Advertising agencies brace up for digital age challenges

Rahul Kapoor - Televisionpoint.com | Mumbai
Ravi Deshpande, chairman and creative officer of Contract Advertising India, staunchly believes in the power of digital media to engage and build brands.

He scouts the internet for the cutting-edge work in the mobile and internet space that allows brands to be built using unconventional tools such as Facebook.

"Online is hot now. We have built up a full-fledged team of 40 people and will scale up our capabilities as we go ahead," says Sudhir Nair, vice-president, G2 South Asia, Grey Group's activation and marketing division.

With the fast paced growth, it's no wonder that Starcom IP , Digitas, iContract and Neo@OgilvyOne are all sprouting up as dedicated digital competency centres from their ad agency roots.

"The trend is to set up specialist units within traditional advertising agencies," says Karl Gomes, executive creative director, Arc Worldwide.

"Unlike other agencies, which have set up a separate digital advertising arm, we feel we must own the whole process of communicating the brand attributes across media. And digital is a key part of that," says Deshpande.

Contract has its team of creative professionals work on aspects such as a website for a new product launch, in addition to print ads and television spots.

"Unfortunately, clients don't value the online work as much as that for mass media so the remuneration that one can charge for such services is limited even as the amount of effort that goes into the making of such ads is probably as much as that in other media," adds Deshpande.

The digital imperative is not one driven by passionate creatives at the ad networks. There is a strong business case for having a stake in the medium. A study by market research agency IMRB International forecasts online banner advertising to grow by 40 per cent to Rs 350 crore in the present fiscal year.

But in the digital medium, advertising agencies are facing a classic chicken-and-egg situation where they have to invest ahead of demand, incurring costs so as to be future ready even, as these tell on their bottom line.

"The issue is that one doesn't get salability of an opportunity in the digital medium. Plus, the availability of talent that can work on creating brands in these domains too is restricted," says the chief strategy officer of one of the leading multinational ad agencies in India.

Kiran Gopinath, chief executive officer, Ozone Media, agrees. "The challenge for traditional ad agencies is how soon they can ramp up the online advertising division to comprehensively strengthen their capabilities."

Since the digital medium works on a one-on-one basis with consumers, who engage with brands real time, content needs to be refreshed on a continuous basis. "This demands much more spots than a typical TV commercial," says Gupta.

Again, within the digital media, the approach for using mobiles as an advertising medium is very different from that on the net. "Tactical promotions and price-offs will probably work better on the mobile than a 30-second spot that can be used by a limited number of GPRS (global packet radio service) users," adds Gupta.

In addition, since the interoperability between mobiles is limited, the advertising often needs to be programmed in different software to be accessible across different cellular phone brands. The net result is a situation where there are a few tested recipes for what works and yet far more accountable.

"It's an issue of salability, investment and learning. Agencies need to be in the digital space but we can't turn around and say therefore I need to make the same amount of money that I make from creating ads for print and TV," says V Shantakumar, chairman, Saatchi & Saatchi.

Shantakumar likens the experience of agencies in the digital medium to the early days of television when returns on creating spots for television were far lower than that for cinema advertising. "In the digital space the return on engagement is measurable and remuneration is set up on that basis." he says.

The digital medium needs a vibrant and intimate appreciation of the target audience. "You need young, energetic, tech savvy and data intensive skill sets for the digital medium," says Aditya Khanna, co-founder of online ad network Tyroo.

"It's not about how clever you are, it's about being persuasive with your target audience. Using our existing firepower to address problems and setting up digital arms so that client doesn't take away their business because one doesn't have a set-up to handle digital, is not the right way to approach this issue." says Shantakumar, alluding to the need for traditional ad agencies to re-engineer themselves for the digital age.

Firms that represent digital media owners such as Tyroo are doing well. "Focus and DNA determine how aligned the company will be to the industry. New media is very return on investment sensitive so, one has to go into details," says Khanna.

What matters is the management of the campaign and how an agency is able to optimise the campaign using the dynamics of the medium, says Leroy Alvares, president, Tribal DDB India.

Travel and financial services sectors have been big spenders online but Nair says that fast-moving consumer goods companies that are among the largest advertisers are now allocating spends to digital media.

MTV's Aila Tendulkar, featuring gags and funny takes on cricket, may perhaps be a pointer of things to come. "It's for the first time MTV India is promoting a show only using the online medium," says Alvares.