Tuesday, February 9, 2010

The Agency is a business

I read this provocative post about the reasons for the decline and fall of the newspaper business in the US. The comments below made by two prominent personalities will strike a chord with anyone who is from the agency business.
Sean Paul Kelley says, “The primary culprit is the same as it is all over the country, in every industry and in government: equity extraction.
Let me explain, in short: when executives expect unrealistic profits of 20% and higher per annum on businesses, something has got to give. It's an unnatural and unsustainable growth rate. For the first ten or so years of a small to medium size company's life? Sure. But when you are 3M, or GE? Unrealistic and ultimately impossible.
That is what has happened to the news industry in America. The excessive obsession with unnaturally high profits has led to a vicious circle of cutting budgets, providing less services, which is then followed by even more drastic cuts.”
Michael Moore puts it across bluntly, “It’s their own greed, their own stupidity,”
Isn’t this true of the agency business, especially in the developed markets?
The unfortunate outcome of all this was that agency operations in booming markets like India were not spared. They were choked to ‘make up’ for the numbers lost in the developed markets. Pay cuts, hiring freeze and mad scramble for all kinds of business were symptoms of this malaise. Managers in the Indian operations of international agency networks were stressed (and stretched) beyond limits, with some of the offices were almost on the verge of a flameout. Now, this is a myopic way to operate.
India, China and other developing countries will continue to be a traditional media market for a long time to come. Read this case of Baidu vs Google if you want to know what I mean. To large corporations that run agency networks, these markets must be to them what California must have been to prospectors during the Gold Rush. However, instead of stripping it bare, they can reap far greater rewards (and bonuses) by nurturing it. Hire more people, train them well and pay good salaries. This is not wishful thinking but an inevitability that agencies will have to follow if they want to survive.
Newspapers in the US might die. Agencies will not, more so in countries like India. The Agency is a business, a thriving one at that. This is because the growth story in markets like India has just begun.  Hey, you never know. In the process of making tons of money, they might even produce some decent work!


  1. rightly said !! good post aage ke profit dekhna ke pehle door ka nuksan sochne hai

  2. Thanks Jay for those kind words and for the visit.