| Interview with O&M president
(Chennai & Hyderabad) R Krishna Mohan |
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'South
accounts for less than 25 per cent of the overall advertising
market'
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| (Posted
on 27 March 2005) |
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The
southern market is undoubtedly becoming increasingly critical for
marketers. Ironically, this region in terms of its sheer advertising
revenue contribution is shrinking. O&M president (Chennai and
Hyderabad) R Krishna Mohan in an interview with Indiantelevision.com's
Sonali
Krishna discusses
the southern market, its drivers, constraints and the consumer.
Excerpts:
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How critical is the southern market in terms of advertising
as regards the overall picture?
If you look at the size of the market, then the slice of the
pie as far as advertising is concerned is shrinking in the south.
This is largely due to markets like Delhi, which is growing very
rapidly and Mumbai more or less maintaining a steady growth, which
is very large anyway.
For
instance, if you look at Chennai, we account for about six per cent
of the overall advertising spends in the country. That's it. So,
it is a fairly small advertising market. And here I am referring
to advertising business that emanates from Chennai and not clients
who spend a lot of money in Chennai but via their Mumbai agency.
Bangalore would account for approximately 15 per cent and Hyderabad
would be about two per cent. So in essence it would account for
about less that 25 per cent of the overall advertising market. And
this is shrinking.
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Why
is it shrinking?
What is happening is that Bangalore is not growing as rapidly
as it was earlier. Delhi has taken over and is really driving the
business. Currently it is going through a boom in the advertising
business.
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What
about Ogilvy specifically?
Even
for Ogilvy, it more or less follows the overall trends where O&M
Mumbai is very large and contributes about 55-60 per cent of the
total turnover, followed by Delhi, Bangalore, Chennai, Hyderabad
and last of all Kolkata.
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What
are the major categories that are driving the southern market?
It is most definitely FMCGs; some of the big spenders being Cavin
Kare, Henkel, Brook Bond and Britannia in Bangalore. The other evolving
category is automobiles and the third large sector would most definitely
be retail.
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But
will retail give a boost to mainly the mid-size agencies or will
it affect the larger agencies as well?
It will definitely be a boost for mid-sized agencies. For example
if you look at jewellery as a category, a lot of the times they
partner with smaller agencies but they do a lot of business. If
you look at outdoors specifically, it will give you an idea as to
the amount of monies that is being spent in retail. The cellular
business is another evolving category that is sustaining and driving
growth.
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Talking
about O&M specifically, how did the agency fare in the southern
market in 2004?
In
terms of performance, absolutely fabulous as Chennai and Hyderabad
have grown by 45 per cent over last year. And a lot of this growth
happened because we moved from commissions to the fee based model.
As a result, we have been able to charge some additional fees for
work that was earlier taken for granted which was largely in the
area of Ogilvy PR, direct marketing, Landscapes and our retail signage
division. So our 360 degree offering has helped us quite a bit.
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Could
you throw light upon this new term which is extensively used called
360 degrees. Is it mere lip service or is it really being utilised?
For
Ogilvy it is our cutting edge right across the world. This is really
driven by what is happening in the market, where both the advertiser
and the consumer are saying that you need to reach out and touch
me in more ways than just mass-media communication, simply because
of the high clutter levels that exist today. Also, from the advertisers'
point of view, because it is so expensive. And for effective 360
degree advertising, it is very crucial to think out of the box and
learn to touch the customer at various moments of his life. It is
really about touching the customer during these "moments of
truth" and making the brand promise come alive at these moments.
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'Agencies
today are not addressing the southern consumer'
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Is that really happening?
It may not happen in a 360 way, but instead of just limiting myself
to mass-media, if I can stretch it out to two other touch points
then it is good enough. So, while we call it 360, I think what drives
this phenomenon is the thought that one really needs to touch the
customer at those various moments. In fact, it might not be desirable
to touch him at every moment of truth.
For
instance, I know that people believe that catching early morning
walkers is a great moment of truth. But, the fact is that the walker
does not think so. We have had instances where a client set up little
booths near all the popular walking places. But, the customers saw
this as an intrusion, saying that this is our moment of peace and
not a moment of truth. So, the whole idea is taking it beyond the
30 second box and touching the customer in a more relevant and meaningful
way.
