After taking charge as the president of the Advertising Agencies Association of India (AAAI) last month, Arvind Sharma, chairman & CEO of Leo Burnett India, is busy drafting fresh business practices and guidelines to foster a healthier business environment between advertising agencies, media owners and clients. The AAAI today represents a large number of small, medium and large-sised agencies as its members, who together account for almost 80% of the advertising business in the country. In an exclusive interview with Lalitha Srinivasan, Sharma talks about the association’s future plans. Edited excerpts:
What’s going to be the AAAI’s major agenda this year?
First is the area of business practices among the three key players in the industry ? advertising agencies, media owners and clients. Through dialogue with all the stakeholders and their associations, we want to create a healthier business environment. For instance, our agreement with the Indian Broadcasting Foundation (IBF), which formally defines the basis of dealings between broadcasters and advertising agencies, expired a while ago. We will like to get this agreement in place.
We?re exploring the possibility of AAAI and multiple media associations such as IBF, INS (Indian Newspapers Society) and others coordinating our efforts in areas like collection of dues from errant clients.
What are the new initiatives that AAAI will be introducing this year?
Digital is emerging as an important avenue for brand communications. We will engage with IAMAI (Internet &Mobile Association of India) to streamline dealings between advertising agencies and internet media owners.Outdoor is another area where healthier business practices can benefit all stakeholders.In the area of compensation, our plan is to engage with the best management consultants to see what fresh ideas from other industries they can bring to the table.
You took charge of the AAAI, when the court battle between NDTV and TAM broke in the media. What’s going to be the AAAI?s action plan?
The case between TAM and NDTV has galvanized all the three associations. On August 10, ISA, AAAI and IBF representatives met and initialed the articles of association that will allow us to move forward on this front. ISA and AAAI have ratified these articles. We are awaiting for IBF?s ratification, which is expected soon. While the outcome of this battle is for the courts to decide, this has clearly made moving forward on BARC (Broadcast Audience Research Council )an urgent priority. Under BARC, we need to put in place a new television measurement system with wider geographic coverage, larger sample size, and importantly a better audited and highly transparent research process. It is high on the priority list for AAAI.
`Retention of talent’ is a major issue in the Indian advertising industry? What are your steps to attract and retain talent?
In the coming months, we plan to come up with a platform to make the advertising industry a top-of- mind choice for this talent and make it easier for them to access the industry. For retention of talent, a significant factor is compensation. Senior and experienced marketers recognize that ill-considered pressure on agency compensation will hurt their own interests in the long run. But sometimes this group feels like a small minority among the fraternity of advertisers and their organizations. With the help of these senior and experienced marketers and management consultants, we will look for ways to address the broader challenge.
Increasingly, Indian advertising agencies are switching over fee-based system in sync with global trends. What?s your take on it?
This is an issue that is reviewed at AAAI at every year. Media constantly keeps reporting that the clients are switching to a fee-based system but the truth is different. It is true that many multinationals have switched to fees. However, our members confirm that they continue to derive a large part of their compensation from the 15% commission system.
What?s your prediction for the Indian advertising industry for 2012?
The second half of 2012 should be slightly better than the first half. If I have to pick a number to the growth of marketing expenditure in 2012, I would say, around 7.5%
