'I feel the advertising industry will see 10 to 12 per cent growth this year' : Arvind Sharma - Leo Burnett chairman & CEO

A vibrant man, full of life and a twinkle that never leaves his eyes, Leo Burnett chairman and chief executive officer Arvind Sharma exudes charm. His laugh is contagious and one can't help but join in.

A management graduate from IIM (A), Sharma started his career in the marketing arena with Voltas. Advertising happened to him in 1979... and of course... the rest as they say is history.'s Hetal Adesara caught up him just after his return from Cannes where Leo Burnett India won a Bronze for it's ad for Senso Restaurant.

Excerpts from the chat:

What do you have to say about the way India performed at Cannes recently?

I feel very good. I think in award festivals especially, performance should not be read in terms of the medals received. There will be some ups and downs and this time we had only bronzes. But I feel great about the width of agencies. Four agencies were in the shortlist and that has tended to be narrower in the past. Apart from us, O&M and McCann, who are traditionally at Cannes, there was also Saatchi and Saatchi and Ambience Publicis this year.

There was wider participation and the contingent was about 110 strong. I feel particularly good that a lot of youngsters from the creative and also other departments were there. Also feel great about the fact that clients are now beginning to actively participate in Cannes and that can only be good news for advertising in general across the world.

Leo Burnett India won the 'Worldwide Agency of the Year' award last year. Having set such lofty standards, how do you propose to better that?

Having become the Worldwide Agency of the Year, we are now going for Cannes Agency of the Year in three years time! (Laughs) It is audacious but that is what is motivating. And in many ways it is a new phase for us because now we are not setting out to do what is called 'Cannes type' work. At least both Sridhar (Leo Burnett national creative director) and I are convinced that the best advertising with the maximum impact connects with people locally and wins globally. What will it take? --- Great ideas which are extremely well executed to maximise their impact on the viewer or the reader. And that's what we are going for. We have realised that almost all clients are seeking solutions wider than television and print.

Cannes Agency of the Year also becomes a good rallying call for us to take our clients there and make them participate. In today's world you can't be Cannes Agency of the Year doing just television and print. That is simply not possible.

"Having become the Worldwide Agency of the Year, we are now going for Cannes Agency of the Year in three years time"

What is Leo Burnett India's contribution to your international counterpart worldwide and the APAC region?

We are a moderate size agency and I think in terms of size we will be among the top 25 agencies. In terms of revenue and profit contribution, we probably may be a little higher than that.

My dream would be to make India a major source of creativity. And that is beginning to happen. We participated in a couple of global pitches and in the creation of a couple of global campaigns for multinational brands. So my dream would be to make India a major centre for the creation of global campaigns and all forms of global innovations.

Why should India not be the centre for figuring out what we should be doing in branded content or what the future of interactivity should be or figuring out new smarter multimedia, one-on-one relationship management campaigns? We have the software and creative capability and we have the marketing understanding and knowledge and being able to bring all of it together consistently to lead the world is a challenge and that's what we are aiming at.

What per cent of globally aligned business does Leo Burnett India get?

Today, 18 per cent of Leo Burnett India's business is globally aligned and 82 per cent is locally acquired business. We, as a network, regard ourselves as a global local which means the collection of agencies which represent absolutely the best knowledge of local consumer and culture and does work to global standards.

This in turn means that the ideas are fresh and have an impact and are well executed so when anybody in the world sees them, they would know that it is an Indian piece of work and at the same time also say that "I wish I had done that" and not "Well, that works in India but I don't think it is very relevant to Argentina." Because the best advertising, while it is culture specific, also evokes a human response.

Do you see that happening in India?

Absolutely. Wait for two or three more years. Our people are fantastic, talented, committed and are willing to work very hard.

What is your medium and long term strategy for Leo Burnett's growth in India?

Our strategy will continue to be top leadership coming out of our planning work on brands and outstanding creative. Also providing clients with different services. But we have a specific view of services as we are not about to launch headlong into setting up direct marketing or a promotions wing. We want to stay clear of commodity areas.

How many profit centers come under the Leo Burnett India umbrella, which are they and how do they stack up as far as contribution to the overall revenue kitty is concerned?

At the moment we have Leo Entertainment and Leo Activation. Both of them are growing rapidly and are profitable.

The game we have learnt in Leo Entertainment is branded content. The low end of it is marketing current products and services. So celebrity management is the low end of it - generating endorsements for celebrities. The high end of it is bringing things together creatively to produce excellent value. Now exactly the same principle can be applied in telecommunications, radio sports and music. Leo Entertainment will to extend itself beyond feature films into many more vehicles.

Leo Burnett has just created a new legal entity for its existing below the line divisions - Black Pencil Advertising. What was the reason behind this?

