Japanese marketing communications group Dentsu Inc has just completed the global acquisition of Aegis Media and established Dentsu Aegis Network Ltd in London. All eyes are on Ashish Bhasin, chairman, India, and chief executive, South East Asia, Aegis Media, and director, Asia-Pacific for Posterscope (the out-of-home communications agency of Aegis Media) as to how this acquisition will play out globally and in India. In a conversation with
FE Brandwagon?s Anushree Chandran, Bhasin talks about retaining independent operations despite the global buyout, as also scouting for interesting partnerships in new areas of communications. Edited excerpts:
With Dentsu?s acquisition of Aegis now complete, what are some of the changes we could expect globally and in India?
Yes, the deal has gone through. But it’s business as usual in India and globally. The Dentsu companies will operate independently of Aegis. Aegis brands will retain themselves the way they are. We will look at synergies with Dentsu while keeping our operations separate.
For example, neither Dentsu nor Aegis is that big in India in terms of media buying clout. We are not a GroupM. There may be opportunities where we negotiate on media rates together while keeping our buying operations separate. Scale plays a huge role in media and Vizeum and Carat (the two media agencies of the group) already negotiate on rates together. With Dentsu, it will be more a negotiating unit than a centralised buying unit because buying still remains an integral part of an agency?s work and specialisation.
What were the challenges that you faced when you took over as chairman of Aegis?
I joined mid-year in 2008. Percept and Aegis had decided to break their alliance in India and there was only one Aegis brand operational here, which was Carat. Aegis as an entity was barely known in India and the reputation of Carat was at best sketchy. The agency had seen a rough phase because of its joint venture having fallen through, business losses and people churn. Plus, this was a market dominated by big league agencies such as GroupM, Madison and Lintas Media Group (LMG). I came from Lowe Lintas and, frankly, we never bothered about the infrastructure because we always took it for granted.
At Aegis, I had to get the right office space and recruit the right people. There was no HR department, finance department, etc. It was all put up from scratch. Today, we are around 550 people and handle premium accounts such as Phillips, BMW, the Mattel Group, Tetrapack, etc.
How big a company are you in India? And what are the key levers for growth?
We have been largely focused on organic growth, except for Communicate2. Most of our businesses have been organically grown. The year 2012 was important because for the first time our annual turnover was Rs1000 crore. In media, this threshold is significant. We now aspire to double our turnover every two years. In two years time, Aegis will be a R2000 crore company in India. By 2015, we will be among the top three media groups in the market. We are happy that we have come this far, but there is no reason to be complacent.
Rural marketing will play an important role in our growth for the years to come. I think that the next phase of growth for India?s economy is not going to come from the metros, but from the tier 3 towns and rural areas. There is no agency left that can provide a professional service in rural. We are also doing a great deal of work in digital. For one of our regional clients, we have actually entered the tech development business. We are responsible for their websites across the Asia Pacific, in around 18 countries. In a few years time, I see no reason why we can?t have a 200-member tech team to do similar work for other global clients. If there?s an advertiser in an expensive market such as Singapore and he can get his work done much better and at half the price in India, why shouldn?t he make use of it? My regional role allows me to see what?s happening in other international markets ? it allows me to cross-pollinate talent and get new business. Social media again is a practice we?ve seeded and done well, albeit on a small scale. But we are looking to scale it up.
What is your strategy on mergers and acquisitions? Would you be looking to scale up in social media via acquisition?
As far as mergers and acquisitions are concerned, whether it?s social media or otherwise, we are open to any good partnership as long as it is strategic in nature. In order to be strategic, it has to qualify as one of three things. Either it should add scale or it should have a capability which I don?t have or which may take years to grow. A third factor could be a company which has an innovative product/patent. Else, we will grow it organically. In India, there have been many acquisitions recently by marketing communications groups. But many of these acquisitions have gone wrong, because people tend to go for the flavour of the month.
Dentsu has interests in a broadcast operation ?Hello Japan? which is also scheduled to roll out in India. Would you agree that this smacks of buyer-seller conflict since they operate in the media buying and planning space?
I am not aware of Dentsu?s broadcast plans. I can give the Aegis point of view. Aegis is media agnostic and owner agnostic. If it works for the brand, I don?t care who owns it (the broadcast channel). We have often had conflicts with creative agencies because of this. We might decide that it?s a great idea to put a campaign only on digital and newspapers if it merits so. That?s how media agnostic we are.
How has the ?One Country – One P&L? helped you?
All our business units at Aegis Media have their own separate targets but we all report to the outside world as one P&L (profit and loss statement). We are able to give the benefits of specialisation, without the hassle of silos. Many of our competitors are legacy agencies and have well-entrenched silos.