interview with Madison Communications CMD Sam Balsara
our clients grow we will grow. That really is the essence
of our strategy"
on 31 July 2004
man needs no introduction. Madison Communications' chairman and
managing director Sam Balsara can boast of having built up, that
too from scratch, one of the only unaffiliated 'Indian' media agencies
in the country today.
Madison Communications is among India's largest, fastest growing
and most respected media agencies.
a free-wheeling conversation with indiantelevision.com's
Balsara spoke about Madison's plans, addressed current industry
issues and more...
What makes Sam Balsara one of the most influential men in India
Well I don't think I am influential but if others say so then
I suppose I must take the compliment with some modesty and humility.
These are all media created hype and I don't think one should take
that so seriously.
what do you think is your USP?
That is a difficult sort of question. But I don't think it is
anything unique. We believe in sincere hard work, no short cuts,
and I don't think growth is an obsession with us; whether it is
growth in billing or growth in profit. All these are not severe
compulsions at Madison. I think doing a good job, keeping the client
happy, making sure his objectives - whatever it may be - are met
to the best of our ability. All that has been our focus and of course
the underlying transparency and integrity are the cornerstones of
our value systems. So I guess somewhere that helps.
completed 15 years as an agency in March 2003. Can you give me a
brief rundown on what have been the landmarks for you and the company?
Clearly the first high was when we started. We had a good start
with a silver spoon in our mouth with prestigious clients like Godrej,
Nelco and the Tatas.
second high came when we tied up with DMB&B and Procter &
Gamble (P&G) became our client. The third high was when P&G
chose us to be their agency of record (AOR) over other more established
larger players and with whom they had a heritage relationship. The
next high came when despite our breakup with DMB&B; P&G
and Coca Cola decided to continue their relationship with us in
for the more recent highs, we are delighted that our PR unit is
doing extremely well. Last year, P&G decided to entrust our
PR unit with their entire PR account and consolidating it with us.
Last year was particularly good for our media division as some of
the country's most prestigious and coveted accounts were won by
us - Asian Paints, Cadburys, Hyundai, more recently Marico and most
outdoor unit, which was started for the second time, has been extremely
successful and will complete three years in a month's time. I think
there are some more interesting new units that have been planned
which we will unveil over the next few years. I must mention one
particular high that despite all odds Madison Creative - despite
the severe disadvantage that it operates with which is the dominance
of the media unit - continues to win new business and also delight
lows are very well documented. The biggest low was when we lost
the Cinthol account since I was closely associated with it personally.
I think the failure of our first outdoor unit - Outsell, the failure
of Adnova which was a unique web enabled system to give quality
backyard work of media.
had a good start with a silver spoon in our mouth with prestigious
clients like Godrej, Nelco and the Tatas"
that you've won all these accounts in the face of "international
competition", just what is it that you offer that is so markedly
I think increasingly clients are concerned about dealing with the
best in class service - be it international or Indian. Today clients
are under tremendous pressure with regard to their market shares
and profits. So what they want is a service partner who they believe
is the best in class and has constantly their interest in mind and
not the agency's own interest. I think we have been able to demonstrate
to our clients that we are sincere, transparent and we have what
it takes to deliver.
that point, the first half of 2004 has gone extremely well for you.
It's almost been like a dream. How do you propose to beat that in
the second half?
Well, we are continuously working hard but the results are not
completely in our hands. So I think we are happy when we do our
job well and not just do our job well but we have sort of constantly
preparing the ground to improve our skill sets and our offering
to out clients. I think as long as we continue doing that it will
give me tremendous satisfaction. Then I think if the results come
or not, is another thing altogether.
of the things that I must say here is that we are indeed unique
because there is no other agency that can boast of this kind of
billing with just 22 clients. So we have the highest average billing
per client which works well for us. But in return we offer our clients
the highest number of media professionals per client. We are now
some 175 media professionals dealing with just 22 clients. This
is a unique formula that I have not come across anywhere else and
it works well for us and our clients.
is the only media agency which can actually challenge the supremacy
of Group M - Mindshare, Maximize and Fulcrum. How easy or difficult
or easy was it to be at par with them considering that you are solely
an Indian agency?
