"We are looking at 60 per cent of our revenues coming from other (non-advertising) areas" John Goodman O&M

For 2005, we will have about 79 per cent of our revenues coming in from traditional sources with the rest coming from non-conventional avenues. By 2008, we are looking at a 50:50 split
Ashutosh Srivastava, CEO (South Asia), Group M

Whilst 20 per cent of our revenues come from emerging media, we see the spoils getting evenly shared between established and emerging media
Ravi Kiran, CEO (South Asia), Starcom Worldwide

Today, 60 per cent of our revenues come from advertising. In three years, we see that dropping to 40 per cent
Arvind Sharma, Chairman & CEO, Leo Burnett

Consensus is a term you won't easily find in the lexicon of the advertising industry, but when it comes to forecasting the future of this Rs 12,000 crore business (as of 2004), it isn't difficult to hear the head honchos speak in one voice. Almost in unison, you can hear them proclaiming: "Advertising, as we know it, is dying. Agencies as we knew them have to change, fast." Thus it's impossible to miss the twinkle in John Goodman's eyes when he says a 360° communications approach "is the way forward for the industry." Sitting in the Ogilvy & Mather (O&M) headquarters in Central Mumbai's Lower Parel (flatteringly dubbed India's Madison Avenue), the CEO (India and South Asia) explains that 30-35 per cent of his revenues this year will come from non-advertising sources. In five years, he adds, the proportion from non-advertising will exceed half. "We are looking at 60 per cent of our monies coming from other areas." If that sounds like hyperbole, consider this: In 2005, the star performer at O&M was OgilvyOne (which offers online and offline services like one-to-one marketing and integrated services across traditional and interactive channels like internet and mobile telephony), which grew 21 per cent.

Starcom's Ravi Kiran: "Consumer outwards" approach

If you're wondering why this seemingly laidback bunch of dream peddlers-which incidentally had a great year, with an estimated growth of 12 per cent for 2005-is in a revamp mode, the answer could well lie in these numbers that follow: The advertising business grew from around Rs 2,000 crore in 1995 to Rs 12,000 crore in 2004, translating into growth of a whopping 500 per cent over a decade. That may appear impressive in isolation, but if you juxtapose those figures against the actual sales generated on those spends-that's the purpose of advertising, right?-the picture isn't as pretty. Assuming a conservative advertising to sales ratio of 5 per cent, Rs 12,000 crore of ad spend should have generated additional sales of Rs 60,000 crore for marketers. Has that happened? "Well, the answer is for anybody to guess," says Sam Balsara, Chairman & Managing Director, Madison Communications. Balsara may not be willing to stick his fragile neck out, but industry experts will tell you that new bucks spent on advertising have not managed to generate any incremental sales in a large number of cases. Put simply, return on investments (RoI) in measured media (mainly print and television) has declined in the past one decade.

Read on to understand how: Total commercial airtime on television went up from 51 million seconds five years ago to 214 million seconds in 2004. In the meanwhile, the average duration of ads came down from 20 seconds to 10-12 seconds, contributing to an increased clutter on TV. Alongside, the TRPs (television rating points) of commercials also plunged 18-20 per cent. Conclusion: Fewer people are watching the increasing number of ads, which again highlights the worry that RoIs are indeed dwindling. Says Preet Bedi, President, Rediffusion DY&R: "The 30-second spot on TV is increasingly losing its spark." Adds Pranesh Misra, President & coo, Lowe: "The ability of advertising to deliver in the earlier days was much higher. This really meant that there was no need to look for an alternative. Today however, clients are looking at more avenues."

In such a scenario, agencies have little choice but to reposition themselves-as "full-fledged marketing and communication service entities." As Nirvik Singh, Grey Global Group's Chairman (South Asia) and President (South East Asia) puts it, there are two big reasons for agencies having to look at marketing services seriously: The demise of the 15 per cent commission coupled with fragmentation of media. "The needs are different today. Your consumer interacts with your brand several times a day and there is a need to manage the brand better," explains Singh. That's why buzzwords like above-the-line and below-the-line have become a refrain. Over the past couple of years, direct marketing (DM), customer relationship management (CRM), event management, as well as design and rural initiatives have become key areas of business, requiring high levels of skills and expertise. That is really what the 360° game is all about and the idea is to get as close to the consumer as possible.

Above The Line, Below The Line How agencies are positioning themselves as integrated entities

Ravina Raj Kohli » Publicis has acquired a 60 per cent stake in Solutions Marketing, an independent specialised marketing services outfit. » After acquiring a majority stake in Kidstuff, a kids marketing and ground events company, Mudra will buy it out early next year » WPP group's Broadmind will formally launch a branded entertainment entity early next year with Ravina Raj Kohli, former Star News President, heading it » Mudra to launch a branded entertainment division, tentatively dubbed VideoTest, early next year; also set to launch a dedicated design consultancy » Rediffusion to also set up a design consultancy segment » The BPO/KPO space is also attracting several agencies, primarily with an eye on database management and customer profiling

The marketer, for his part, is as interested in effectiveness as in innovation. Says Hemant Sachdev, Chief Group Marketing Officer, Bharti Enterprises: "Media consumption habits of consumers have undergone a sea-change in the recent past. Today, a consumers' mindspace could be penetrated through various mediums and at various touch points, like in a retail outlet or at an ATM centre or a multiplex or a mobile phone or the internet." "The key today is all about measurability and impact which are hugely important. This is a significant change from the earlier days when it was driven by creativity and accountability was not defined," adds Ashutosh Srivastava, CEO (South Asia), Group M. He is now on the verge of announcing a major foray in the emerging Knowledge Process Outsourcing (KPO) space by joining hands with an existing player who will provide the technological expertise. Ashish Bhasin, Director, IMAG (Integrated Marketing Action Group), Lintas India, terms the non-conventional areas "through the line" and he tells you that IMAG's design consultancy dCell does the packaging out of India for "Good Morning" which is Unilever's soap in Egypt.

Clients, meantime, seem to be satisfied with the return on their investment via the 360 approach. FMCG giant Hindustan Lever (HLL), for one, sees it working. "We have some high quality work on the 360 front on brands like Surf Excel, Pond's, Lakme and Lifebuoy. All our brands now pursue a multi-media/360° approach in their communication. Our brief to all our agencies-creative as well as media-is to think 360° all the time," says HLL's General Manager (Media Services), Rahul Welde. That apart, the benefits of the approach, he adds, are that it engages consumers at multiple touch points and makes the communication more compelling. HLL's work on Lifebuoy through the "Lifebuoy Swasthya Chetna" is today the single largest rural health and hygiene educational programme undertaken in India where the objective is to educate people on basic hygienic habits.

For the time being, every agency worth its pitch is in the midst of getting its revenue mix right. And there are few regrets. For, as Vikram Sakhuja, Managing Director, Mindshare, points out: "I guess if we had not repositioned ourselves, we would still be playing the 3 per cent game (the media buyer's share of the commission)."