Advertising agency Rediffusion Y& R has traveled a long way in the last four years. When Mahesh Chauhan took over as president in 2006, there was a mass exodus of key people such as KS Chakravarthy, or Chax, who had been the creative backbone for the agency for three years. Simultaneously, it also lost key accounts such as Onida, General Motors, DNA and others. So much so, that the agency lost 10% of its topline.
?It was an interesting beginning,? says Chauhan. He joined the agency in 2002 and was the head of its South India business. ?In 2006 when I joined back Rediffusion from Everest I did my ?Bharat darshan?. Met clients, met agencies, and met clients who were exiting. So by the time I settled down which was effectively the first quarter of 2007, we had lost about 10% of our topline.?
Chauhan?s journey from the president of Rediffusion Y&R to its group CEO mirrors the growth path of the agency and its evolution into one of the top communications hotshops in India. The obstacles were many. ?The first thing I did was look at the entire eco system. Not just Rediffusion. I looked at the entire Rediffusion group eco system and made a presentation to Arun (Diwan Arun Nanda, the founder and chairman of the agency).?
He explains that there were two kinds of clients at Rediffusion. The first, ?who seeks the whole nine yards and then there are clients who seek the high end of specialization?. ?We were certainly not equipped to do the first, that is, the client who seeks the whole nine yards,? says Chauhan.
And while clients were expecting collaboration, there wasn?t any. ?Clients come and say you are my entire communications partner. Do what?s good for me,? he says. But while the group had several different operating units there was barely any collaboration.
Secondly, ?I felt that we were not contemporary at that point in time,? he says pointing out that the agency did not have capabilities in digital, design and retail offering then. ?So it was specialization which was no longer high end and it was collaboration that did not exist. So effectively it meant that we were in a space where we were not satisfying either of the two clients. So it was a challenging scenario.?
Chauhan also says that it was very important to change the basic perceptions. ?I was seen as an IPL player, flash-boom here and there, who will make things happen immediately. But I am fundamentally a test match player. I work on the basics. I work on the fundamentals.?
The agency restructured itself at a very fundamental level in terms of hierarchy. Now there are just four levels. ?So there is grade one which is where I belong along with the top management and then there are grade two, three and four and that?s it. So you enter at four and aspire to be at number one.?
?Parallely, we developed a work process that was cognizant of the new realities. With convergence of media into platforms, collaboration in real life was also required. Which is where we trademarked this idea called ?brand conversations? that you hear now and then. Like Ogilvy had leveraged 360. And we invested 15,000-20,000 man hours of training.?
Diwan Arun Nanda, the founder and chairman of the ad agency admits that the change took a long time in coming. ?This change should have happened at least 10 years ago.? We set up the silos about 10 years ago. So we set up Wunderman. We set up a separate media house. And now the time has come to consolidate it into one. But it doesn?t happen easily. There are people and their egos involved and there are many issues that need tackling. We have spent two years tackling these issues.?
Divya Radhakrishnan, president of Redifussion PR and TME, says that it is the media agency TME in the entire Rediffusion eco system that has leveraged the collaborative effort to the maximum. ?And that?s why it is not integration. It is collaboration.? She also says that the way the consumer has changed, media planning alone cannot help and therefore a collaborative effort is very important.
The other realization over a period of time was that ?if you have seven different practices, collaboration is a tougher process,? says Chauhan. So it was important to reengineer the whole group.
The agency came up with a concept called three seeds – content, connect and contact. It then restructured the various units under these three heads. Sudler and Hennessey, the healthcare division and Rediffusion Wunderman, the direct marketing division, belongs to the connect bucket. The out of home agency and shopper marketing division OAP Touchpoint, the event management company Showdiff, PR and the media agency TME are part of the contact bucket. And Rediffusion Y&R, the creative unit, and the soon-to-be-launched design unit are in the content bucket.
The agency has branded this initiative of collaboration as ?1 Rediffusion?. ?It is the branding of the collaborative product which is when we come under one banner,? he said.
However, not all the strategic shifts worked according to plan. Some backfired as well. In 2006, Chauhan made two significant changes in the agency. He got two national creative directors (NCD) on board ? Ramanuj Shahstry from Ambience Publicis and Sagar Mahabaleshwar from Ogilvy & Mather. This format was a first for the agency. But now both the NCDs have quit and Minakshi Achan is the new chief creative officer of the group. ?It hasn?t worked. I am honest enough to admit that,? says Chauhan. ?Do I have plans to get one more person? No. It doesn?t mean I am closed to the option. In future, if there is an opportunity then I will.?
Second, Chauhan discontinued with the servicing department. But even that is now back. He says, ?Servicing never went. Servicing never came back. The objective was to change the mindset. The whole idea of client servicing was carriers of artworks. Because planning was doing the thinking and creative was doing the creative. So the idea was to change the perspective of the guy who has reduced himself to being the operations person. To tell him, that the real value was coming from the thing between the ears and not from the legs.?
