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JUNE 17, 2007
 Cover Story
 BT Special
 Back of the Book

Rupee Rise
Though an appreciating rupee is a cause for concern for many industries, it is proving to be a boon for some, particularly those that have large foreign currency borrowings. A weaker dollar is making repayments cheaper. Also, state-run refineries and those in the aviation sector are well-positioned to benefit from the stronger rupee. The Indian currency is up 8 per cent this year and is Asia's strongest currency against the dollar in 2007.

The ECB Route
The cap on maximum external commercial borrowings (ECBs), an annual ritual for the government, is fast losing its significance. Since the bulk of the foreign borrowings is raised under the automatic route by companies, it is becoming difficult to enforce the cap. The government had raised the annual limit of ECBs last year from $18 billion (Rs 81,000 crore) to $22 billion (Rs 99,000 crore). Now, it seems that total inflows will cross the $22-billion mark.
More Net Specials

Business Today,  June 3, 2007

Unbundling The Hot Shops
As clients become more demanding and open to using every medium available-radio, print, the internet, outdoor, elevision, cinema-to get their message across to their target audience, the country's premier ad agencies have recast their operations in a bid to be present at every touch point.

The Ogilvy Spread
J.C. Giri
President, Ogilvy & Mather, Mumbai
"We need to be wherever the consumer is in the 360-degree circle of life"

The healthcare specialist.
Sport advertising, promotion, and events.
Outdoor, rural and direct marketing.
Internet advertising.
Works on the agency's auto-related clients.

Last fortnight Religare, a Ranbaxy group company that provides financial services, went live with an advertising campaign that attempts to extol the virtues of trading in shares via the internet. The campaign may not have set the Ganges on fire, but the significant bit about it is that the company and its advertising agency, Rediffusion DY&R, are using every medium available to get their message across-radio, print, online, below-the-line, television and even cinema. Religare may not be an isolated example of advertisers resorting to 360-degree campaigns. Recent communications by Pond's Age Miracle, Appy Fizz and Chevrolet Aveo were also launched on multiple media platforms.

The Rediffusion Mall
Mahesh Chauhan
President, Rediffusion DY&R
"It's up to the agency to decide whether it wants to have a department store model or a mall model"

The healthcare advertising division.
The relationship management arm.
Outdoor and out-of-home promotional activities.
Customised events, sports marketing, talent management, content syndication and in-film placement.

Such hybrid campaigns may be gaining in popularity but that's not what this story is about. Rather, it's about how advertising agencies are remodelling themselves to be in a position to offer clients solutions on multiple fronts. After all, today there exist innumerable ways of getting to the consumer, and advertising agencies are fast waking up to the fact. With traditional media, primarily television commercials, no longer able to give advertisers an adequate bang for their big bucks, advertisers have little choice but to rely on other forms of communication delivery. And that's already begun to happen. For instance, what till recently was referred to as 'below-the-line-activity' is today one of the most focussed areas of advertising, marketing and communications. So much so that it is referred to as through-the-line in some sections of advertising, and rightly so. As Ashish Bhasin, Director of Lintas India's Integrated Marketing Action Group (IMAG, which comprises Lintas' eight specialised arms), puts it: "If you were to look at the us, depending on the category, almost 70-75 per cent of the ad industry's revenues come from through-the-line areas. Looking at the trend in India, by 2007-end, IMAG estimates show that through-the-line will command a 50 per cent share for the entire industry. Going forward, it will make up a far larger part of the communication and marketing pie." As far as the Lintas group is concerned, through-the-line-activities are on a smaller base, but make up the fastest growing part of the business. This is true for the industry at large.

