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Rediff.com  » Business » Adworld churns its creative accounts

Adworld churns its creative accounts

July 19, 2004 08:19 IST
Agency pitches for creative accounts are intensifying by the day, with clients crossing the floor more often. Driven by both better offerings and global realignments, creative advertising accounts worth over Rs 700 crore (Rs 7 billion) changed hands since January.

In the last six months, J Walter Thompson, bagged nearly 32 new accounts. The booty? Rs 185 crore (Rs 1.85 billion). According to Tarun Rai, senior vice-president and general manager, JWT, these accounts include Godrej airconditioners, Philips mobile phones, Lake City Corporation, SBI Mutual Fund, HPCL Power, Godrej Security, UTI Mutual Fund and Dr Batra's.

Lowe recently acquired 11 new accounts, including those of the Torrent group, VIP Footlose, Blowplast Ergonomics, GAIL India, Bharat Gas and BPCL Corporate. The accounts have a combined billing of over Rs 100 crore (Rs 1 billion), says Pranesh Misra, president and chief operating officer, Lowe India.

Leo Burnett has acquired 10 new clients, including McDonald's (which moved as part of a global realignment of creative accounts), Bajaj Auto CT 100 and Oriental Insurance. They will contribute Rs 90 crore to the agency's revenues this year.

Explaining the reasons for this churn, Rai says: "Clients are evaluating their marketing mix more frequently. Communication, being a part of this mix, also comes up for evaluation."

Market pressures, unbundling of the media and creative functions and flexible remuneration models are fuelling the churn, he adds.

John Goodman, CEO, Ogilvy & Mather, however, feels only a handful of advertisers change agencies every six months. Only a couple of clients have asked O&M for reviews in the last six months and the agency has lost only one client so far, he claims. "Bigger clients tend to be more stable in their relationships with

agencies," he adds.

Nonetheless, white goods heavyweight LG reviewed its account this year after only a six-month gap. According to an LG spokesperson, the company redistributed its creative account among McCann-Erickson (for consumer electronics), O&M (for home appliances), Lowe (for premium products) and RMG David (for GSM mobiles). The over Rs 100 crore (Rs 1 billion) accounts earlier had been with O&M and Lowe.

The over Rs 200 crore (Rs 2 billion) Samsung account, held by Mudra Communications, was reallocated to Samsung group company Cheil Communications and Grey Worldwide at the start of the year. Spokespersons for both companies said the pitches were made independently and not as part of the global realignment drive.

In March, TBWA Anthem won the Rs 5 crore (Rs 50 million) Pedigree account from Grey Worldwide, as a fallout of a global realignment initiative.

Hindustan Lever's brand Close Up bucked the global realignment trend to move from JWT to O&M. The Rs 30 crore (Rs 300 million) UTI Mutual Fund account recently moved from FCB Ulka to JWT.

HSBC and LG Care also moved from Lowe in June and from Everest Integrated Communications in May, respectively, to Contract Advertising. Kinetic Nova moved from Contract Advertising to Grey Worldwide (India) in June.

Frequent reviews mean more pressure on agencies. Most advertisers now ask for a fee-based remuneration system, as opposed to the earlier 15 per cent commission, which is essentially a cost-plus-compensation model. This allows for greater negotiations, says Prasoon Joshi, regional creative director, South & Southeast Asia, McCann Erickson.

With advertisers looking for more value for their buck, the pressure on ad agencies is only mounting. As Rai puts it, "Whether it is healthy or not, it is the reality today."

Richa Singh in Mumbai