I don't think it's difficult. We do our job to the best of our
ability. We are continuously working towards improving the quality
of our service and our intellectual knowledge base because if you
are talking about media, I am concerned that the same magic television
used to deliver for my clients 10 years ago, it doesn't deliver
that now. So we are constantly looking at trying to discover new
ways to bring that magic back so that media can work as well for
our clients as well as it did in the past. I think the challenge
is that once you're successful and once our clients are large and
they have a lot at stake, there is tremendous resistance to change.
today there is a dying need to experiment with new media. The Internet
is still only very small but it is showing signs that it is going
to become a powerful medium. Right under our nose SMS has become
a big thing. I am told that there are 600 billion SMSs flying across
the country every month. But media agencies and clients have been
slow to recognise this. Instead we go on putting money behind the
tried and tested television and press.
there is a need for spending more on multimedia campaigns and in
order to give our clients a greater confidence because we now live
in a world that is very strongly data focused and less judgmental.
For example the Madison Media Research Center has just come out
with a new tool called M Spectra and that tool allows our planners
to show to our clients what is the combined reach and frequency
of a multimedia plan. So we constantly invest in newer tools and
techniques and I think what helps tremendously is that all these
are conceived locally here by the very same people who are actually
dealing with media every day. So these tools are not just fancy
tools which remain on laptops and are brought out at the time of
presentations. But they are tools that are conceived by people to
help them in their day to day working and to respond to clients
and media challenges as we face them by the day.
other agency can boast of our kind of billing with just 22
Balsara with daughter Lara
are probably the only agency that has very rarely lost a major client
in all these years. The exception could be BPL, but that was more
because you won Airtel rather than the client being unhappy. Just
what is the Balsara USP?
Well, let's put it this way, we did not lose the BPL account,
we had to resign it because we won the Airtel account.
believe that once an advertiser becomes our client all his problems
are our problems and we do sort of go the extra mile. I believe
and I hope to sort of try and partner the client genuinely without
looking at Madison's stream of resources or profitability or whatever
to make the client succeed. As I mentioned to you, most large agencies
and their top management because of their shareholding structure
are focused on the agencies growth, profitability and increase in
billing. Our unique ownership structure enables us not to waste,
and I use the word 'waste' consciously, top management time on all
these internal issues. Instead our top management is focused on
our clients' growth and profitability and I think this is a particularly
unique advantage that Madison enjoys because of which our service
in the market is superior.
of loyalty, your first client was Godrej who is still with you after
all these years? How have you seen the brand grow and what is the
proposition that you have been offering to them?
its age Godrej is a young and dynamic company that is built on a
strong value system and I think that is the reason again despite
international competition on the one hand and competition from a
lot of other small players on the other hand, it has been able to
hold its own. We respect Godrej a lot and continue to learn from
their management style and philosophy.
thing that Madison has been known for is innovation. What you did
around Shanti in the good old DD days is well documented. Any recent
work that has particularly enthused you on that front?
There have been several. Shanti was really a defining
moment in Indian television because it created afternoon viewing.
Some others that come to mind of late are the BPL cricket replay
bug that was on television. The other was P&G's CID Tide
commercial. More recently on 31 December what we did for Cadburys
on Star Plus was unique too. What we did was on 31 December Star
Plus put out a special programme under which all the hit serials
on the channel came one after another starting 9 pm. What this concept
involved was that two kids from Star's Khichdi serial land
up on each of the sets and the protagonist of that serial ends the
serial by wishing them Happy New Year and gifting them Cadburys
chocolate. And this happens consistently in every serial right up
to midnight. Then at midnight all the kids gang up together and
they party on Cadburys chocolates.
it was not just an innovation just for the sake of innovation but
given the fact that Cadburys has some sort of question marks raised
on the quality of their products, we thought the fact of Cadburys
chocolate being gifted by celebrities would go a long way in reinforcing
public confidence in the product.
innovation of us was for Perfetti around cricket with all those
characters saying Lage Raho. Another very dramatic new thinking
that we provided and which won the Gold in media strategies at the
Emvies this year is our excellent paper on how you can control media
cost and yet make a brand big. Today with rising media cost and
inflation, the challenge for any brand is how to maintain profitability.
And generally a lot of people would put a lot of money behind a
successful campaign. This unique approach lays down how little to
advertise and also when to pull a copy off air. So we're very proud
that it was our unique approach and thinking that won the ultimate
award which is the Gold in media strategy and strategy is what media
is all about.
