A Founder’s Perspective on How to Make a Mark in a Mature Industry: Tapas Gupta
Hey guys! We are not talking about an IT start-up or a software technology business or a very innovative big idea in e-commerce or modern trade that can attract millions of dollars from corporates, investors or private equity funds just based on the start-up idea. We are talking about a very mature and conventional business of advertising, where every year for last many years numerous prima donnas of advertising and creative gurus have tried their luck in branching out and building their own brand of advertising agencies. But the unfortunate reality is most of them have failed or sold their ‘little child’ out. The survival rate (at least for a five year time period) in this industry is less than 10 per cent. Of course, many of them had created their advertising start-ups with the objective of selling to global advertising systems and lot of my friends, peers and ex-colleagues have succeeded in making very substantial monetary gains out of these seed companies they had given birth to.
Confluence in 1998 was started with a very different idea. The idea was to develop a smaller version (I love to call it a ‘microcosm’) of a large agency system that would offer 360 services from day one through a single-window. Remember, in 1998, there hardly existed independent media agencies (and no Digital agency was in existence in India those days) and all large agencies had their full media set ups run by senior media professionals. The only exceptions were the boutique creative agencies which existed in large numbers formed by one or two creative partners whose claims to fame were some award winning campaigns in their last agency, and their stature and relationships they enjoyed with clients in their network agencies. So, the model was to capitalise on their past reputation, get one or two marquee clients based on their work and relationships of the past, do some attention grabbing ads, TVCs, and get attracted by the global network agencies, sell at hefty prices and live king-sized lifestyles with bungalows in Goa or Ooty.
So, it was a short term objective with no long term plans. It was more business than love for the profession.
When I started Confluence, I had a very different idea. I started with a group of mid-level but passionate and bright professionals from my last agency system, who were willing to believe in me and my idea of starting an ‘agency with a difference’. The difference lay in the fact that I was trying to give birth to a start-up agency that offered full palette of services (Brand Management and Strategy, Creative, Media Planning, Buying & Operations, Direct Marketing and Activation) but on a far smaller scale than the bigger, global agencies and a number of Indian agencies in those days like Triton, Everest, Rediffusion, RK Swamy, Everest, etc. Most of these agencies too later got gobbled up by global networks.
However, sometime in 2004 we did flirt briefly with a small US-based international agency group BE International, better known as BEI (with offices then in NY, Dubai, Hong Kong and Singapore). Two relatively large BEI clients – Alcatel from Europe and TCL from China – were opening up their operations in India, and insisted that they would work with Confluence if we had an equity tie-up and a name change (prefixing BEI to Confluence). We offered a small minority stake to BEI and the name got changed. The ‘marriage’ did not last beyond a few years as BEI was unable to bring anything intellectual and strategic to the table. In fact, they used to assign their creative work to the Confluence creative team, and we felt more exploited than capitalising on this collaboration. An inevitable ‘divorce’ happened around 2009/10 and since then we have never looked back. BEI owned media agency Media Pros in India got amalgamated with Confluence as they had some high calibre media professionals who value added to Confluence considerably. However, the brand BEI Confluence was by then pretty well known as we did not tinker with it.
We did not experiment with anything new or novel even in our positioning and when prospective clients used to ask us ‘what is your USP?’ our answer was honest and simple. We offered full services through a ‘single-window’ backed by a strong & professionally oriented team with great thinking and execution capabilities, but without any frills and at costs they would love. The sincerity of our commitment was appreciated and when some of these businesses joined hands with us they started believing in us. We did not have prima donnas or too many Awards of our then young creative team under our belt to display. What we did demonstrate was our enthusiasm, passion, diligent homework, coupled with hard work on the brands that we started working on.
Our intent was very clear. We wanted to thrive and grow offering 360 services to businesses and brands from Companies and Groups that were led by passionate and professional owners who wanted to challenge the big brands and succeed in difficult situations like the Davids taking on the Goliaths. We had a similar vision for our agency. So, when the vision and the passion matched, the match-making happened easily.
Our first major breakthrough came within a year of our birth with Subrata Roy assigning us the Air Sahara brand and their media brands like Sahara Samay TV channel, Sahara Times newspaper, all in their nascent stages. There was no credentials, no pitch presentations, no hob-nobbing or big lunches and dinners, but a short and simple meeting of just me with the Sahara Boss, who sized me up in a half-an-hour chat on my abilities, confidence and ‘enthusiasm quotient’ in handling the Sahara brands.
In the Airline industry, too, Air Sahara was like a David taking on the giants like Indian Airlines and Jet Airways. With him, there was a meeting of mind as he felt that Confluence as an agency was also a David taking on the mighty Goliaths. Many months later in an evening break after a Conference in the scenic Amby Valley, I had actually asked him how he could trust me with such a huge responsibility of assigning an Airline account to a fledging agency. His answer, like most successful industrialists, businessmen and top corporate honchos, was “I trust my sixth sense and I have never been proved wrong by people who I have judged by just looking straight into their eyes”.
Confluence has handled the Air Sahara account for nearly ten years from its nascent stage to the last day when Air Sahara merged with Jet Airways.