Lintas' Hybrid Model
Prem Mehta
Chairman, Lintas India
"Traditional media is beginning to give way as it is not as vital to communications as it
used to be"

Rural marketing
DM, CRM, Internet solutions
Public relations
Event Management
Film marketing, in-film product placements
Pharma and healthcare
Strategic design consultancy

To be sure, not all advertising agencies are responding in exactly the same manner to the increasing demands of clients. Whilst the likes of Lintas, Ogilvy and Rediffusion DY&R have set up separate divisions to cater to their clients' specialised needs, others, like Leo Burnett and behemoth JWT, have all these specialised services under one banner. Says Arvind Sharma, Chairman of India Sub-Continent, Leo Burnett: "We have brought Arc Worldwide to India. It will provide our clients with speciality services like direct marketing, customer relationship management (CRM), events management, promotions, and a whole area of services that our clients might want, depending on their needs." JWT too has RMG Connect, which performs a role similar to that of Arc Worldwide.

Doubtless, however, it's the divisional structure that's most popular with agencies. Consider Lintas' IMAG, which consists of eight divisions. Linterland, its rural marketing arm, has 10,000 people working for it at any point in time. Lintas Personal, which started as a direct marketing entity, has today evolved into offering CRM and internet solutions too. Aaren Initiative is the company's out-of-home operation, LinOpinion its public relations division, Advent the event management arm, and Lintertainment is involved in film marketing and in-film product placements and associations. There's also Lintas Healthcare and dCell, a strategic design consultancy that focusses on packaging, corporate and brand identities and retail design. Then there's Ogilvy, which has OgilvyOne, which in turn includes a host of focussed operations. These include Ogilvy Healthcare, Ogilvy Sport, Ogilvy Activation (which concentrates on outdoor, rural and direct marketing), and Ogilvy Digital, which also includes Ogilvy@neo.

Prasoon Joshi
Creative Director South & Southeast Asia, McCann-Erickson
"One can't become a one-stop shop for every integrated service that there is; I've seen that model and it just doesn't work"

There's clearly reason for such specialised branding. Explains Prem Mehta, Chairman, Lintas India: "Clients would not see those services (for which different brands have been created) as specialised unless they were branded separately. In fact, if you look at things like direct marketing and design, these are things that the agency provides free of charge to the client in any case; but for these units to compete with specialised companies, they needed to have the character of specialised expertise." Adds J.C. Giri, President, Ogilvy & Mather, Mumbai: "We need to be where the consumer is in the 360-degree circle of life. We need to be present at every touch point."

It's not as if divisions for direct marketing or rural marketing or design or out-of-home or in-film marketing are new phenomena. For many years now, they've been on offer as a part of a bouquet of services. However, it's only in the past couple of years that these offerings have been packaged, branded and promoted as individual, specialised services. Giri adds that agencies have also realised the importance of having people with in-depth domain knowledge at these specialised niches if the objective is to "deliver quality work seamlessly."

Arvind Sharma
Chairman of India Sub-Continent, Leo Burnett
"We have brought Arc Worldwide to India, and that will provide our clients an array of speciality services"

Another agency that's put in place a hybrid model is Rediffusion dy&r, although the specialised divisions don't rely on the mother agency for branding. There's Sudler and Hennessey, which is the healthcare advertising division, Wunderman, which handles customer relationship management, OAP, with a focus on outdoor and out-of-home promotions, and Showdiff, which specialises in customised events, sports marketing, talent management, content syndication and in-film placement. Says Mahesh Chauhan, President, Rediffusion DY&R: "It's up to the agency to decide whether it wants to have a department store model, or a mall model."

However, there's at least one agency that doesn't appear enamoured of any of these models. McCann-Erickson in India is the only multinational advertising conglomerate that does not have specialised divisions. It does have McCann Healthcare, but that's run as a separate company, with a separate office. Prasoon Joshi, Creative Director for South & Southeast Asia, McCann-Erickson, is more keen to focus on his agency's core strength. "We need to define and understand what it is (the core strength). We can't become a one-stop shop for every service that there is; I've seen that model and it just doesn't work," shrugs Joshi. Those are indeed brave words that go against the grain. Joshi may have a point when he voices doubts about an agency's ability to build competencies across the spectrum; but, then again, with clients increasingly seeking value-added services, ad houses that don't set up such specialised shops run the real risk of losing out dollops of business. As Lintas' Mehta points out: "Traditional media is beginning to give way as it is not as vital to communications as it used to be." Traditional agencies too might be going down the same road.

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