Tapas Gupta, Managing Director, BEI Confluence

Tapas Gupta has been a marketing and advertising professional with 25 years’ experience in the Indian and international offices of McCann Erickson Worldwide. He started out with Clarion-McCann in 1977 as a management trainee and left as the General Manager, Kolkata in 1986.

Gupta has headed McCann Erickson’s Delhi, Kolkata and Kathmandu offices as Senior VP and Director from 1987 to 1995. He has overseen M-EW Bangalore from 1991-93. He has worked on key global McCann accounts like Nestle, Gillette, etc., at McCann’s international offices in Manila and Hong Kong.

Gupta was deputed by McCann Erickson to head M-EW’s new JV agency, PSL-Erickson, in 1996 as President & CEO. He was CEO from 1996 to 1998.

Gupta started Confluence Communication in 1999 simultaneously in Delhi, Mumbai and Kolkata and has built it into a Rs 100-plus crore agency in nine years. He collaborated with BE International, a reputed mid-sized global agency in 2004, and became the Managing Director of BEI Confluence in 2004.

He is also the active Executive Committee member of AAAI, and has been the Convener of the Northern Region of Advertising Agencies’ Association of India for the last five years.

In conversation with exchange4media’s Puneet Bedi Bahri, Gupta gives his frank views on the ongoing economic slowdown and its impact on the advertising industry; how one can turn these tough times into opportunity; the structural changes in BEI; new account wins; and harnessing the digital advantage.

Q. Last year, you had set a target of close to Rs 145 crore. How close are you to achieving that? What is the target growth percentage for 2009?

We many not be able to achieve Rs 145 crore this year, as starting September, a lot of our clients have cut down on communication costs, particularly in ATL activities. Certainly, we will be above last year’s Rs 110 crore. Given the slight uncertain trends, no client is actually coming out to say this is what I will spend between now and March. Every client now is treating things on a month to month or quarter to quarter basis. So, we are at the beginning of Q3, which is November, and are now looking at quarter by quarter targets. We are expecting a double digit growth and many still achieve it, but maybe lower than what we had targeted. The industry has been growing at 25-26 per cent in the last year, this year, the industry may not achieve a double digit growth.

Our film production arm had a major tragedy. Sandeep Chatterjee, the gentleman who was heading it, passed away in July this year, Sandeep was one of the most well known names in advertising. He was taking the unit to great heights and had a lot of plans in the offing. With Sandeep, we had done a number of assignments, both in advertising and in the cinema medium. We were also looking at the possibility of getting into feature films. However, with Sandeep’s passing away, that domain that has suffered a huge setback. We have some juniors who are running the division. Hocus Focus is trying to re-coup, but this is admittedly not the best of times to re-coup. Nevertheless, the division is still very much in existence.

There have been further changes after Devraj Basu moved to Singapore to take charge of the Far Eastern region. He is looking after 2-3 offices and is in charge of Kuala Lumpur and Bangkok markets. Kiran Vernekar has left us. He has joined one of our clients and is now working as a client with us. The other structural changes that have taken place after these two gentlemen have left is that Srimanta Mitra has joined as Vice-President (Delhi); Ish Bawa, as Vice-President (Mumbai). Bawa is a marketing guy and not a classical advertising professional. He comes with a background of 10 years of marketing communications experience. He joined us in July. Bawa’s mandate is to provide clients with total marketing communications strategy rather than just focus on advertising, so we have tried to enlarge our preview of work. In Mumbai, we work for fairly reputed big names. There our job has been also to provide a lot of strategic marketing inputs, which a person like Ish has been able to do. We have a strong creative team there led by Pabitra Roy, Vice-President (Mumbai - Creative). The Mumbai office has two VPs who report to me. Effectively, I am overseeing Mumbai and Kolkata operations. Anwar Abbas is the Vice-President (Delhi - Creative), while Chabi Roy Gupta is Vice President (Delhi - Media).

We have growing at a rate of almost 30 per cent for last three years and in the current year that is 2008-09 I cant yet predict a growth it will certainly not close to what we have been growing last three years, it will be far flatter. It may be a single digit growth or may be a lower double digit growth. I had an objective to get to Rs 145 cores but I will not get anywhere close to it because last 4-5 months have seen very bad times.

2009 is also going to be slow, it seems it could be a tough year considering that the economic recession has set in already and is impacting everyone in the industry. As far as BEI Confluence is concerned, we are making certain structural changes and getting closer to the global BEI organisation. We are trying to restructure the agency in such a way that our integration with Media Pros (our sister concern) will move forward, where BEI will act as creative agency. In fact, in recent months we have been focusing more on the creative and strategic part of the business. A lot of the media responsibilities will be given to Media Pros, which will take place over the next couple of months. That’s a major development that we are seeing, so our clients are going to get the very best in creative through BEI Confluence and the very best in media through Media Pros and, therefore, we are going to offer them integrated services.

Out of Mumbai, we have a direct marketing and BTL company that has also been integrated into our system. A lot of work that we are doing for our clients is also in the domain of BTL and communications in direct marketing, communication in merchandising. One of the trends that I have seen in the recent past is that a lot of monies of clients are now going into BTL, where the results are far more indigenous that ATL, which is brand building, so we have geared ourselves to handle that. A couple of a our clients have moved into that mode, where 20-25 per cent of their budgets have moved from ATL to BTL, so we are geared to handle that and we are doing our best to service our clients in a way that our clients get immediate results rather than the long term brand building. At this point in time, not many clients are investing in the long term brand building exercise. At present, it is an issue of survival, therefore, all advertisers are looking at shorter term plans.