360 degree helps to give an idea arms and legs and makes the brand
promise come alive.
The classic case is of Bru. The brand promise has always been 'As
good as South Indian filter coffee'. What Bru did was very interesting.
What they said was, if you look at a moment of truth for coffee,
it is usually first thing in the morning when one is reading the
newspaper and drinking your morning coffee.
So, the question was how can Bru make its presence felt at this
moment of truth? They did it in a not so intrusive way. They distributed
little sachets of Bru along with Aavin milk packets. So, when you
picked up your morning milk, you also received this Bru sachet and
you tried it out. They managed to become a part of their customers
moment of truth without being too intrusive. This is a classic way
of doing 360 degrees.
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Where
do you see the growth coming for advertising agencies now?
If
you look at the US and most other countries, the growth is really
coming from direct marketing, interactive, event marketing and so
in essence non-traditional media and not from mass media. In India,
we are still at 85 per cent mass media advertising and 15 per cent
everything else. But, in most other developed countries whether
it is Europe, UK, Japan and the US it is more like 50 per cent mass
media advertising and the rest constituting everything else. Which
is why I believe that our brand ambition and our business strategy
is very well intergrated.
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If
you look at the south markets, would you agree that that as agencies
we are really addressing the southern consumer?
No I don't think so. This is largely because people sitting in Mumbai
and Delhi think the rest of the world are like them. And so we get
ads here which talk about 'Karwachauth', which is such an alien
concept in the south. So, people are left wondering why on earth
is the man showing some girl the moon (through the sun roof). And
there are many instances to show that people up north believe that
what works there, works here. It doesn't at all.
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So
what are you doing to address this issue?
What we
are doing really is looking at a study of people in the south. And
we are not doing it through traditional market research agencies but
through sociologists who understand people behavior. So, there is
a study of the Tamilian/Malyalee/Andhraite/ Kannadika as a race, how
he or she behaves. Not cutting it by socio-economic classes. The research
will throw light upon what drives the way they behave. |
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What
strategic accounts have you bagged in 2004?
We got
CavinKare Foods which is a huge source of joy for us. Because there
is nothing like getting new business from an existing client as it
shows that that your client sees a certain amount of value in you.
We also got Arun ice creams, which is a very large brand down south.
We also got Nalli Sarees which came back to us after almost 12 years.
I think what is great about O&M is that we have truly been able
to Indianise advertising. A lot of our communication is very regional
and it reaches out and touches a chord purely because of that. And
this is why we have realized that our brands with a large presence
in the south need a little more help and hence our south initiative.
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Could
you expand a bit on your south initiative?
We are
not quite ready for it as yet because our body of knowledge has
to come in and that will happen in the next four to five months.
So, once that comes in, we are looking at brands that have a very
large regional presence in the south as well as regional brands
which need to go out and touch a chord and find that empathy. And
brands which are looking at tapping the southern market first. So,
the aim being, becoming the agency which understands the southern
market the best.
The other is looking at communication we are doing for our own brands
and see how we can fine tune it in the south. Is there a little
nuance that we can change to help that communication work better?
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I
believe you are also getting into B2B initiatives?
Yes.
We have got into that area. We know the business, and hence we can
help one business communicate to another. Essentially, B2B communication.
It is called B2B. It has already been launched in Hyderabad and Bangalore
and soon it will be launched in Chennai.
The
other initiative is our people. Ogilvy was always known for how
well it used to train its people. And I think somewhere down the
line, because we have grown so much, we lost focus and sight of
that. We have taken a decision as of last year that we would bring
that training back. So, there is a huge training initiative which
is then linked to how motivated our people are.
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What
about margins? Do you see them getting further squeezed?
No, actually we see margins going up in the mid-term, in the short
term it will get squeezed as we are moving from commission to a
fee based system.
As
clients begin to realize that they will have to pay for services
that we have not been charging them for earlier, the margins will
grow.
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