FACE OFF : Diwan Arun Nanda, CMD, Rediffusion Y& R

I will not rule out selling further stake”

How was the year 2012 for Rediffusion Y&R?

2012 does not seem to have been a very good year for the advertising industry in terms of revenue growth and profits. But on many dimensions, it’s been a good year for Rediffusion. In fact, it’s been our best year in terms of economic performance. We’ve recorded the highest profits in the 40-year history of the company.

There are other dimensions as well. We launched The Brand Asset Valuator ? BAV ? which is a tool for brand diagnostics, predictive power, risk analysis, and intelligent decision-making action. Over the last 14-16 months, we have hired 32 strategic planning people in the agency. They have come not just from the advertising industry but also consulting companies such as McKinsey. It was deliberate; we wanted cross industry pollination. At the end of all that, we have to produce creative work that shines and resonates with the consumer ? truly iconic advertising that takes the client’s brand to greater heights. That creative journey also started December 2012 onwards. We will hire the most eclectic and creatively gifted people, and not just from India. The first such hire is Sam Ahmed. There will be more such hires.

When you say true marketing partners, what do you mean? Are other agencies not true partners?

In the 70’s and the 80’s, the ad industry had talented people who could sit across the table with the client and discuss their brand and marketing needs. They could strategise as equal partners. Ad agencies have lost those people. The industry has become a supplier of television commercials from being an advisor and a partner in business strategy. This is a reduction of the ad agency’s value in the chain. Which is why clients call for half-hearted pitches where agencies are given a few minutes to present their scripts and are chosen on the basis of a short lived idea. This may work for a one-off campaign, but it is certainly not a lasting partnership between a client and an advertising communications partner. There are advertisers who think, “Oh, he’s got a nice cute song/ jingle. Why don’t I use his services this year?” When it doesn’t work, they are out shopping for the next guy. We are not here to create 30-second commercials that sometimes may work and many times won’t work. We are in the serious business of nurturing brands.

Could you talk about the specialised service capabilities or units that you have in-house?

I think that the time for talking about specialised communications divisions or units is over. We’ve got digital, design, direct and many other capabilities in-house, but the whole exercise is done as part of one exercise. No doubt there is proliferation of media and new interactive points for the consumer. But why must we keep setting up separate cells for all of these? You need to holistically look at the idea. And then tap the consumers with differential communication and strategies at every stage and touchpoint. But this must be done at stage one itself, when the idea is being planned out.

Since you already have a lot of specialised services in-house, why did you choose Edelman for Tata?

Rediffusion is the appointed partner for Tata in the area of public relations, public affairs, looking after brand Tata and strategic advice for the Tata Group. For public relations and public affairs part of the business, we have partnered with Edelman. We had two options before us which we discussed with the client, option one was that Rediffusion sets up in-house what you call a public relations ?division?. Or we could partner with somebody else who was already doing this. When we looked at whether we should do it ourselves or partner with somebody, we came to the conclusion that if we were to provide a service that is world standard, we must have a set of people of that quality within that company. Unfortunately, we did not think that there was that kind of quality people available in the business. We chose Edelman, because it was the largest PR firm and most awarded. Their set of clients is blue chip. So we met them and they met us, and they partnered with us. This relationship is called Rediffusion-Edelman and it is specifically for the Tata mandate.

Why have you bypassed WPP agencies for PR and for media planning?

Martin Sorrell and I have coffee together, on very amiable and amicable terms. Edelman is considered one of the best in the world. Also, they are privately held and that was one of the considerations, since they are not necessarily answerable to Wall Street quarter on quarter.

Yes, we could have partnered with GroupM. GroupM has good planning. So why have we gone to MPG for a strategic planning alliance? Honestly, our media business is not as big as JWT and Ogilvy. There are a lot of competitive clients who are at GroupM and Mindshare and sometimes clients are not comfortable being with an agency that handles competitive business.

What is the shareholding pattern of your company. Would you consider selling further stake?

The shareholding pattern hasn?t changed. It is 60% Indian owned, 26.7% owned by Y&R network and 13.3% by Dentsu. I will not rule out selling further stake but it has to be good for the future of Rediffusion and not just good for Arun Nanda. In the end, this decision has to be good for Rediffusion and its people. As long as it adds value, brings in great stuff and makes people here bigger and better, I would not rule out selling further stake. Without that, I will not cash out.