Piruz Khambatta, chairman and managing director, Rasna, says, ?We have recently appointed Rediffusion Y&R as our creative agency. I personally believe it is the team and people who handles the brands is what matters the most. And to that extent both the creative and the client servicing team of the agency are extremely knowledgeable. Their account planning is extremely strong. India today is not ‘one India’. There is India within India and therefore even the marketing strategy of Rasna needs to change. I will reserve my comments on to what extent Rediffusion is successful in helping us make this shift, only because we have just launched the campaign and it will run for the next 5-6 months.”
Industry watchers say one of the strongest points of the Rediffusion Y & R success story, and thereby, Chauhan?s, is that the agency hasn?t lost a single account in the last couple of years. But now with the exit of the two NCDs, is there a fear of losing clients? To this Chauhan says, ?I have always believed that clients engage with the organisation. Sure, there is some level of involvement with individuals. But at a larger level it?s driven by an organisation. And an organisation should always be larger than an individual. In fact, I would rate myself as a failure and I have said this again and again that I consider Everest to be my failure. I couldn?t give it the legs that I had desired to give it. Rediffusion has built relationships with its clients for many, many years ? whether it?s the Tata Group, Eveready, Airtel, Colgate or the UB Group.?
However, Nanda is happy with the wonders that Chauhan has done. ?Chauhan is very talented.He is trying to make a difference not just to this company but to the advertising industry.?
As far as earnings are concerned, the creative agency Rediffusion Y&R today contributes 65% of the overall revenues. This is followed by its media agency TME and direct marketing agency Wunderman, each of which contribute between 10-15% to the kitty. And the rest of the 10-15% comes from the other divisions. In 2007-2008, the creative agency saw its best compounded annual growth rate (CAGR) ever of 37%. It had a marginal decline of 1-2% in the last financial year when the entire industry was in the throes of the economic slowdown. It is now aiming for at least 20% growth in 2010-2011.
?I want to get more aggressive in terms of new client acquisitions,? says Chauhan.
Since October 2008, Rediffusion Y&R has added key businesses including Orra, Star Union Dai Ichi Insurance, Marico-Manjal, Tata Nano, Taj Vivanta, Marico – Revive and Sweekar, Polycab, Rasna, Big Channels, Anchor toothpastes to its portfolio.
Agrees Achan, ?We have named 2010 as the year of ?the product?. And therefore the aim is to deliver brave and visible campaigns.?
TME has been one of the star performers in the Rediffusion stable. It saw a CAGR of nearly 10% in the last fiscal despite the slowdown and is expected to achieve the same this year as well. ?As Sir Martin Sorrell puts it, flat is the new growth,? said TME?s Radhakrishnan. ?We have created a tool kit called ?creating conversations?. Therefore the idea is to plan for the consumer and not for the medium.? The second leg of the tool kit is known as ?creating conversation in the neighbourhood?. ?So once we decide what we need to do with the brand, we go around scouting as to where we should talk to the consumer,? she said. ?Earlier when we did not have the process called 1 Rediffusion our planners used to do typical TV plans. But now that has changed. The confidence of implementation comes from the fact that there are experts sitting within the system.? It is due to this process that within 14 months of their launch, the agency has picked up nine new businesses which include Tata Motors (commercial vehicles), Indian Hotels (Taj Safari, Vivanta, Gateway), Legrand, Heinz (Nycil), Indian Overseas Bank, Eveready and Parle. ?My whole logic is evolve or perish,? she says.
On the other hand, Wunderman has adopted a two-pronged strategy. Its presence in India will now be through two entities – Rediffusion-Wunderman (previously called Wunderman India) and Wunderman International. While the former will focus on both domestic and global companies in India, the latter will dedicate itself only to Wunderman?s global network clients.
?The process has been going on for 18 months now. It comes from the fact that client needs are different,? said Leroy Alvares, president, Rediffusion?Wunderman. ?And as a network we realised that there are certain accounts which are very global by nature and their needs are also completely different. And we were thinking how to divide these two focuses. And thus the formation of the second unit came into being.?
Some of the key clients of Rediffusion Wunderman include Tata Motors, Kingfisher Airlines, Birla Sun Life, Accenture, Madura Garments, Airtel, Future Group, Elder Pharmaceuticals, HDFC Home Loans, Paramount Pictures, Himalayan Natural Water.
The agency is launching a new design unit in the next one month. ?We do not have any problems in business for the unit and want it to be profitable from day one?, said Chauhan. ?I would say so far we have achieved only 30% of our ambition. Nothing more than that. The real impact of this change will be visible towards the last quarter of this year.?