Recently, Madison has been on a recruiting spree and has taken on
experienced media professionals including Raji Nair, Savitri (ICICI),
Rajiv Gopinath among others. How have they contributed to the growth
of the agency?
is now at latest count which is 16 July, 307 people across all our
units. In media we are 175 people. I think we are careful about
the kind of people we bring in to join the party but I must confess
that each person that joins comes in with his own rich experience
and once that is wedded to the Madison operating system, thinking
and value system, it does deliver a unique product that is highly
accepted by the market.
What is your medium and long term strategy for Madison's growth?
Well, I don't think I can describe it in one sentence, but obviously
as we grow larger, we have begun to spend a little time thinking
about it. But I would go back to what I said earlier that we are
not so focused on our own strategies. We are focused on what our
strategies should be for our clients. If our clients grow then we
will grow. That I think really is the essence of our strategy.
the media what a handful of clients are doing gets reported
and blown up but as an industry we are concerned with what
3,500 clients are doing and not what a handful of them are
wanting to do"
do all the profit centers that fall under Madison Communications
stack up as far as contribution to the overall revenue kitty is
Madison Media last year contributed to just a little over 50
per cent of total Madison Communications revenue. Other units that
contribute to our overall revenue are Moms, PR, Creative, Merchandising
can you give me an estimate of the percentage these units contribute?
Well at least I have given you some idea so I don't think we
should go into the specifics.
has the growth been for Moms? You also won the in-stadia rights
for the Indo Pak series in Pakistan. How did you'll fare there?
I think Moms fared well during the Indo-Pak cricket matches.
This was despite all the odds. As you know we were operating in
unfamiliar territory, that is, Pakistan. Also we had a huge handicap
which was that we could only sell the billboards to those advertisers
- either Pakistani or international - who had a presence in Pakistan.
We pulled it off and we were 100 per cent sold out by the time the
we are into our second venture that is the Asia Cup where whilst
the perimeter boards were sold bundled with the television rights,
all the other signage at the pavilion level have again been won
by us and they have virtually been sold out.
Outdoor is also now in the process of opening an office in Dubai.
We hope to make some growth in that market.
Well, its close by and it's a dynamic market. It gives us a
base also for dealing with rights in other countries.
when is this likely to happen?
We've already acquired the space and currently it is being outfitted.
is your vision for the agency? Where do you see Madison five years
away from Madison to an industry overview, let us tackle the most
immediate issue, that of service tax. What are the short and long
term repercussions flowing out of this for the industry?
This is an issue that has plagued us for the last few years and I
hope that the finance minister's announcement that service tax can
now be offset against excise duties paid by manufacturers holds true.
The differing views of ISA and IBF will now go away because I think
it should now become a non issue because those advertisers who pay
service tax can now claim credit for it against the excise duties
if they are manufacturers or against the service tax that they pay
if they are service companies.
are those who say that going by current trends, over the next few
years service tax will be at about the same levels as excise duties
so we could well be looking at 16 per cent service tax. Your comment.
Well to the extent that it is offsetable against the excise
pay I suppose it is fair and fine. I think the finance minister
has indeed taken the right step in making it offsetable and although
there are some concerns as to the mechanism that the government
will put in place as to how this would work for the advertisers,
I have no doubt in my mind that the FM's intentions are very clear.
I have heard him specifically elaborate on this on many occasions
even after the budget speech. In fact he has also said that he has
increased the service tax from 8 per cent to 10 per cent in order
to offset the lower revenues.
are you saying that you would be happy if service tax was hiked
up to as much as 16 per cent?
I would say that I am very happy. Actually nobody is happy paying
more tax and tax is something we have to live with just like birth
of service tax, it is well known in the industry that there are five
major clients who have consistently resisted paying service tax, Levers,
P&G, Colgate, Godrej and Tatas. You being the head of Triple As
if I (Advertising Agencies Association of India), what is your stated
position on this?
have made it clear at the Three As of I that this not an area that
we want to go in to. Triple As of I is an association of 80 Indian
advertising agencies which in turn deal with about 3500 advertisers.
It is for individual advertisers to take a stand on this and based
on the advice that they receive from their agencies or their own independent
stand, and the agencies would have to comply or abide by that stand.
It would be wrong for the association or an agency to take a stand
at payment, for a media agency what do you think is the best compensation
model, fixed or commission linked or a mix of both?
