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Wednesday, May 1, 2013

'Ad agencies see themselves as large businesses, not consultancies. Now, that's bad'

This Q&A first appeared in DNA Money edition on March 21, 2013.

Sam Balsara, Chairman and Managing Director of Madison World, recounts the media major's journey over the last 25 years and the road ahead. Excerpts from an interview:

A phenomenal 25 years in business for a home-grown media agency. How does it feel to have travelled so far?

Most people start on their own, because there arises a burning desire to do something independent, to be their own boss and drive their own destiny. I must confess the reason I started Madison was not quite that: because I thought a good agency is a small agency with a few large clients; and Mudra, the agency that I worked for then, wanted to become India’s largest agency -- and I felt that I was neither capable nor mentally suited to help the agency reach its goal.

Looking back, is there anything you would have liked to change in Madison World?

In retrospect, I should have focused a lot more on the creative aspect when we were full-service agency and subsequently. Because of my background, I tended to focus a little more on strategy, which I thought should be the foundation and pillar for any communication. That clearly was a mistake. In hindsight, also not focusing and, in fact, decrying scam work that wins awards was also a mistake!

And what have been the highlights?

I would say the three key pillars of Madison success have been these: Not spreading ourselves too thin in the early foundation years. We did not accept any new client for the first four years of our existence. Our early focus on media, when not too many others focused on it. Our adopting the concept of specialisation in the communication business, having seen it work in media area and applying it to other areas like PR (public relations), outdoor, BTL (below-the-line), rural, so on.

You started in 1988. What was your vision for Madison then? How much of it have you achieved?

I must confess I am a little more focused on doing a job well today based on some principles and value systems, rather than get excited by long-term vision. Long-term vision may be necessary for large organisations, but for a small hardworking, performance-oriented agency like Madison, it is the here and now that matters.

How has Madison's business fared when compared with domestic and international peers?

It has fared reasonably well. We have had our fair share of successes and knocks.

The Indian advertising industry has changed drastically in the last two decades. How has this change impacted Madison?

Yes, there have been substantial changes. The biggest change is that, from agencies viewing themselves as professional consultancies, they have begun to view themselves as large businesses in their own right. This, according to me, has led to weakening of bonds in agency-client relationships and I don’t think this change has been in the interest of either the client or the agency.

Global advertising giants have pitched their tents in India. How challenging has the market become for agencies such as Madison?

Clients are constantly under pressure and the competition that they face is increasing day by day. My experience has been that they want to deal with a partner who can best help them reach their objective.

Of late, the market has witnessed significant inorganic action, especially in the digital space. Is Madison considering acquisitions as well?

We do receive proposals from time to time from other agencies and we evaluate them. Our view on digital has been, and continues to be, that we want the digital function within Madison Media and our planners to be digital-savvy. Just acquiring a digital agency and letting it run as a separate unit neither helps our clients nor us. Nor does it enable us to improve the quality of our service. It does not offer expertise to our clients either. It may help our topline and bottomline, but Madison is not about that.

You have recently said that consumption is not increasing in spite of high marketing spends by the corporate sector. Do you see this changing in the near future?

Yes, given the intense fragmentation that is taking place in media area, especially in TV, and given the increasing competition that marketers are facing, return on the advertising rupee spent has been going down. Also, today you require far more carefully crafted strategies to ensure that return on investment is maintained. A few years earlier, it was enough to just advertise -- rightly or wrongly -- and you could get positive results. Today, it is not so.

What is Madison World's overall billing and market share like in India?

Madison World’s gross media billing including outdoor would be in the range of Rs 3,000 crore. Our market share according to a RECMA 2011 report, without counting (partner) Mediacom, is 11.2%; with Mediacom, it is 17.7%.

Does the possibility of being bought over by competition faze you?

Anything is possible in today’s world. Who would have imagined five years ago that we would have an independent joint venture with Mediacom where we own 51%?

Where do you see Madison World another 25 years from now?

'Younger and wiser'.

Have you considered putting together a succession plan for the company?

Most succession plans in the agency world go awry and create unnecessary disruption.

Do you foresee Lara Balsara taking over the reins?

Lara Balsara is a substantial shareholder of all group companies. Madison is a meritocracy and will be led by the most capable person available at the time. That person need not be a shareholder. However, if that person is also a shareholder, so be it.

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