Stability and consumer confidence to come back in 2018: Vishnu Mohan, Havas

As we enter 2018, Vishnu Mohan, Chairman & CEO, Havas Group India & SouthEast Asia, hints at big plans for India. Leaving a “not so rosy 2017” behind, Mohan, in conversation with exchange4media, talks about accelerated growth plans for the agency and hopes 2018 is a year of growth and stability for the entire industry.

Excerpts:

What are your expectations from 2018? Will it be a good year and if yes, what are some of the key trends contributing to it?

2018 will be a change year. I believe the industry will leave behind the lean phase of the last 18 months that has been associated with so many uncertainties and concerns, stemming from economic stability and consumer confidence in part to trust erosion and the rest coming from brand safety, ad fraud, digital trading transparency. Things are beginning to settle down with some early indicators in the last few months. On the more positive side, 2018 is a year that will witness big sporting events, a year that will see a much larger pitch activity coming from many contractual commitments due for a review, a year that has elections in multiple markets and above all a year where the trust dust will settle with respect to digital.

What are your expectations from Havas India in 2018?

We will be focused on augmenting what we have today by seeking talent and organizations that complement our current offer and are compatible with our culture. The Vivendi acquisition of Havas enables us to make music and gaming integral to our business solutions through Universal Music and Gameloft, our group companies. 2017 saw the acquisition of Sorento, a leading healthcare agency. 2018 will see more accelerated growth.

You merged your media and creative agencies this year. How did it help the business grow? Can you share some numbers/data?

Yes, we brought them together in what we call a Village, which is premised on being together, working together and innovating together. We have moved further in many markets to a singular village leadership to accelerate the value proposition resulting out of this offer, to our clients as they were the sole reason for us to make this happen.

If you look at the two most fundamental pillars that everyone wants and recognizes the need to excel is in data and content. Unless you find a way to link the two for the benefit of business, you will be paying lip service. But it’s easier said than done because data has largely resided in the media side of business and has largely resided within the creative side of business. So, it’s difficult to make the most obvious thing happen unless you put an organisation that makes it happen. Our scale and structure has allowed us to make it real and be able to better integration, stability, single point of contact and everything that a marketer wants from its agency.

We have seen really positive outcomes not only in terms of great feedback from the client and a warm welcome from them, but also in terms of actual business outcomes for us. We tried to put a magnitude to what is the value to augmented business that we could get as a result of working together as a village. We were able to get 5-6 per cent additional business. The Netflix work we did for the launch of the Crown was a great example of data and content coming together because of the Village and went to pick up awards at all major festivals. In India too, our Village model allowed us to bring in creative into Malabar Gold, a brand where media was the starting relationship.

Over the years, there have been constant allegations that the media agency business never truly evolved its business model and still relies on scale and volume and offering better rates as strengths. Do you agree? If yes, why do you think this has not changed and will it in the future? If no, what are your reasons to disagree? Why are agencies of scale still considered among the strongest?

I don’t quite agree. The media agency business has evolved significantly especially in the digital ad ROI era, where investments in talent and technology have been made by one and all to demonstrate agency value as growth drivers for brand’s business. That said, I’m not denying that scale has a role to play, but it’s not enough. The ability of skill to reign supreme over scale has been changing over time, making it more relevant than scale and not the other way round. With more than 50 per cent of money on digital and 70 per cent of that on small screen and increasingly more programmatic relationship, the real value is in smart technology and smart people. The agencies of scale may be considered the biggest but not necessarily the strongest.

Another debate has been on the role of agencies themselves, creative or media, and if they’re still seen as partners by marketers or as suppliers. In your experience, how has this equation evolved over the years?

I believe the word ‘vendor’ is used increasingly more than the past. So yes, the equation has evolved but for the worse. This is a generalized view of the industry seen from the outside. And no one is to blame for this but the industry itself which has fallen in the trap of a “race to the bottom,” under-pricing itself to gain size and share and many a times to survive. A vicious circle is an obvious outcome, you earn less, you are not able to draw the right talent, you are not able to demonstrate the right value, you continue to be paid even less and the cycle goes on. The truth is there is not one single marketer out there who is not willing to pay right for a service if the expected value is provided. How often have I been in meetings when a client says I want more time from this person and I don't care what that costs. Are we a “partner” or a “vendor,” the choice is ours to make. The technology shifts, the digital transformation, the emphasis on analytics and accountability are all great enablers giving a fresh lease of life to the industry to make their way back to where they truly belong, which is being “partners for growth.”

How are you seeing the role of consultancies such as Accenture or McKenzie in a market like India? Are they potential competition to your role as advisors and partners to clients in India, as seen in other markets?

They are already potential competitors in my view. They are making their mark and their presence felt through continuous signals. Their primary consulting DNA coupled with knowledge of industry, acquired through roles of “audit” or “pitch consultants” and investments in digital and recent acquisitions of some strong creative boutiques for example in UK and Australia, say it all. I do believe this is the start and there is a lot more to come and India may be no exception to that. That said, there is one fundamental difference and it's the core DNA of them vs us, consultants vs creators. Our industry is premised on “creativity” and thus even if we have overlaps in several areas, this fundamental difference will ensure the healthy co-existence of both.

We are in the last week of the year 2017. How was it for the industry and your agency?

Probably a year for the industry in general to forget the past and move on to 2018. The results of the communication groups are at best, showing a very marginal modest growth vis-à-vis the forecasts it had a year ago same time round. The industry has faced a double impact this year. A greater than expected decline in traditional media spending coupled with the brake on digital spends growth arising out of an aggregation of concerns around transparency, brand safety and ad fraud led by large advertisers which was a cue for many others who followed the same path. Adding to these woes have also been specific local factors such as the continued impact of demonetisation at least for the first half of the year and the initial wait and watch effect for the last four months following the GST enforcement. Havas has been no exception, but that being said, the second half has shown some momentum which has seen some further acceleration in Q4. We have declared an 8 per cent growth in the region in Q3 and hope to look upward by the end of the year.

Do you think people are becoming more confident about spending on digital?

I guess you are talking here about advertisers. I do believe that the industry has rallied behind to address the issues at hand and the trio of regulators, publishers and agencies are doing their bit to restore the trust and confidence. In May 2017, HAVAS launched CTS (Client Trading Solution) a 100 per cent transparent programmatic offer that gave brands greater control and full visibility and costs removing the perceived opaqueness in the system. Our clients embraced this initiative from the group with many already adopting the model. Money follows eyeballs and if all the action is on digital, the spends will be there. The slight brakes that we have seen this year are transitory and I am confident that the pace will pick up in 2018.

With the rise of search and social media, digital had broken many walls between India and other more advanced markets so to say. But things such as connected homes or connected cars or the likes of Amazon Echo, point out once again that markets such as the US and UK are ahead of India. Has India lost its place with the advent of newer forms of technology like AR/VR/Mixed Reality/AI/Robotics?

It is a little far-fetched to say that India has lost its place. Yes, it does lag behind the other countries in terms of development. But that's a function of the investments that are being made ahead of times to shape the future and the culture of entrepreneurship in some nations versus other. Indeed, anything that is forward-looking such as AR/VR/Robotics/AI necessitates an investment that you are doing in anticipation of what that might generate. These investments may find way into other more important priorities in the country. Take search and social on which we were lagging behind but we have caught up now. It’s not so important to lead all the time, what’s more important is the capability to deploy it when you are ready.

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