Martin Sorrell, in all his visits to India, has talked about hiking stake in Rediffusion. Assuming you decide to sell, would you consider WPP?

Even when he?s not in India, he does talk about it (smiles). I don?t know. Possibly. Time will tell.

Is it correct that you are undergoing a re-branding exercise and could go without partner Y&R in your branding?

It is not so much a re-branding, as a brand refresh exercise. Rediffusion is a recognised and strong name in the Indian advertising market. Possibly a stronger brand name than Y&R. If we advise clients to strengthen and build on strong brand names, why wouldn?t we do that as well? We haven?t zeroed on what we want to go with, but we certainly are looking at ?refreshing our image?. Could it happen that we will leverage on the Rediffusion name alone and drop the Y&R? Yes, it could. But we are still deciding. However, change is more internal , than external ?90% of change has happened. The creative change is on its way, with Sam Ahmed. There will be one or two people brought in from out of India, as well.

What is the future for Indian owned agencies?

There are agencies started by young people with talent. But it is sad that some of them sell too soon. I would understand their intent to sell, if they?ve been in the business for 20-30 years and want to just move on. But to sell within a year or two of coming into existence, is it fear? I wonder. Fear that they?ll be overtaken by other talent. Or is it the need for money? I can?t fathom. We haven?t sold majority stake in 40 years. At the time we started, Chaitra Advertising (now Leo Burnett) started. They sold. RK Swamy started. They sold to BBDO. Ulka started, they sold as well.

Chaitra was there for a long time and were actually doing very well. RK Swamy stayed with the Indian owners for a long time – they did well. I can understand them selling after many many years. They built, they grew to a large size and probably, they wanted the benefits of a global network. We sold stake after 20 years. But to sell in a few years, that is strange. Still, looking at things from their side of the fence, nothing wrong with that either. But at the end of the day, that is cashing out.

What do you make of other holding companies in this market – IPG, Omnicom, Publicis?

Well, all of them are trying to emulate what Martin (Sorrell) did many years ago, but they are late in the game. Martin was smarter than all of them and a long time ago. He had the vision that India would be huge. It is similar to what he has done in some other countries and, honestly, he was far ahead of the curve. And now they are trying to catch up with WPP. Whether they will – there?s a big question mark. The truth is that Martin Sorrell has been far ahead of the curve in many businesses – whether it is media, digital or any other.

What about your own strategy as far as acquisitions go? Your expectations from 2013?

No, I don?t think that we will consider acquisitions. In this business, fusing different cultures is difficult. Acquisition means you?re buying into another culture of a company. And each of these agencies have individualistic cultures.

So we will focus on organic growth. We will do well this year, unless we lose business. Last year, our profit growth was 100% over the previous year. This year we will be stable. But we are not expecting much financial growth – not more than 5-7%. Because it is a difficult year for advertisers.

The mood not optimistic; it is not growth oriented.

FACE OFF : Sam Ahmed, Vice Chairman & CCO, Rediffusion Y&R

“I can do a great deal for Nano”

You don two hats – as Rediffusion’s vice chairman and also as its chief creative officer. How do you balance the roles?

My role at Rediffusion is not too different from what I did previously. I had managed operations earlier too and it’s not too difficult because there were people within the system, managing affairs.

So my primary focus at Rediffusion is the creative aspect. The management part will follow, once I have crafted a few pieces and the world has seen it. Because I believe that in an ad agency, everything ultimately filters down from the creative. Once you have your creative mantra set, then what the management should be like, will follow. Most agencies do it the wrong way. They set up the management, the management sets the guidelines and then the creative follows suit. For me, it’s all backwards. For me, the big question is – where do you want to go creatively?

What are the brands that excite you?

When I was offered this job, the brand that excited me the most was the Nano. Mainly because I don?t think that it has been exploited well or advertised well. The Nano can be an iconic brand. I don’t know whether the advertising has done justice to the brand. Previously, I had taken on this challenge for an American automaker. It was doing terribly in the Middle East. People were returning their cars in the context of the Palestine uprising. News reports said that its windscreens were made in Israel. For me, that was a great opportunity, because the brand was doing really badly. I like it when something is not doing well, because I am a solutions guy. And we positioned it very differently. And now it is doing really well. So these are some of the learnings I bring. And there is a great deal that I can do for the Nano.

