the next few quarters.

Going forward, we expect digital media and out-of-home media to grow significantly. Currently, digital media is not even 5 per cent of the total ad pie, but that is exactly the reason why a lot of thrust will be on these emerging media.

What will be Lintas Media’s focus areas this year?
Capability building in digital and out-of-home space. We will invest in more technology into these areas. We will also look at adding bigger clients during the current fiscal year. Currently, we have 114 clients. We added around 12-13 new accounts in 2008 and touched Rs 458 crore worth billing. However, the first four months of 2009 was a big loss for us, as Idea Cellular discontinued its account, estimated to be Rs 100 crore in billings.

Any particular changes within the organisation?
We are looking at a few major structural changes, which we cannot disclose right now. We have recently reshuffled senior management people. N P Sathyamurthy has been promoted to President and COO, and would be in charge of the group’s western region operations and the Digital Collaborative. Sudha Natarajan takes over as President and COO in charge of the group’s northern operations, in addition to its southern operations, from Delhi. Amit Ray has joined the group as president, with specific charge of the ITC Collective and the Kolkata Collective.