'If our clients grow we will grow. That really is the essence of our strategy' : Sam Balsara - Madison Communications CMD

The 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.

Today, Madison Communications is among India's largest, fastest growing and most respected media agencies.

In a free-wheeling conversation with's Hetal Adesara, Balsara spoke about Madison's plans, addressed current industry issues and more...


What makes Sam Balsara one of the most influential men in India today?

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.

But 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.

Madison 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.

The 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 media.

As 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 recently Airtel.

Our 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 existing clients.

The 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.

"We had a good start with a silver spoon in our mouth with prestigious clients like Godrej, Nelco and the Tatas"

Considering that you've won all these accounts in the face of "international competition", just what is it that you offer that is so markedly different?

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.

Extending 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.

One 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.

Madison 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.

I feel 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.

I think 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.

"No other agency can boast of our kind of billing with just 22 clients"

Sam Balsara with daughter Lara

You 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.

We 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.

Speaking 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?

Despite 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.

Another 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.

I think 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.

Another 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?

Madison 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.

"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"

How do all the profit centers that fall under Madison Communications stack up as far as contribution to the overall revenue kitty is concerned?

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 and Rural.

So 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.

How 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 matches begun.

Now 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.

Madison Outdoor is also now in the process of opening an office in Dubai. We hope to make some growth in that market.

Why Dubai?

Well, its close by and it's a dynamic market. It gives us a base also for dealing with rights in other countries.

And when is this likely to happen?

We've already acquired the space and currently it is being outfitted.

What is your vision for the agency? Where do you see Madison five years from now?

Bigger and better!

Moving 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.

There 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.

So are you saying that you would be happy if service tax was hiked up to as much as 16 per cent?

Yes, 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 and death.

Talking 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?

I 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 on this.

Looking 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.

I do 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.

As 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 the agencies.

In 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.

"At the Three As of I, our position has always been that the commission system is the best system"

Looking 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.

Let 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.

Coming 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?

As 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.

To 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.

In 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.

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