Independent agencies versus international networks – who would win?, Marketing & Advertising News, ET BrandEquity

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The Indian advertising industry is home to all sorts of agencies: the “big names” backed by international networks — WPP, IPG, Publicis Groupe, Havas and Dentsu, to name a few — and the generalist and specialist agencies independent.

Traditionally, major networks have been viewed as beacons of advertising culture that represent massive learning, stable cash flow, travel opportunities and a clear growth trajectory for talent, with key global companies aligned with them on local markets. All this has made them very attractive to talent and customers. As a result, generalist independent agencies, with their limited resources, struggle to monopolize a share of the
business pie. But has this story changed?

Who wins?
Virat Tandon, CEO of the MullenLowe Lintas Group, believes that networks provide some level of brand protection over time. “The people on the client side change constantly every two or three years. Often it was the network agency that held the brand together. Likewise, on other occasions, when the brand needs a new spirit, the network agency has enough talent to put the right person or team to work,” he says.

“Network agencies are part of large marketing communications holding companies and therefore benefit from execution capacity, scale, international reach, budgets, etc. huge,” says Anupriya Acharya, CEO, South Asia, Publicis Groupe. “They have the strength of the network behind them; they can benefit from lessons learned from other international markets. The holding companies, to which the network agencies belong, offer integrated services under one roof and in all markets and attract big brands and big mandates.

“Most legacy agencies are structured so that a very small group of people carry the bulk of the glory. They have had a problem with the culture of credit for decades – within their own teams and especially with production houses and directors. I don’t think ad leaders can complain about the industry’s compensation and cost issues unless we fix things (like credit culture) that are freely fixable. »PG Aditiya, co-founder, Talented

The debate between networks and independents today takes another turn, thanks to the evolution of the circumstances which surround it. Saurabh Varma, founder and CEO of Wondrlab, however, believes that all of the factors that made network agencies attractive might not hold today. -80 countries does not exist [anymore]. Second, access to information and knowledge used to be restricted, but it is now a very democratic process. Third, difficulties in a market can affect you, even if you are doing well. And when it comes to clients, 90% were cases presented and won locally, in my experience. »

So while local offices do the heavy lifting of winning business in today’s world, Varma sees no significant advantage in being part of a holding company.

Pushing that thought further, Rediffusion’s MD Sandeep Goyal also doesn’t believe network agencies’ access to larger budgets is an advantage. “Budgets may be there, but multiple hurdles in approval processes negate the advantage,” he says. “If the local agency is doing well, budgets aren’t really an issue; access to these budgets is much simpler and faster.

Network agencies have the advantage of size and geography, but Indian agencies are more nimble and success-oriented, he adds.

To be independent
Now is the best time for freelancers to thrive in the advertising ecosystem. As Acharya points out, independent agencies are now ready to offer custom solutions and are better suited to the unique needs of clients. “They bring niche and specialized services such as analytics, social media, performance and CRM,” she adds.

And because network agencies are subject to strong corporate governance, they may not take on all brand missions and some of those businesses go to freelancers, she says.

Managing an independent agency also means improving the business processes put in place by the networks. PG Aditiya, co-founder of Talented, was, until recently, the CCO of Dentsu Webchutney. “We started Talented because we had radical ideas for improving the agency business – which first needed to be tested at the prototype level in a lossless environment, and therefore, would not fit the form of the agency. ‘a global network,’ he says.

However, he admits that the current size of his agency prevents him from offering certain services to clients, which has never been an issue in a network like Dentsu.

The biggest benefit of being independent is the freedom, says Varma. Another is not listed on the global stock exchange. “Being listed means you are under the scrutiny of analysts who look at your quarterly numbers. It gives you very little ability to think strategically and long-term,” he says.

In terms of stakeholders, independent agencies are accountable, but primarily only to their investors who look at the long-term results of the business. These agencies may also choose to make unplanned strategic investments based on opportunities or even choose to cut operating margins during downturns, advantages not necessarily enjoyed by the big guns. “Being an independent agency gives you the freedom and flexibility to make contextual decisions that are relevant and appropriate to your context,” says Varma.

But that said, it’s the big networks that provide opportunities for talent to travel overseas, Goyal says. Scale and exposure are important and cannot be ignored.

The talent piece
Tandon says freelancers are founder-focused and can make quick management decisions. “A few well-known independent agencies have very good talent in the founding team. However, they have rarely been able to build strong teams due to the lack of organizational strength that provides a long-term career path for talent,” he explains.

Independents are aware of this perception, says Aditiya. To counter this, Talented is looking to implement ideas that re-examine base pay at all levels, shed the baggage of hierarchy, provide a better credit culture, and have respectable working hours.

New-age agencies are also playing the game smartly. For example, retaining and attracting talent – a problem plaguing the industry worldwide – is now being faced by several independent agencies offering ESOPs and more skin-in-the-game (where owners, executives or directors have a significant stake in the shares of the company). business they run) for employees. These are more common practices in tech startups. Access to investor money and start-up loans, in today’s world, helps these agencies offer competitive compensation salaries and timely raises to employees. In an independent agency, talent also has easier access to senior management.

But the stakes are also higher for an independent. Winning business is ultimately the most important marker of success. And that could possibly mean relentless pitches and longer hours of work, at least in the early stages while seeking funding.

What the future holds
It will be interesting to see how networks and indies evolve over the next five to seven years.

Acharya says, “The business is likely to become more concentrated, with more consolidation and fewer players. Market challenges will be such that some of the independent agencies may have to join forces or be bought out by larger network agencies and holding companies.

Tandon agrees. He says, “Building successful brands takes more than a campaign that is a one-hit wonder. The client needs long-term custody of the brand and idea across all platforms and consistently over time.

Goyal predicts that networks will become less competitive as talent demands more “space” and less global interference. He says margins will be squeezed further by customers as they cut services and reduce resources. But it’s no cakewalk for independents either. “They will need imagination and investment to remain competitive. Some may restrict their field of action and specialize. Others may see digital as an area of ​​growth where multinationals have been slow. For freelancers too, the future will depend on proactive leadership, relationships and a nimble foot,” he says.

Varma thinks getting acquired isn’t easy. “Most freelancers are doing basic things or the networks have already supplemented the skills they offer,” he says. “Unless you’re building something spectacular with data or perhaps a solution-driven platform, there’s no value for networks to acquire something independent.”

Another possibility, he adds, is that freelancers start selling to big financial consulting or auditing firms, akin to Accenture’s acquisition of Droga5 in 2019.

When the advertising industry passes off token employee-centric initiatives as grand gestures, something is inherently broken, says Naresh Gupta. The managing partner of Bang In The Middle sheds light on three areas where the industry has failed its professionals – from unhealthy work weekends to the dreaded pitch process that has forced many good people out.

When deciding where to source your advertising needs, it’s important to understand the distinction between an outside advertising agency and inside assistance.

Marilyn J. Hernandez