The financial crunch has hit the industry very badly, and it is coming on two fronts – one is clients are cutting down their budgets, and secondly, the clients are not paying up, even the very stable clients who have always paid up on time, are not paying now. This has impacted the industry big time and has impacted us as well. So, now it is an issue of very stringent financial management. Those who survive and take strong measures will pass through this financial crisis and live to see good times. It is like the turbulent waters, if you don’t drown, you will see smoothness again, but you have to pass through this period. These are very turbulent times not only in India but globally.

As far as expansion plans are concerned, we are not going to spread beyond the four metros that we currently exist in – Delhi, Mumbai, Bangalore and Kolkata. At this point of time, I am not even pondering on that. There are certain agencies that are closing down offices, so I am not even dreaming of further geographical expansion. I also firmly believe that in today’s world, you don’t really need geographical expansion for growth. It’s an expensive formula to expand as real estate prices are going up; acquiring people is also expensive, so we are not expanding in India. Internationally, the idea to send Debraj Basu to Singapore was to expand in that region comprising Indonesia, Malaysia, Thailand, and Singapore. BEI is expanding globally, but now we are treading it a little more carefully. We were going for rapid expansions till about July 2008, now we are a little more carefully because the time is not very conducive. Thus, we are taking it one step at a time. We have been on rapid expansion in the last two years, but are now a little more conscious and are only adding new country on its merits.

One of the major gains has been the Hindustan Sanitaryware Group, where we have been inducted into two of their key business portfolios. They have three business portfolios, out of which Percept has one, which is sanitaryware. We are handling their kitchen range and are also working on their retail initiative, called EBOK, which is into home furnishings. They have huge outlets and we are doing a lot of advertising for them. We have made a major headway into the Zee Group in Delhi as well. We have made some gains into the Essel Group here, which is into commercial space and entertainment in a sense that they are building multiplexes. We have also won the Costa Coffee and a reality business called TDI.

I would like to mention an important point here, which will be an inspirational point for agencies our size. We don’t belong to the Top 20 global multinational agencies, nor are we a small shop setup with a single agency. We are somewhere in-between and I think we are very strategically poised in terms of our size, infrastructure and network. We have four offices with 80-90 people working for us. We are a 100-plus agency and not a 150-plus agency. Agencies like us are very strategically placed as we have the full infrastructure, we are fighting as competitors and we provide equal value, therefore, larger clients can look at us where they don’t get the brand name of a multinational agency, yet they get a full value at a price that is probably couple of notches lower. They get the complete support of the agency, management and the kind of servicing.

So, I think this is an opportunity for agencies in the 100-150 size group, which are poised in the middle. Clients who are developing or businesses that are developing and have been working with smaller agencies can move up to us. In times of recession, big clients looking for greater value from the advertising agencies can certainly consider us. Even in times of recession, this can be looked as an opportunity for mid-sized agencies.

New age media has definitely taken the developed countries by storm. The trend is growing. We have qualified professionals who are getting specialised. I don’t think the people who have worked on offline media – the traditional media – will expand their horizons to take this further. There is need for a new set of professionals to take over, who will be savvy in the Internet domain. We work with a couple of consultants who are totally into the online media and are not working on anything else. There are agencies where they handle both online and offline work, but I think digital is going to be a very specialised area.

I don’t think in next five years there is going to be a complete amalgamation of the media. It will rather get bifurcated, and it will get more and more online people, more software professionals who have the aptitude for the online media will take over. It has got huge potential in India because Net connectivity is growing by leaps and bounds. Even the e-choupals of the world are getting connectivity in the rural areas and it is going to expand at a pace that mobile connectivity has expanded and at a pace in which television had expanded 20 years back. I think the only barrier to Internet is language. In China, even the poor people use the Internet because it is available in their local language. If we are able to break this barrier in India, which I am sure is going to happen sooner than later, one can see this spreading like wild fire.

It is impacting us, my clients, it is impacting the media. I don’t think we can hide from the reality. We cannot say that the industry is doing great and we are doing great; we all are all passing through a tunnel now. We are sure that there is light at the end of the tunnel, though we are not sure how long the tunnel is. Hopefully things would be better by the end of this financial year or early next financial year. Those who survive through this tunnel and pass through it safely, will obviously see better times again. The Indian industry is very strong in its fundamentals, it is going to move up, and in my opinion and industry leaders’ opinion, it is going to move up very fast, faster than the rest of the world because India is a fundamentally strong country, both in economics and management. Whether it is the software industry or entertainment industry, we have a strong set of managers who are like commanders now and have to steer the industry out of this crisis. We all are trying our best.

People are being doubly sure. A lot of agencies have frozen recruitments, we have also frozen recruitments in a couple of our offices. At this point, we have not sacked anybody. In any agency there is natural procedure of attrition that happens. Now, in certain offices if two people are leaving through attrition, they are possibly replacing with one, this is the trend in our agency. As far as our industry is concerned, I hear of job freezes across the board. Nobody will come forward and say that they have sacked so many people.

I believe there have been a lot of lay offs, but I can’t really stick out my neck and say who and how many, because I have no definite information. As far as we are concerned, we haven’t laid off people, but we have frozen recruitments in one or two of our offices out of the four. In Mumbai and Delhi, we are replacing people, but not adding to the numbers. In our Kolkata office, which is growing even under difficult situations, there have been recruitments in the last 3-4 months. Our Kolkata office is a very public sector based office, where we do a lot of work for clients like Tata Motors. Public sectors have not been impacted to the extent that other sectors have been. The public sector might have come down by 5 per cent, but not 40-50 per cent like the other sectors, therefore, our offices, which have a mix of clients, are recruiting people.