‘Competitive pitch environment is squeezing agency business’
Stretching the advertising dollar and becoming business partners of brands and clients rather than mere communication agencies is the name of the marketing game today. In this interview, Sanjeev Jasani, COO, Cheil India, talks to Akanksha Nagar about the changing role of advertising agencies, the increasingly competitive pitch environment and how Cheil is getting rid of the perception of being “Samsung’s agency”. Edited excerpts:
In what ways have clients’ expectations from agencies changed with the changes in technology and the tight economic scenario?
Classically, brands used to go to agencies for creative products or big ideas. Over a period of time, because the market has become so competitive, brands don’t consider agencies as just communication partners, but they also look at agencies as business partners. So the role of the agency is also changing — from a point where you were only building communication to a point where now you not only do that, but your responsibilities have grown beyond that to also ensure that the brand succeeds in the market and makes money.
There’s a lot of consultancy work that has come in, communication is no longer the only arrow in the arsenal.
There’s a lot that an agency needs to have in order to succeed. That’s why most agencies today are trying to add many more capabilities within the agency set-up and this is going to differentiate agencies over a period of time. Also, if we are not able to make a dent for our client business, there’s no reason for a client to keep us in the end, so, we try to put more skin in the game. We have been building these capabilities over the last three-four years and now we are a business-connected agency.
What do you mean by ‘a business-connected agency’?
Born digital, we were one of the first agencies to truly be able to integrate all our services, which allowed us fluidity within the organisation. It also allows us to collectively focus on brand and business challenges and we’re no longer working in silos. However, it is often debated that marketers prefer specialist agencies over integrated ones as the former is said to be more ‘focused’ in driving business objectives. This is why we are moving towards this business-connected agency model. There are clients who have extremely specific needs. Therefore an agency must be modular — it must have those specialised units, but those units cannot operate in silos; they must communicate with one another. This is where our “connect-plus” philosophy comes into play — combining various capabilities to create something new and valuable for the client.
How competitive has the pitch environment become today?
The pitch market has definitely become extremely competitive. A lot of clients today conduct pitches just to fish for ideas and beat down the price, making it even more difficult for agencies to do business. While a lot of pitches are genuine, a lot are still very much within that area where people will either beat down the price or optimise it because the first budget that gets cut is the advertising budget for clients. Advertising is not a cost that you need to cut. Also, a lot of brands have also moved to projects, at times to get a good agency to prepare big thinking and then get a cheaper agency to do the grunt work, again to optimise the dollars. To become so competitive many are losing their value as an agency. Therefore, a lot of people believe that clients should pay for pitches. Although a few clients do pay, it is not the norm yet.
What are Cheil India’s plans for 2023?
Other than communication, we have content, technology, data, media, and retail services. Content and tech are the fastest-growing verticals for our business, at present. Content is growing at close to 300% year-on-year. Another pillar that we are trying to build in-house is around data analytics, which will become a very strong vertical for us, next year. We are trying to embrace a lot of artificial intelligence that will go into different facets of business, not just online.
In terms of the clientele, we pick up businesses that give us badge value, which helps us to slowly move away from the perception of us being Samsung’s agency. We are aggressive but we won’t take up any and everything that comes our way. In terms of growth, we are expected to beat the market growth rate.
