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It's time to wake up and smell the coffee! For the advertising fraternity, at least. That was the sentiment among the speakers at the diamond jubilee celebrations of AAAI (Advertising Agencies Association of India) on Thursday. And ironically, it was the marketers who seemed more aware and attuned to the changing dynamics of the marketplace today than the advertising community itself, if their presentations were anything to go by. The occasion being the 60 year anniversary of the AAAI, the theme of the seminar was 'Beyond the Horizon' and revolved around looking at the possible implications for the advertising industry given the changes taking place in key sectors like FMCG, retail, media, financial sector, telecom, print and electronic media.
The session began with former Ogilvy top boss Ranjan Kapoor and current Country Manager, WPP India, serving the assembled advertising audience with a wake up call, namely the fact that in the coming years, it will be the media independents who will offer a more diverse set of skills to clients than the traditional agencies who seem ill equipped to handle the changing dynamics of the new marketplace.
A pertinent point that he brought up was the estimated size of the marketing communications industry in India today. "Are we underestimating our own Adex?" questioned Kapoor, "And if so, by how much? Are we missing something? I believe we are. I believe that non-traditional media has grown considerably faster than our ability to measure it. Some of the direct to consumer businesses like Amway, etc., are billion dollar businesses. And they use direct marketing tools which go largely unmeasured. As do rural brand building efforts and in-cinema branding."
An important hypothesis by Kapoor was the fact that brands are not built in the era of shortages; they are built in the era of plenty. Plenty of choices, plenty of goods and services, plenty of financing options and plenty of disposable incomes. Kapoor warned that those brands which were built in times of shortages would do well to reassess their notion of brand loyalty.
Kapoor also pointed out that 52 percent of India's GDP had grown up without the help of the advertising industry as companies like TCS, Infosys, Wipro and many others have become billion dollar enterprises without their help.
According to Kapoor, the future belongs to the media independents. He also pointed out that the two big trends which will shape the advertising business in the future will be the retail boom and the mobile telephony phenomenon.
FMCG: Advertising's oldest pal!
The session on the FMCG sector was chaired by Sam Balsara, Chairman & MD, Madison and presided over by C.K Ranganathan, CMD, CavinKare and Saugata Gupta, Head, Marketing, Marico. Having the FMCG sector as the first session of the day was significant, given the fact that traditionally the first advertising campaigns that began peddled FMCG goods like soaps and food. Also significant is the fact that over the past few years, the share of the FMCG industry towards above the line advertising has been on a gradual decline as the industry is turning, increasingly, to below the line and direct marketing initiatives.
The Indian FMCG industry which is valued at about Rs 53, 000 crores currently has registered a compounded annual growth of just about 2.5 percent last year while the share of rural markets, the favourite last hope of many a marketer has actually declined by a percentage point. According to Balsara, the main reason for this anomaly is the fact that with most of the FMCG behemoths having gone public, the marketing team has shifted their emphasis from brand building to sales and to combat the pressure to shore up their share prices, have shifted the money from brand building on to short term tactical promotions.
Coupled with this is the fact that management has increasingly become risk averse and there is not enough money being spent on product innovation. Also, marketing teams
To read the entire story, grab your copy of Impact Advertising and Weekly magazine issue dated June 20-26, 2005