Meaningful conversations are important for all relationships, including the relationship between advertisers and media agencies, but it often goes awry due to different expectations, shared Prasanth Kumar (PK), CEO, South Asia, GroupM, at the e4m Confluence held on Thursday.
During a fireside chat with Nawal Ahuja, Co-founder of exchange4media, PK said: “Having consistent conversations is the key to understanding each other’s point of view and arriving at solutions which is a win-win for both.”
Advertisers and agency negotiations often go awry over issues like remunerations and media rebates. This tussle has reached a point that veteran media planner Sam Balsara suggested during the e4m Confluence that media agencies should learn to say NO to such clients.
Kumar, however, feels shutting the doors of conversation won’t help. “We know every ecosystem, be it a marketer, agency or partner which is an advantage. We know each other's business so absolutely dialogues are possible. It's important to have conversions to iron out issues and then resolve to work together. Marketers have every right to seek transparency and ask for media rebates. Hence, it's good to have conversations on these three-four principles, and then use your intelligence to create space for dialogues. Conversations should not be broken down,” he suggests.
He stressed that coming generations of planners would look up to the current generation. “Conversations around remunerations hit at the heart of the agency model but the future of the agency also depends on it. It is eventually a service business.”
Speaking on the churn in the Indian advertising market wherein many top advertisers of yesteryears like tech startups, gaming, crypto and betting have either slashed down their ad budgets drastically or have shut the shops, Kumar said, “
India to be among top 2 markets
Will the Indian ad industry grow at 15% in 2023, as predicted by the TYNY report of GroupM at the beginning of the year? Responding to this question, Kumar admitted that the first quarter of 2023 (Q4 of FY22) was not as good due to several reasons, including inflation and global economic headwinds. However, things improved from the second quarter onwards (April to August), he said.
Kumar is hopeful that the next two months will make up for the deficit and industry might achieve the projected growth as well. “Despite ups and downs and variations in the business models of brands in certain categories, we may get closer to 2-3 percentage points down (of the predicted 15% growth),” he insisted, adding India will still be in the top two growth markets.
Asked whether the year 2023 was an inflexion point for advertising, Kumar said every year comes with its own challenges and opportunities.
Speaking about the changes in the media services industry over the past three decades, Kumar noted, “The media services landscape is not the same, the market has also evolved from print to TV to digital. There are many platforms now. Solutions have multiplied too, influencer marketing, for instance, is a completely new solution. Besides, it's now a quarter-wise business, with short-term priorities.”
TV’s strength and reach are huge
The ace media planner is not bothered about the slow growth of TV media in 2022. “Firstly, the Indian advertising industry is growing faster than many other developed economies. The television media has substantial strength and the largest reach. It has the potential to grow in many more regions and languages. While digital will continue to grow, the TV sector will also see growth.”
Kumar, however, agreed that the TV industry faces two big challenges - it has too many channels and there is a lack of tech solutions. TV media will thrive again if consolidation happens and they come up with tech solutions, Kumar said. “There are still a large number of advertisers and categories who rely on TV for brand building.”
Performance marketing is growing, Kumar noted, when asked about the latest trends in media buying.
While GroupM controls a significant chunk of TV advertising in India, its independent agencies spread across the country and run the digital ad business.
The GroupM head said he welcomes seeing more and more competition coming in because it just helps you to get stronger. “I don’t think today agencies are not only in the business of managing media. They are very much focused on the transformative growth for clients as well as for themselves. This means you have to be more agile and proactive and think strategically at transformation. If you are going to be myopic in some of the areas, then it’s a trap in which you can fall. This space will only populate and have many more radical and inventive offerings. As an agency, you have to strengthen your offerings so that you are able to give a great narrative to the solutions for marketers.”
“It's very important to have a vision for the next few years as the digital ecosystem is changing very fast; talent and skills are also changing quickly. It’s needed to chalk out a strategy for the next few years. Over 80 per cent of digital ad spends are concentrated among four companies. That has many implications. The balance of power shifts from the agency side to the other side or it becomes equalized. The other challenge is the humongous first-party data, which these four companies own. Media services companies have built enough knowledge to counter that first-party data, which these platforms have. Clients are tempted to go straight to these platforms. You need more insights to do a better job. You got to demonstrate how accountable you are,” said Kumar indicating his resolve to scale up his digital business gradually.
“The ability and the capability that you build to show how some processes can be useful initially to start with one single case. But you need to build more cases to become more credible and convincing for marketers to try it.”
Kumar also predicted that IPL 2024 would be better than IPL of this year in terms of advertising revenues. "A lot of learning happened this year. There are genuinely intelligent and smart people in the industry who will try to make it better next year.”
