IndustrySpeak: Global media holding Cos in the grip of digital fever

Global media holding companies are making many statements on their plans for India. And what emerges from these statements is the serious intent to acquire digital agencies in India. The only problem is that even as media agencies are bullish about this, the hunt isn’t turning out to be as simple as it sounds.

Some of the recent international heads, who have unveiled their digital objectives in national and international interviews, include WPP’s Global Strategy Director Mark Read; Havas CEO Fernando Rodes Vila; Publicis Worldwide COO Robert Pinder; Aegis Media Asia CEO Richard Halmarick; IPG’s Steve Gatfield (CEO, Lowe Worldwide); and Omnicom Vice Chairman Michael Birkin.

Some of the recent initiatives seen on the digital front in India include Aegis Media announcing the launch of its digital arm, Isobar, in India by the year-end; Dentsu and ConnecTurf launching interactive joint venture ‘Clickstreamers’ that would provide Dentsu’s Indian client base a complete range of interactive and digital media services; 141Sercon, the newly-formed activation brand from BatesAsia, launching 1010, the group’s first ever digital initiative; and Zenith Optimedia launching Zed Digital India, its full service interactive and digital unit.

WPP holding its second Asia strategy meeting at Bangalore in July 2007, where the theme was digital focus, is just one of the other indicators of this digital frenzy. Starcom let it known far and wide when General Motors appointed Starcom MediaVest Group’s Starcom IP to drive digital marketing in the Asia Pacific.

Now let’s take the top digital agencies in India such as Quasar Media, Webchutney, Pinstorm, BCWebwise, ConnecTurf, Interactive Avenues, Media Turf, etc, 80 per cent of them don’t belong to any media network or holding company. All media holding companies have spoken to these agencies. In addition to these, other companies like Network18 are also trying to build digital capabilities and lure these companies. Needless to say, private equity firms are also in this chase.

Perhaps one of the biggest challenges that the ‘buyers’ face here is that when it comes to buying a digital agency, the decision is not based on revenues but on valuation, and the game then is more expensive than expected.

Advertising networks in India have not been able to build digital capabilities that they can boast of or would keep them away from this rush for digital agencies. Industry experts believe that the reason for this is that the Indian advertising and media industry per se is young, and in developing the traditional skills, digital medium was not a priority, until now.

What the industry has to say
Lodestar Universal’s CEO, Shashi Sinha, remarked, “Two key reasons for this digital interest are the digital footprints in the international markets, and the fact that global investors are seeing what their agencies are doing in India, and in the new media in India. In the US, digital is almost 8-10 per cent of the ad industry. There is a genuine belief that digital will take off in India soon and if you are not in it already, then you will miss the bus.”

R Gowthaman, MD, MindShare West and South, observed, “The platforms for distribution will converge, and soon you can watch TV on mobile or the Internet. At a time when content can be viewed in different forms, the digital agencies are better poised to cater to consumer needs, which is why agencies have to enhance their digital capabilities soon. As we speak today, India’s digital population is roughly around one-third of Australia’s population – this just indicates the scale India can offer.”

Aegis Media’s Country Head, Charles Berley Jenarius, said, “India is a young country demographically and digital is where the next generation is headed. As a country, India has leapfrogged in technology – hardly had we seen dial-up, when broadband arrived. So, when digital takes off, it would be very fast. In order to be future ready, you need to move into the digital arena now. Also, today we are working on global brands, who expect their key markets to be in sync. Digital is a strong tool to integrate with the rest of the world, and be on the same wavelength. Acquisition can give you specialised skill sets with scale, but for Isobar we are exploring both training people internally and acquisitions.”

Starcom Mediavest Group’s South Asia CEO, Ravi Kiran, said, “My frustration with this subject is why is digital still at 2 per cent. Advertisers are not growing in digital the way the consumers are. Look at everything around you – when bomb blasts were covered on news, the channel also aired the pictures that people put on the channel’s websites; our music is digitised; our work is digitised; there are 120 million mobile handsets in India. Look at the people who are going digital, and the influence they have on other people. This is the medium where opinion leaders go to. Ad agencies and advertisers should run in the digital space like there is no tomorrow if they want to keep up with the consumers.”

Agreeing with Kiran, Harish Shriyan, Managing Partner, OMD, added, “Media is fragmented and everyone is talking about integrated solutions, and digital is one of the mediums to attain that. It may appear too early, but advertisers have started looking at the medium seriously, and it is only a matter of time before it becomes one of the most important components of communication. The young generation is multitasking and you have to run to keep pace with the consumer. Acquisition is the fastest route to get the digital capabilities.”

Media experts see the digital medium divided in three parts – one of media buying, where most agencies have some capabilities in buying media on digital platforms. The second part is content building, where the independent digital agencies seem to be dominating the market to the extent of even providing services to mainline ad agencies. The third part is of digital strategy and consulting, where no agencies seem to score. When things are seen in this league, the competition suddenly includes names like Google and Microsoft, and then the media industry is no longer what we knew it as.

Also see:

‘Google & MSN, and not IPG or Omnicom, are the new competitors of WPP’

International: Microsoft: DoubleClick Deal Will Bring New Meaning to 'Being Googled'

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