It is again an issue that is continuously evolving. At the Three
As of I, our position has always been that the commission system
is the best system. Giving the current state of development in our
country it's direct, easy to implement and operate and it doesn't
lead to disputes or confusion. But I think one must understand that
in the Indian advertising market there is a wide dispersion of spend
levels. There may be one client who may spend Rs 500 crores (Rs
5 billion) and there may be many who would spend Rs 50 lakh (Rs
5 million). Now surely this system, which may be conceived by two
or three clients who spend in the vicinity of 100 - 500 crores,
cannot work well for somebody who spends 50 lakh to a crore.
believe that there is a lack of appreciation of this phenomenon
which is unnecessarily causing a lot of angst and discussions amongst
both agencies and clients.
far as compensation is concerned, the industry norm is about 3-4
per cent. Now considering the amount of work that agencies offer
their clients, both qualitative and quantitative, isn't it rather
incongruous that a creative agency can demand 10-12 per cent for
work rendered. One would have thought that if not at par, the media
agency should actually be charging higher. After all what the agencies
offer (or claim to offer) today are 360 degree solutions.
Well I couldn't agree with you more but this is how it is today
and my understanding of what has happened is that over the last
few years the media agencies have gone up the value chain offering
a lot of services including value added services and I'm sure in
time to come clients would appreciate and then suitably remunerate
today's cutthroat environment, with so much undercutting, it is not
inconceivable that compensation may go even lower. Where will it all
end? What is your take on it?
My take on it is very simple, just like how a manufacturer decides
on the price and the terms on which he will make a sale; the channel,
the print and media decide on the price and the terms on which he
will make a sale. I think advertising agencies also need to make that
same decision. There is a bit of over hype and exaggeration about
agencies operating at lower commissions. Sometime ago when we had
done an investigation, we had found that yes whilst there may be a
few isolated instances, by and large, there is much of an aberration
especially when you look at it in the context of what 3,500 clients
in the country are doing. What tends to happen is that in the media
what a handful of clients are doing gets reported and blown up but
as an industry we are concerned with what 3,500 clients are doing
and not what a handful of them are wanting to do.
the Three As of I, our position has always been that the commission
system is the best system"
at the industry trend, earlier we had full service agencies, then
came the specialists, now we have the one stop shops like Mindshare.
Has the wheel turned full circle?
Well, Mindshare is a media specialist and is not a one stop shop as
it does not provide creative services - that's JWT. I think my understanding
is that today, as I mentioned to you earlier, all clients because
of the kind of pressure they are under are looking for best in class
services. If an agency can provide best in class service in creative,
media, PR and direct marketing, then the client will have no hesitation
in giving the business to that one agency and then could also insist
on that agency setting up a special integrated structure with a one
point contact. Today my understanding is that in clients' assessments,
especially the larger clients, there is a wide variance in the quality
of service offered by different units of the same agency and therefore
the business is split.
us look at advertising on television, which is our area of particular
interest. For products pitched on mass entertainment programmes like
a 'Kyunki...' or 'Kahaani...', which come out on top of any TG that
you can think up, how do you differentiate the media plan for different
clients? After all nothing can better the CPRP benchmark than a 'Kyunki...'
or a 'Kahaani...'?
That's what media planning is all about and that's what 175 people
in Madison Media are doing day in and day out. And that is why we
have the databases, sophisticated econometric models, forecasting
techniques and target audience analysis and demographic and psychographic
variables. So it is a churn of all these that ultimately decides on
the media plan.
back to you now, why are you in the media business? And if you were
not here, then where would you be?
From looking at me, where do you think I should be?
for you second question. I don't know where I would be. As I have
told earlier, after I finished my graduation my elder brother was
a chartered accountant and I was all set to become a CA too. And
then somewhere along the line this management thing came up and
there was a huge rush where everyone wanted to get admission. I
did not get admission in IIM (A) but I got through Jamnalal Bajaj
Institute and therein lies the tale.
sign off, are there any pearls of wisdom that Sam Balsara would
like to offer the industry?
I would say that given the fact that the world is changing so rapidly,
I think the communications and the advertising agencies' industry
is not changing that rapidly and that does not augur well for the
industry as a whole. One has to venture out as the saying goes -
Nothing ventured, nothing gained.
fact our philosophy, though many large clients find it difficult
to accept, of - 'If it's safe, it's risky,' is indeed true in today's
advertising world. If you want to follow a safe path, it is actually
the riskiest path because chances are that it is not going to work.
So it is better to take a risk and do something a little different.
Then at least you may have a decent probability of success.