`Advertisement agencies should stop devaluing their services`

Q&A: RANJAN KAPUR, country manager (India), WPP

Ranjan Kapur is a man of many hobbies, busy finishing his three books and preparing for an upcoming sculpture exhibition. After receiving the lifetime achievement award this year, Kapur, 66, the former Ogilvy & Mather chief, shares his views with Ruchita Saxena on the Indian advertising industry in turbulent times of inflation and a global economic slowdown.

What is the impact of the economic slowdown on the ad industry?

So far, the Indian advertising industry has not been impacted by the slowdown. For WPP, till now we have only seen an acceleration. Most of the advertising agencies in India are actually ahead of their target. Inflation in India, although touching 11-12 per cent, may just be a short-term trend. But as WPP CEO Martin Sorell said during his visit to India, 2009 could be a tough year.

How can ad agencies design a better revenue model instead of compromising on margins when pitching for accounts?

It is a long-drawn battle, but the first thing that ad agencies can do is to stop devaluing their own services.

The time has come for agencies to emphasise their role as a partner for their clients and not as suppliers. I know of some agencies in India that were also offered equity in companies by their clients. In this kind of a model, agencies could get value dividends for their work.

By demanding their rights, agencies would benefit more than by compromising on their margins. After all, it is we who have developed a culture of pitching and shrinking margins. So we will have to do something about it.

How original is Indian advertising? Are we apeing the West?

Indian advertisements are culturally very relevant. For this reason, the juries at award functions abroad actually see Indian ads with much greater interest.

However, it is the industry’s growth that needs to be scaled up. In a few years, India will become the third-largest economy in the world. But the advertising industry is just 0.4 per cent of the gross domestic product (GDP) compared with the 1 per cent average worldwide.

Ours is just a $5-billion industry as against China’s $35 billion. The Indian managers need to wake up to this advertising potential and spend in line with their revenue-generation capability.

What aspects of the Indian ad industry can attract young talent?

In the last 37 years of Indian advertising, there has hardly been any expatriate heading the agency. It is only recently that some have been appointed.

The Indian ad industry is by India and for India. This is something that we can take great pride in. This is not the trend in other countries like China, where there are many expatriates, but their margins are a sorry sight. Similar to banking, even in advertising, we are the net exporters of talent.