S. K. Swamy: Agencies need to work on clients core function

Rahul Kapoor - Televisionpoint.com | New Delhi
Last month when big ticket advertisers such as Coca-Cola India and Hindustan Unilever Ltd (HUL) decided to link compensation of their media buying agencies to the performance of their brands, the Rs 22,000 crore marketing and advertising industry felt the jitters go down its spine.

Power breakfasts and lunches saw senior management make presentation on how to tackle the scenario, while the industry is caught in a double whammy - clients getting more demanding and the global recession forcing companies to cut down on their media spends.

S K Swamy

Despite such problems, S. K. Swamy, chairman and managing director, R. K. Swamy BBDO, feels the industry will recover from the current phase by the end of this year. "But advertising and marketing agencies need to work on evolving into one of the core functions of companies rather than remain an expenditure centre." Swamy adds.

Swamy explains, "The present phase of the industry is a mere blink. The markets have shown a healthy rally over the past few months and sectors such as auto, banking and telecom have posted healthy quarterly results."

He says, "All these are also heavy ad spenders, while sectors such as FMCG and consumer durables haven't been hit much by the recession and their ad spend will remain pretty much the same. Going by this logic the ad industry will see a recovery beyond the second quarter this year."

Swamy's 1,000 strong work force company clocked a turnover of Rs 750 crore last fiscal and a robust growth of 23 per cent. Growth this year is hovering at around 12 per cent and is expected to witness buoyancy after December.

In the first half of 2009, the Delhi office of R K Swamy BBDO won communication responsibilities for Ranbaxy Global Health Care (RGHC), Revital, Chericof, Chericold N Flu, Pepfiz, Pepflux, and Chyawan Active Chyawanprash.

From the existing roster, the agency handled the launch campaign of Suzuki GS 150 R motorcycle. It also created a fresh positioning for IndusInd Bank – 'Makes You Feel Richer'. The campaign for Orient PSPO Fans with M S Dhoni as a brand ambassador made its way across media in an effort to raise sales volumes for the brand.

Citing recession, corporates are taking undue advantage and paying less for services, said Swamy. "Suddenly, I see all these corporates taking advantage of the economic downturn and paying less for media services." he says.

"Even people who are posting healthy profits are pushing for lower rates. In this situation the only way out is to evolve advertising as a key business component focus." he adds.

Naturally, this is telling on the results of large media houses, as net profits for the quarter ended June have nosedived. An analysis by leading brokerage houses shows that profits have dipped by 8-10 per cent for most media companies.

On the evolution of the ad business, Swamy says, "When I joined school my fathers profession in the school form was mentioned as an advertising consultant. And when I joined the industry after finishing a degree in engineering and management we were called creative consultants."

"Now, consultants have been replaced by agents. This I feel is degradation in terms of nomenclature. Advertising agencies have moved beyond the typical creative business, and now there are specialised verticals on everything right from branding to research." opines Swamy.

Under the present circumstances, only the tough can hope to survive. Says Swamy, "I still go for pitches. Recently (we) did a thorough research for a large FMCG client for their incense business. Good research and a pragmatic approach helped gain the clients respect, and business followed."

Typically, Swamy makes a heavy duty pitch once a week. During the day, he holds strategy meetings with the company's top brass. Evenings are kept aside for learning the Vedas. This avid reader is now reading Predictably Irrational by Dan Ariely.