Here is an interesting real life episode: since the day we landed up the Sahara business soon after our inception, we had been in the limelight in those days in the advertising magazines like The Brief and A&M and soon in Agencyfaqs (in those days remember all were physical magazines or tabloid formats in hard copies). One day I got a call from one of the leading Indian agency owners from Mumbai ‘advising’ (not requesting!) me that he would come to Delhi just to meet me in my office. He had an ‘attractive offer’ for me. Being inquisitive, I told him I was ready to meet in our modest office in Delhi. After a bit of small talk, he came straight to the point: he wanted to buy us out at a very attractive price and he actually took out his cheque book. It was almost like a scene from a Hindi movie where the ‘Don’ bulldozes into anything he wants to acquire. It took me hours of gentle persuasion to convince him that advertising was my passion, not exactly my business. He told me I was being foolish and that I would ‘regret later’. But the irony of the time is that while BEI Confluence is thriving and knocking at the doors of the ‘big league’, the agency owner who met me nearly 20 years back has practically sold off his main agency and the one he probably still owns exists in a skeletal form. Poetic justice!
Over the years, our ‘big leaps’ have been for my colleagues and me like a ‘leap of faith’ each time. Many a time we too have taken instinctive decisions and those have in most cases taken us to the next level. I always believe in the fact that we are here to play five-day test matches and not 20-20 or even one dayers. This philosophy has been ingrained into our system by my Founder colleagues and me in our less patient but brighter, younger colleagues. Because we believe in this hard truth that we have been able to survive as an independent agency system and grow satisfactorily in a stiffly competitive environment, where the ‘big fishes’ are gobbling up the smaller ones by the day.
In spite of us growing healthily each year without exception (recession or no recession), we have played the game in a low-key fashion about ourselves without any publicity or chest beating. Again, this has been dictated by our core philosophy: play like Gavaskar (or even like ML Jaisimha) and not like Sehwag. I always tell my colleagues that ’drum-beating’ needs to be done for our clients’ brands and not for us. We should be the hidden force behind the success of our clients’ brands. We are happy when clients applaud us for our contribution in their brand-building journey.
However, there is a downside to the business model I and my colleagues have followed. In a slow but steady run, in a race between the hare and the tortoise, and if you are a tortoise, you don’t always make enough money and acquire enough wealth for the company or from a personal perspective. While I and my founder colleagues and the early staff who have seen us grow step by step, are wedded to this philosophy, all from our newer talent base don’t necessarily subscribe to this. To get the best people in the industry to look after our clients’ brands, one has to offer prevailing market prices (and above) to attract them. Agencies at our life-cycle and juncture are as yet unable to attract top-of-line fee compensations from clients (as they would pay to top 5 agencies), but they would expect top-of-line people, technology and infrastructure from us, all of which come at a hefty price. As a result, the margins are squeezed from both sides leaving the agency with thinner profit layers.
However, we as a team are not in a great hurry to accelerate our growth objectives exponentially because such abnormal growths are fraught with uncertainties. In our business, a lot of agencies have been killed due to sub-standard financial management and mis-calculation of client’s credit worthiness and timely payment abilities. We are gravely aware of this and apply high discretion in accepting any business. Advertising entrepreneurs can at times be a little slack on this, but I have learnt the hard way from my previous experience that this is the biggest poison that can instantly kill.
Therefore, our sole objective has been to steer the ship through exciting, placid and at times turbulent waters by betting on our belief and confidence to stay afloat, grow steadily (and not necessarily extravagantly!), and accelerate growth every year with a pace that is manageable, affordable and less risky.
Twenty years is a long time in advertising, particularly for a completely independent 360 agency like ours that started from a scratch with extremely moderate capital. The easy way would have been to be allowed to be gobbled up by a big ‘global fish’ and walk into sunset with a big fat cheque and a leisurely, comfortable life. 90 per cent agency founders have fallen for the bait. And why not? One should live a life according to one’s choices. I also get such offers for sell-out regularly from Agency Systems or Consultants. I laugh at it and mostly ignore it. But it’s not easy. The lure and the comfort and easy life of not running an agency in a ‘dog-eat-dog’ world is at times irresistible.
As we have stepped into our 20th year of existence, we are poised to take a leap to the big league. We are today positioned at a rung just below the top agencies of the networked global agency systems competing directly with their ‘younger brother agencies’ as all big global agency systems have their second (and even third) agencies to help handle competitive brands. Today, we are in the radar of clients who are looking for larger mid-sized global agencies and we often pitch (and win!) against them.
This is an exciting slot to be in. Just below the top ten MNC agencies (particularly in Delhi) and also competing with a few of them in pitches from time to time. It’s a position where we are poised for a take-off to the next level, and need mature and deft handling of our growth potential to make it to the big league. But we exercise restraint and move with slow elephant steps, as I believe that if we climb faster than what our system allows, the chances of falling are greater.
It has taken us 20 years to reach this destination and the journey has not been easy. I am ready to walk for another 20 years to reach the destination and entrench ourselves solidly there. But without compromising our principles of “ekela chalo re” and without holding the hand or being bought over by a global agency network. I believe in the Johnnie Walker credo “Keep Walking”. “The Next Step is the only one that matters” (courtesy: Johnnie Walker ad).
Our journey for the next 20 years has already begun.
(Tapas Gupta is Founder & MD, BEI Confluence Communication Ltd. He is also formerly President & CEO of a McCann-Erickson agency.)
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