What are the goals you?ve set for yourself and Rediffusion? Creatively speaking, where is Rediffusion at the moment?

Well, Rediffusion is where it is and I am not concerned with the past. I will definitely want to be up there in terms of culture, people and creative product. It is literally about creating a different culture within the company, a culture that people want to be part of. And I will definitely get the best talent to come and work for us. Because Rediffusion will have a fun, creative focused culture, quite unlike other agencies. The agency has some amazing talent downstairs. All I need to do is to open the doors.

What sort of people are you looking to bring into Rediffusion?

The sort of people I am already working with. Before I came in, I did not know what I was walking into. I had this thought at the back of my head: Do I need to pack in my entire team from around the world? Everyone was willing to come here. But when I reached Rediffusion India, I realised that it is not short on talent. The talent is just tremendous in this agency. Most of them are very talented and they want to be famous. Which is what I want. Once they desire more, I can teach them the discipline. You can?t possibly teach them how to hunger after success, that has to come from within. That said, there are some new people coming in. Not many. These are mainly people I have worked with in the past.

How important are awards for you? Can you tell us about your film-making stint?

Awards are important, because they give you gratification. Any agency feels good about having won at Cannes because it is the Oscars of advertising. But what ?s more important to me personally, is winning the consumer?s heart. For some time, I went into film-making. And I had a lot of fun. The first thing you learn is to think on your feet. And that is what is helping me in advertising now.

When this opportunity came up, it took a lot of convincing on their part to bring me in but I loved the brief. I thought let?s take it up then, make Rediffusion the most creative agency in India. Which is not to say that I didn?t have doubts about myself. Am I good enough for this assignment? But I came in, and third day, we cracked something big for Nano.

What reasons would you attribute for India?s poor showing at Cannes?

Well, it?s not like we don?t produce good advertising. Look at Cadbury, for instance. Its advertising in India is just beautiful. The Shubh Aarambh ad that shows two people at a bus top, is so endearing. Such beautiful chemistry and the execution is impeccable. Or Meethe Mein Kya Hain, again beautifully shot. But execution will not fetch these ads awards. Because they (international juries) don?t get what we are getting as a population. Most juries are looking for something else. They are looking for a life changing idea. Or an original concept. That it moved a billion people may not qualify it as an original idea. Airtel?s Har Ek Friend Zaroori Hota Hain may not win at Cannes, but it?s a lovely film.

What wins awards? Well, 95% is the brand. I could do something for Zandu Balm which is a very big brand in India. But a jury member from Norway does not understand it. There?s a lot of explaining to be done. Still, we have had a few good years at Cannes.

Is long copy going out of fashion?

Texting is in fashion. So in a sense, yes. And I come from print schooling. My school was somebody called David Abbott. I learnt all my advertising from Abbott and Mohammad Khan. I think the youth does not have much time for all that. Unless it?s something about sex. Probably if the headline says ?Free sex?, they would pay attention. So to answer your question, long copy must grab attention. Long copy means a 10-minute commitment. And this is a texting generation. So give me something interesting, something funny, witty, charming, honest or about sex and I?ll read it.

What do you think about the advertising in India and creative leadership? Have we been able to look beyond a Prasoon, Piyush and a Balki?

In India, 95% of the advertising is bad and you have 5% which is good. Much the same as anywhere else in the world. The thing is that the stuff that?s good is really good. And the stuff that?s bad is so bad, that it?s terrible. I know that it is possible to do good work even on a boring account. Unfortunately, when people get boring accounts, they do boring work because they think that it is what the client wants.

On creative leadership, I would say certain agencies have some great leadership. Others, not so. When I spoke about the 95% of bad work that India puts out, that obviously comes in from a majority of the agencies. Not everyone wants to create remarkable memorable work, because they are not remarkable memorable people. The names that you mentioned – they are hungry, ambitious people and they?ve succeeded in putting out good work. When I find people who want to be better than themselves, I enjoy meeting them. I think that there are a bunch of people at Rediffusion who are like that. It?s about the hard work you put in and the effort and the time. When you are out there pushing the limits, everything else falls into place.