Basically we spoke to our clients first. It is not viable for any agency to create services only for its clients. If you are going to create services you acquire skills only if you can service current clients and the rest of the market. Now when you try and service the rest of the market, part of the issue that arises is one of conflict. So Black Pencil was created with the agreement of our key clients that whatever services we create they will be offered those first but those services will not be a part of the Leo Burnett exclusivity contract. It will be a separate company. If P&G is not interested in those services but Godrej is, then the service should be offered to them.

So basically with the agreement of the clients, it was our way of finding a new way of managing the conflict issue. So Leo Entertainment is free to do work for two competing whiskeys since it does not follow the exclusivity contract.

Who are Black Pencil's clientele?

Leo Activation and Leo Entertainment clients are Black Pencil's clients. Black Pencil is strictly a separate legal entity as far as clients are concerned. And they are not part of the Leo Burnett company as they follow their own policies.

"The 'India Shining' campaign was largely an empty communication - trying to charge people in believing that everything was fantastic while on the ground they knew that it was not the case"

How do you see the advertising scenario panning out in the coming year? What are your industry growth expectations?

Zenith has put out some numbers that are not very bullish. Zenith is one of the major media groups in the world which gives countrywise forecasts. And I think Zenith is saying something like seven per cent growth this year and seven per cent next year and significantly higher in 2006. I personally feel that we'll see a growth of about 10 to 12 per cent.

And what of for Leo Burnett?

We generally try and target one and a half times to that of the market growth. (Laughs)

What are the total gross billings that Leo Burnett achieved in 2003-04? What are the growth expectations this year?

You see three major groups Global Publicis (and I am bound by that), WPP and Omnicom don't give out any financial numbers except at the global level. Well like I said, we target one and a half times the market growth so if the market is growing at 12 per cent, our target generally will be 18 per cent.

But there are many who believe that with the reversal of fortunes that this election result threw up, it will negatively impact business and by extension advertising. Your comment.

I don't believe so. I think with the growth in the economy we will continue to see 7 ?+ to 8+ per cent growth in the economy. I am very positive about that.

What are the most valuable learnings/ experiences that you have had in your stint with advertising?

Except for my initial couple of years in marketing, everything I have gathered is from advertising. This industry has made me believe in the innate goodness of people. When you are dealing with mass communication and you are putting out messages, there are millions out there who are either ignoring them or acting on them. So it has made me feel very good about our race and our country. It has reinforced the fact that intrinsically people are motivated by motivations which make us good human beings. It has made me believe that we are not selfish, individualistic people but are social human beings that care about the well being of not just our own but those around us too.

What else can I say? The Congress election results are a case in point. To be able to communicate with the whole country with the end result of having an impact on the outcome of the elections of the largest democracy in the world is wonderful. It makes you feel good about the power of communication. It has made me believe in the value of team work because a part of the advertising business requires analytical mindsets, part of it requires sympathetic mindsets and part of it requires people with what is called creative ego.

A bunch of people respect their hunches and are willing to do a lot to go out of their way to insure that their hunches translate into ideas and campaigns. So it is really wonderful. We have to deal with people from all over the country and also over the world. We have to appreciate what is beautiful about their background, their culture and learning and make it all work together for a bigger cause.

Since you mention Congress let's talk about the 'Aam Aadmi' ads that were made by Leo Burnett's subsidiary - Orchard Advertising, which in a sense overpowered the much hyped BJP's 'India Shining' campaign.

This just says that human beings are intelligent and you can't put wool over their eyes. Neither can you manage to charm them with empty communication. The 'India Shining' campaign was largely an empty communication - trying to charge people into believing that everything was fantastic while on the ground they knew that it was not the case. And the 'Aam Aadmi' campaign took a much smaller share of resources to make people come out and vote against NDA.

"I believe we're hot because we have great credentials behind us"

Leo Burnett Worldwide chief creative officer Miguel Angel Furones with Arvind Sharma & VJ Cyrus Broacha

Considering that Leo Burnett has always tom tommed about its values in respect to political advertising (as in not doing such ads), isn't it ironical that Orchard was behind the Congress campaign?

Well I think it was a good outcome and let's just focus on that. (Laughs)

So are you saying 'No comments'?

(Grins) Ya! Absolutely no comments.

What do you think of the new talent coming into advertising? Is it good enough? Why I'm asking you is because for the last few years we have been hearing the same names in the advertising world.

That has less to do with reality on the ground and has more to do with human nature. Somebody else was asking me the same question that suddenly all agencies are waking up and appointing national creative directors (NCDs) and how should one go about selecting NCDs. It takes 20 odd years for you to acquire a name in any profession, while most of the good work is probably done in the period of 5 - 20 years. So by the time you become famous you are by definition not young. And for people to remember your name, you have to be famous and you have to have done half a dozen famous campaigns or different things.

I think there is a lot of good talent on the ground. There are clients who are asking the wrong question as to - Who is your national creative director? - as if the NCD does all the work!

