Will Group M India's Mindshare restructuring work?
May, 31st 2008
By Samidha Sharma and Ramya Ramamurthy, CNBC-TV18
There is a totally different value proposition that can be created and we can lift the game a whole lot more than what we are doing right now, said Vikram Sakhuja, CEO, Group M India. That was Group M Indias CEO flagging off Mindshare's plans. Other media agencies are more inclined to play skeptics and say that they are already doing this!
Just a few days later, the agency worldwide has announced that it is restructuring its business to go beyond just bulk buying of media. In India as well, where Mindshare buys some Rs 2,000 crore of media annually, the idea is to do some McKinsey style consulting. The question is do they have what it takes?
As 97 offices across the world take on Mindshares new credo; India, one of its top ten markets will be an early adopter. Come July, just two months after the restructuring was announced, Mindshare India will go all out to provide business solutions to its clients. Four business units will offer services ranging from consultancy to intellectual property creation to branded content. The idea is to provide media neutral creative content for their clients.
We are delivering communication solutions for our clients, they are seeing it and valuing it big time. But we are just going further down that path and trying to actually do it through this restructuring. In fact, if there wasnt a path of evolution, this ambition would have seen quite ridiculous because we wouldnt be rooted in reality. Right now, we are confident about this because of the way we have moved up. We are actually considerably up the value chain and we now just want to go a little bit further, stated Vikram Sakhuja.
So, Mindshare will start off with focused teams for key clients like PepsiCo, Unilever and ICICI. But you can also expect dedicated teams for other brands soon. The end objective is obviously higher revenue margins. Mindshare is eyeing a 20 % year-on-year growth with this move towards consultancy.
Is this a game changing move for media agencies that are beginning to see low margins? Other media agencies are more inclined to play skeptics and say that they are already doing this!
There are players like Mindshare and there are others like that who played the volume game and probably still do. They have been associated more with the buying process and the implementation process than with the think-end of the business. The buying driven agencies may not have been doing that with the extent that other agencies may be like us have. So, for Mindshare to now say that they are in this space is good for them. It is good positioning to be in because you have to be in that space, said Lynn De Souza, Chairman & CEO, Lintas Media Group.
The honest truth is that media agencies have been delivering for the last few years a lot more than just media. However, unfortunately, the remuneration that we get is actually only for media, said Sam Balsara, Chairman, Madison Group.
While the industry greets the news with a mixed response, experts say that emulating consultancy firms like McKinsey or KPMG or PWC that offer auditing, management consultancy to long term business restructuring solutions is one thing but giving them a run for their money may be a long way away.