Advertising industry veteran and chairman of Madison World Sam Balsara believes that media agencies have some miles to go before becoming truly future-ready partners to their clients. He speaks to Christina Moniz about the growing role of digital in advertising and the outlook for traditional media such as TV, print and radio in India. Edited excerpts:
Everybody is talking about the relevance of media agencies and what they ought to do to be future-ready. What’s your take?
I dare say media agencies today play a very important role in an advertiser’s life and occupy pride of place among the many partners that an advertiser may work with. This is because media agencies, being younger (relative to creative agencies), have been nimble and agile and lead the charge in providing value for money to advertisers. They are also quick to spot new opportunities and secure relevant talent and put in place structures to monetise them. As a result, today’s media agency has a complex structure, unrecognisable from what it was two decades ago. Media agencies started out as being specialists, but today their structures demand a group of generalists who understand marketing, advertising and media. Agencies now have specialists across disciplines like strategic planning, buying, trading, analytics, digital branding, sports, retail, content and more. It is true though that we have some miles to go before we can offer advertisers a seamless, integrated service.
So why this sudden soul-searching in the industry?
In their quest to increase business, I have been seeing a disturbing trend. Media agencies have lost the ability to say ‘no’ to their clients. As a result, brands are expecting more and more in return for less and less. Further, they expect the media agency to shoulder greater financial responsibility. Because of this, media agencies are not able to afford to hire high-quality talent at the entry level. If this trend continues, it will not auger well for the future of media agencies and advertisers too will lose in the long run. While advertisers recruit top talent for themselves and pay top dollar for them, for some reason, they are not willing to pay for top talent at the media agencies.
Considering the wide scope of work being done by agencies today, what capabilities does Madison World need to hone?
I would say these are largely e-commerce, technology and the use of automation when handling a big number of clients at scale, yet profitably. Already 41% of Madison World’s revenues come from digital. 44% of our people are digital, and our objective is to take this number up further to 50%. The lines across specialisations in advertising are blurring because of digital, which is now part of everything we do.
Advertisers are now tired of having to deal with too many specialised agencies, which is why the future of the large, integrated media agency is bright. We are delighted that Madison has been successful in riding the wave of change and in many cases, driving it. While there are many successful creative agencies around the world, there aren’t many large media agencies. We’re thrilled that RECMA (Paris-based research company evaluating the media agency industry) listed us the fifth-largest independent media agency in the world in
2020 in dollar terms.
The advertising sector in India had a slower-than-usual start in January this year. Now, at the halfway mark, how close is the industry’s growth to the 16% projection in the Pitch Madison report?
India’s advertising expenditure (AdEx) grew 21% last year despite the funding winter, which saw most start-ups going off the AdEx, and this has continued well into 2023. However, many categories are now performing well including FMCG, thanks to raw material costs becoming more controlled. Therefore, we are optimistic that our forecast of 16% growth in 2023 made earlier in February this year in the Pitch Madison Advertising Report will come true. We are seeing a lot of Indian conventional and legacy businesses today waking up to the power of advertising, who are willing to support their brands with heavy advertising doses and in the process, compete with established players and become national brands themselves.
Much has been written about the decline of traditional media like TV and print. With digital overtaking TV spends, are other media formats likely to lose relevance in the near future?
Not just globally but even in India, digital media has overtaken TV in 2022. However, it is important to keep in mind that while the market share of all media other than digital has been slowly declining, in absolute rupee terms, print, TV, outdoor, radio and cinema are all growing in India. This is because each of these have a unique role to play in a brand’s life at different points of time. Given the economic growth expected in India during this decade, my take is that the future of all traditional media will be good during the next decade.