IPG’s holding company for its media, marketing and digital assets arrives in India, creating a growth environment for IPG here, reports Noor Fathima Warsia
As IPG announced the formation of IPG Mediabrands in India, the promise of an action-packed year for media agency brands came alive once again. For many the big question is: what does this move mean for Mediabrands in light of the forthcoming mammoth Unilever media review? Even as IPG has been working for a while to make Mediabrands a reality in India, the timing of the development finally taking place in India couldn’t be better.
The competition in the media agency business is heating up. Older players have consolidated strengths to bargain better in the marketplace. Players like Mindshare are investing more in India and players like Starcom MediaVest Group have sharpened focus on India once again. New players such as OMD are rapidly making a mark on the industry and the likes of Madison Media too have repurposed their offering to be more relevant and aggressive in the eye of growing competition.
By themselves, both Lodestar UM and Lintas Media Group command strength and respect for what they stand for. But Mediabrands brings to these IPG media assets all the strengths of a global holding company, a benefit that rivals at GroupM and VivaKi have enjoyed in this market for a while.
Just as media agencies gear up for a pitch filled year, IPG agencies can use all the help they need. What is perhaps most interesting about Mediabrands, in comparison to its rivals, is the construct that IPG has opted for it.
Mediabrands to India
For all the countries that Mediabrands is present in, there are only five that have a dedicated Mediabrands CEO. And there is only one market – Germany – where the Mediabrands head is also the UM head in that market. The decision on which form Mediabrands will take in any marketplace is dependent on the size of UM or Initiative in that market. However, in all markets, where both the agencies are of some scale, the operating model is that of a Committee.
In India too, Mediabrands would be managed by a Mediabrands Committee that would be in charge of all its business interests in India. IPG has undertaken a series of changes to empower this new committee. The first step is to ensure Lintas Media Group’s complete integration into Mediabrands. For this, IPG has moved Lintas Media Group’s structural reporting from Lowe to Initiative.
In an exclusive conversation with IMPACT, Matt Seiler, CEO, Mediabrands Worldwide, said, “Lintas Media Group will now have access to everything that Initiative has to offer at the global level. Whether it is the Connection Panels, which has 16,000 contacts in India alone, or Matrix or various other such tools, there are now more opportunities for Initiative to serve advertisers in India.”
As is known, Mediabrands companies in India include Lodestar UM and Lintas Media Group. The various units of these companies such as Reprise, the two media agencies under LMG -- Lintas Initiative Media and a second agency brand and Initiative Lintas Outdoor (ILO) -- together ensure a wide scale of services from Mediabrands. IPG is adding more to this.
Magna - Not Buying, Intelligence
With Mediabrands, Magna Intelligence – its global buying capability -- too is making its way to India. Unlike the structures of holding companies such as GroupM and VivaKi, Magna dons a different form, dependent on the market. While there are some markets where Magna buys for all Mediabrands clients, in all its key markets, such as the UK, Australia and in a sense, even in the US, Magna’s primary role is to provide information to Mediabrands operating units to enable them to make smarter buying decisions on behalf of clients.
The Magna avatar in India would be on similar lines. The buying divisions of Lodestar UM and LMG will stay intact within the agencies. Magna Intelligence will just empower the agencies with relevant information to make better buying decisions.
Seiler explained, “If one of the units – Lodestar UM or LMG – is looking to make a deal with media owners, they will always have direct visibility of their own clients and know what is going on with them. Magna’s role would be to advise them. At present, we are number two in India. Rather than relying on a third party, we have a model, where Initiative and UM will have information to make better buys – Magna will not buy, it will just help them make smarter decisions.”
Magna Intelligence is expected to launch within the first quarter of 2012. The company is in the process of identifying a head for Magna in India.
MAP comes to India too
Elaborating why Mediabrands chose to follow this structure rather than just consolidate buying, Seiler said, “We have the best of both worlds. One can buy on the basis of volume, but the fundamental flaw with that is, it can become all about arbitrage. It is more about bulk buying rather than custom buying developed on the basis of a client’s precise needs. We don’t work on arbitrage or bulk buying. We enter early in the process in conversations with media owners and work to create something of relevance and significance for advertisers.”
IPG Mediabrands’ digital asset MAP will also launch in India this year. The likes of Reprise -- and specialised marketing service platform – Cadreon and mobile marketing service – Ansible when they launch in India -- will form part of MAP. Seiler informed, “We have prioritised eight markets where MAP will be taken to this year, and India is on top of that list. Shashi (Sinha, CEO, Lodestar UM) and Lynn (de Souza, Chairman & CEO, Lintas Media Group) will have access to all the digital assets and speciality groups in the domains of search, mobile, social, display and so on, that would have global expertise developed for India in a way that is much more efficient than it would be if it would be just within Lodestar UM or Initiative.”
The Mediabrands India Committee
The Mediabrands India Committee will comprise four to five key officials from various Mediabrands assets. This includes Shashi Sinha and Lynn de Souza. IPG Mediabrands is expected to announce a third agency globally, which will also be launched in India. The head of this agency, the head of Magna and functional heads such as HR and Finance will also form part of the Mediabrands India Committee.
Seiler informed that the move makes Mediabrands’ formation in India consistent with the global structure, and ensures that the company can deliver its global capabilities for both UM and Initiative clients in India.
Globally, there are only five markets where Mediabrands has a dedicated CEO. All the other markets have the leaders of UM, Initiative and now the third agency, that form and function as a Committee. “They don’t have any hierarchy and there is no head above them. Mediabrands Committee is like an operating unit in itself. Shashi and Lynn join Mediabrands and they will have a team, but no one above them,” clarified Seiler. The India heads report to the G14 leadership of their respective operating units.
To ensure a smooth beginning for the Committee in India, Richard Beaven, CEO, Initiative Worldwide would play the role of ‘Executive Sponsor’. Seiler explained, “This is to make sure that the transition into operating as a Committee, where the two agencies work together and share resources, is smooth. Until now, ILO was only working with Lintas or Reprise was only working with Lodestar UM, but now Lodestar will also contribute to ILO and Lintas will also contribute to Reprise in terms of new business. Richard’s role is to ensure that there are no setbacks in executing this.”
The Mediabrands Committee will also decide which other Mediabrands assets can be brought to India -- shopper sciences or hyper-local or others that exist in the Mediabrands global structure – that are relevant to India at this point. Seiler stated, “This is a much more collaborative model – we have one P&L and incentives for all the teams in a particular market are based on the overall success of Mediabrands in that market. We believe that this will take Mediabrands to greater heights in India.”
Not many agencies in India follow this form of a unified P&L. Most companies prefer individual operating units to work with their own P&Ls. This model brings in certain accountability on standalone units. According to various industry observers however, a unified P&L structure removes the focus from running after revenues to working on quality of services. IPG Mediabrands had begun its life globally in 2007 but in India, the company has just begun. The intention of the launch is also to consolidate its number two position, and close in the gap with the leader. Mediabrands gives IPG a good chance to deliver on this ambition.