We as an agency hired an NCD after a global hunt and we settled on KV Sridhar. After that we were also quick to get the next line of creative directors in place, so we got about a dozen creative directors across the country. They are young and have been in the business for about 12-13 years. They are hot and you'll be hearing their names in the next few years.

What is the pecking order in terms of advertising agencies in India today?

Well, the pecking order depends on who's asking the question! (Laughs). I believe we're hot because we have credentials behind us - credentials in the form of case studies, brand turnarounds, new launches and since our NCD is not yet Cannes jury chairman, we have a lot of passion and willingness to put in a lot!

There are a lot of good agencies in India. O&M one doesn't have to name, McCann is a good agency. I would say the current Brand Equity rankings are a true reflection of the true pecking order of agencies today, with the sole exception of JWT which has had enormous historical reputation. But I think in the last seven - eight years their work quality has continuously slipped. The fraternity's perceptions including clients' are not that far out of line with reality.

What is the value proposition that Leo Burnett brings to a particular client or brand?

It varies because we handle all kinds of brands. We handle high cost and high premium brands for which we will have a different proposition. We even handle low cost and low priced brands and also service brands. So the value proposition of each brand has to be defined by its context, its history and competitive strengths.

We handle Bajaj Eliminator and that has a completely value proposition than Rejoice shampoo. We are not in the business of imposing our beliefs on brands. We are in the business of spotting opportunities and maximising the future of brands and each brand's future is different.

Can you name some good work done in Indian Advertising in 2003-04. Also, some campaigns carried out by Leo Burnett that you are proud of?

I personally love the Hutch work, though it hasn't and is not going to win any international awards.

And why do you say that?

It is not new to India; in fact it is very well put together and therefore it evokes a response. From a global perspective however, when put together, there is not enough basis for winning awards. It has to have freshness of idea; it has to be new to the world of advertising. Whereas this campaign is not. We like it and as consumers we don't care what happened in 1989 in France. To us it is something that is fresh within our context and we appreciate it. So Hutch is nice.

Apart from that I quite like our Hitachi, Indian Oil corporate campaign and McDonald's work. I also like the Thanda Matlab Coca Cola campaign and Waah Sunil babu ad for Asian Paints.

Ranjan Kapoor once said in an interview that "The word client servicing will disappear and domain specialists will emerge." What is your take on it?

We have just restructured Mumbai and there is nothing called Client servicing in Leo Burnett Mumbai. Client servicing as an industry word was an unsustainable cocktail of project management function, client business partnership function and brand planning function. When you have that kind of cocktail you hope that each one of the individuals involved will do the best of all three.

In reality what tends to happen is that you sink to the lowest common denominator. So client service people around the industry are neither very good project managers because that was for junior guys, nor were they very good client business partners because they are in an advertising agency and nor were they very good brand planners because they didn't have time for it. So in this agency over a period of time we restructured the client servicing department and completed it in April. We split client servicing into three functions:

Project Management: Where people are responsible for money and time lines, efficient delivery and quality of art work, stage, productions of all kinds.

Brand business partnership function: Where people think how to grow clients' businesses and they ideate on whether there should be new products or a variant of the products that are already there, and

Brand Planning: This where people worry about should the brand move in the consumers' mind and how?

So in a way I have always completely agreed with Ranjan and we are the first agency in town to actually carry out the structure and not just in town. We'll be the key facilitators in a regional workshop because this is a global issue where the intent is to replicate the Mumbai model across Leo Burnett Asia.

So at the end of the day who will the client coordinate with for his work, if there are three divisions?

Imagine, you walk into a bank and your needs are fully met, you are unlikely to ask the question - Who do I coordinate with? Correct? You are happy dealing with the teller because the teller promptly gave you the cash. You're happy when you were looking around for forms and someone promptly put them in your hands.

One asks the question - Who do I coordinate with, when the organisation is screwing up. So when things are going well, clients prefer to deal with teams rather than individuals. That's the structure we are trying to deliver to clients where they can deal with a four legged stool directly and each leg of the stool is playing its role and that is brand planning.

Now if we are working well as a four legged stool, then the client won't ask the question that who I should coordinate with because each leg is playing its role and the stool is where it should be. And if one leg begins to let the side down then the question will arise.

But to me if we are running our business well then this question should be an occasional question and not an everyday question. Now when there is a period of growth (but not of wild growth), we should be structuring an agency where people who are best inclined to and have the best competency to do a job and the client is experiencing a synergistic positive effect of all four.

Can it be done? Absolutely. Bartle Bogle Hegarty (BBH) has done it for the last 10 years and clients feel delighted. Only when any of these four functions merely becomes a dumping ground for less competent people then the problem begins to occur. In the past given the shortage of people, the industry has been guilty of doing that a lot.

When is this structure likely to come in place worldwide?

We are talking about it in October in the Asian context where Michele (president Asia Pacific) wants to talk, sit and work through the implementation plans for the rest of the region on this structure.

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