They are offering internet, mobile marketing and in-film placement services. | |
| Below the line (BTL) advertising or 360-degree marketing might be the white knight that the advertising sector is searching for. |
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| As the industry struggles to shore up its wafer-thin margins, with media buying agencies reportedly charging anywhere between 2.5 per cent to a paltry 0.6 per cent commission from clients, industry experts point out that BTL can provide some breathing space. |
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| Explains a media analyst, "Media agencies have not been to able to break even with their core business of media buying due to expenses such as infrastructure, research, salaries and increasing competition in the market. In the dog-eat-dog world of media, sometimes agencies succumb to even a 0.6 per cent commission to get Rs 300 crore business." |
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| Of late, most media companies have been offering services ranging from internet and mobile marketing to in-film placement. |
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| For example, GroupM - the largest media agency of the WPP group - offers interaction internet and mobile marketing, kinetic outdoor advertising, dialect the retail and activation cell, ESP Entertainment, sports and promotions division, ShowM product promotion cell, StarM celebrity endorsement division and brands and films in-film placement cell. |
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| Some analysts estimate that margins in the BTL activities are as high as 20 per cent, which is nearly ten times higher than what media agencies make from their core business of media buying. Others are not as confident but agree that BTL can increase margins. |
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| Shashi Sinha, chief executive officer, Lodestar Universal, said, "For BTL activities, the margins are relatively higher as it is treated as a separate division of the media agency by the client and the media." |
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| He elaborated that while a media agency would earn 2-2.5 per cent commission on the total advertising media spend of its clients, it can earn 9 per cent upwards on value-added services. |
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| Lodestar Universal, for example, earns 20 per cent of its revenues from non-media buying activities. As a result, its overall margins increase by about one percentage point. If it's not commission, agencies earn a flat project fee. |
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| Hiren Pandit, national director, ESP- entertainment, sports and promotions, GroupM said," At times we are just the strategic thinkers for the event and outsource implementation, thus charge project fee after considering overheads." |
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| Martin Sorrell, chief executive officer, WPP group has been recently quoted saying that more than half of the company's revenue came from market research, public relations, branding and identity and healthcare communications. |
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| He also mentioned that branding and identity healthcare communications and specialist communications revenues grew by 16.7 per cent in the first three quarters. |
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| Pandit said, "Dialect-the retail and activation arm of the ESP has grown over 100 per cent in the past year." A study conducted by IMAG, Lintas India also mentioned that by the end of 2007 BTL activities could contribute 50 per cent of the overall communication spend of advertisers. |
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