LANDS OF THE RISING AD DOLLAR

CHARUBALA ANNUNCIO (with inputs from Anusha Subramanian)

As India and China witness a steep growth in ad spends, the voice of the Indian ad agency rises in global pitches.

“Speak to your guys at Grey India…” This at first may seem like a routine statement made by an international client to his agency in China. But it covers a vast paradigm shift for the Indian agency and the Indian advertising industry. For this was a client telling the Chinese agency to follow the Indian template of the brand’s global strategy instead of shipping it from its American headquarters.

The world’s attention is riveted towards India and China, especially after the famed BRIC Report by Goldman Sachs. And advertising budgets are growing furiously in keeping with the economies. In India advertising already stands over Rs 11,000 crore growing at 10 per cent every year. China is much larger as estimated ad spends totaled over $15 billion (Rs 67,000 crore). By the end of the decade, Nielsen Media Research forecasts that China’s advertising market will become the second largest in the world, surpassing Japan. It was in the top five in 2002, around the same size as Germany and the United Kingdom.
It is imperative for every brand now to get the communication right in these markets. So no longer does it suffice to ensure a ‘local representation’. The Indian or Chinese agency has to be a strong, independent entity with international capabilities. Says Nirvik Singh, CEO, Grey India, “India & China are very much a significant part of a global pitch process today and global agencies need an equally strong agency representation in India and China that are aligned in culture, creativity, leadership and talent.”
Indian agencies have over the past three to four years witnessed an increased demand for their work, opinion, insight into their local markets. A few years ago, global clients would dictate their global campaigns. Today, these very clients respect the Indian agency’s local insights.

Says M.G. Parameswaran, executive director, FCB Ulka says that “Till now the importance of India and China depended on the product category being considered. This is now seen across most product categories.” Most global clients have now moved to looking at the brand’s core promise at the global level, leaving the communication to the local level. And since India and China are becoming increasingly important, these two countries are allowed to drive the regional campaigns. FCB Ulka is working on several such campaigns.

For instance, it did a film for the Compaq Presario campaign to push the brand into the home PC market. As the American home market is near saturation, the agency had to evolve its own strategy around the brand guidelines. The film was good enough for the client to take it to several south and south-east Asian countries.
Advertising may be made for the Indian market specifically, sometimes there’s an Asian strategy and at other times a single, global campaign. Some brands like say L’Oreal and Nokia use both local and global commercials in a market. “But the entire concept of global communication strategy is today based on a) a central think tank working closely with marketing think tank of the client no matter located in which country and b) a strong network to give local implementation capabilities”, says Subhash Kamath, CEO, Bates Enterprise,

This however spells caution also for Indian agencies after the initial euphoria. Local agencies cannot any longer rely on getting business because of their international alignment. Also, as Asia is critical to the global pitch, the network can lose the account completely if the agencies in India and China do not represent themselves well independently.
Also, in dollar terms ad budgets in India are still small though growing fast. For some electronics and telecom brands, India could account for over 15 per cent of the global ad budgets but is yet “a rounding error for most international companies, less than a month’s turnover for Microsoft” as Anil Ambani, chairman, Anil Dhirubhai Ambani Group, pointed out at the golden jubilee talk of The Ad club of Bombay in 2004. Though the dollar yet goes a long way in India, the participation in the global business has to grow rapidly for the Indian industry to win a permanent place in the hall of recognition.

(This article appeared as the lead in Billboard, the weekly advertising and marketing page of Hindustan Times in Sept `06)