The changing India story for media holding companies: Should WPP be worried?

The fact that in the global markets India is very important is not new any more; the fact that non-advertising businesses like digital, below-the-line, direct and so on would bring in more revenues than advertising businesses is also common knowledge, and the fact that clients are driving this attention to India given that the Indian consumer is not just younger and richer but also spending, too, is known to all.

In fact, these details are so popular and old now that media holding companies across the world are focussing on India more than ever before. The six key holding companies are WPP, Interpublic Group (IPG), Publicis Groupé, Omnicom, Aegis Media and Havas Media. Dentsu, which owns 15 per cent of Publicis Groupé today, may not be exactly termed as global media holding company just yet.

By virtue of the fact that WPP has been one of the first to make its moves and consolidate its position in India makes it the single largest media holding company here with over a 30 per cent share. It is strong in Asia per se, but in markets like China and the Philippines it is still fighting for the numero uno slot with the likes of the Publicis Groupé.

Now, as the attention and plans of other media holding companies, especially IPG and Publicis Groupé, are manifesting into new relations in India, will the WPP market share be affected?

Many in the industry believe that it is not that WPP was not expecting such consolidations like the India Media Exchange from the Publicis Groupé or the IPG takeovers. In fact, these moves have taken longer than expected, and Omnicom, Aegis and Havas Media, which are already far more active in 2007 with new brand launches in different disciplines here, need to get their act together faster in order to make place for themselves in India. The rule of three, that is, only three players can be important in a market, will apply to India too, and action now will shape that report card.

WPP and the foreseeable challenges

In the case of WPP, the company will definitely stay on the top three in that report card. WPP initiatives in India have come before anyone, and in areas that one would fear to tread on. The decisions taken in the market here have set trends for others to follow – whether it was in the media agency business, in the non-advertising businesses or in the sheer approach to every day work and business models.

And that is the reason why the agency is where it is. What is the expected story from here? Media professionals believe that for this media holding company, the India story appears more to be about size than anything else, and in a sense, that is where the first problem is.

A senior media professional explained, “In every business, there is a critical mass after attaining which, size starts becoming less of an issue, and then there is a second critical mass, following which size may just go against the company. A 30 per cent market share may look enviable, but it is not the best job to have, simply because it is not a sustainable position. More importantly, it is not healthy for the market as well.”

The idea is that such a situation might be monopolistic in nature, but the bigger problem is that the impact of such style of working is on the quality of the product. Despite its size, is WPP dictating the agenda for the industry and setting new benchmarks? Various senior experts do not think it is doing that. “The agency's style hasn't changed much in the last 10 years, and it is not so exciting any more. Being a leader, this may go against it with increased competition,” said a media observer.

WPP is strong across disciplines today, whether it is the media business, creative and even the likes of research and analytics and mediums like outdoor, among others. Senior media professionals believe that the move from IPG, Publicis Groupe and Omnicom will have an impact in all areas. However, the media businesses are expected to see a stronger impact.

The focus and investments on Meridian might look positive today, but it was not so long ago when Bates was merged with Enterprise (following the Enterprise Nexus takeover), and then merged with Brand David to make Bates David Enterprise.

MindShare has Maxus today as a strong media brand, but MediaCom really has just become a shell brand, which has already lost people and businesses to OMD in India.

The second problem that WPP can face with increased choice is around its image of a being ‘one house with several doors’. “That is what it is in the strictest sense of the word and that is not the nicest offering to have for customers and advertising – where is the differentiation? The clout may have allowed clients to look at such an option for a while, but with more choice in the same league, they might not want to get inside a house just because it is big, they would want to know what is there,” said another senior advertiser.

A big problem would be talent. Retaining talent, motivating talent and creating a junior rung that is charged and clear leaders of future is not seen at WPP yet – perhaps the creative brands can get a clean chit on that to some extent, but the media brands will face problems. With industry veterans like former Maxus chief C V L Srinivas being quoted as saying that they would never want to come back to the media agency side of the business, the situation doesn’t get any easier.

You create machines when you chase market size… this is perhaps the harshest view that some have on the company. However, it cannot be denied that WPP is a leader by a significant margin in India. IPG has quite a few leadership issues to resolve. OMD will be small until its India partners like Mudra and RK Swamy boost its presence, and that is not happening in a hurry. WPP is not slipping anywhere from its throne in the next year or even two.

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