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Dentsu's expanding girth

Shamni Pande     August 5, 2010
An involuntary shudder goes down the spine of most advertising professionals at the mention of his name. Not because Sandeep Goyal, Chairman of Dentsu India, looks especially menacing at 5'8" and 200lb-plus. Or because Dentsu India's size scares them (its billings are expected to be Rs 1,200 crore this year). Or because Goyal's company, a 26:74 venture with Japan's Dentsu Inc, the single-largest advertising agency in the world by billings, has some of the bluest of blue chip clients.

People recoil because if Goyal believes in something, then "he can get very ugly, even with a client," says an industry veteran who heads an agency. The latest instance was his decision to contest elections for the president's post at the 3As of I, or the Advertising Agencies Association of India, held at its annual meeting on July 30. The industry body, which is dominated by international networks such as WPP, Interpublic, Publicis, Havas and Omnicom, represents business worth over Rs 21,000 crore. Goyal's bid for the post was sparked by a dispute between Dentsu and a client, in which he felt he had been let down by the AAAI. In the event, Goyal lost, by just two votes.

Asked to comment, Goyal shrugged: "What can I say...46-48", referring to the number of votes. Earlier this year, he had rocked the boat as a member, complaining to the AAAI that his client Thomas Cook India had shifted its business to rival JWT without clearing money that it owed to Dentsu as payments to media in which it had advertised. In the final settlement, it held back Rs 1.35 crore. Thomas Cook has a different story. "We found releases billed at different rates and wanted a resolution," says Rakshit Desai, Executive Director.

Advertisers usually work through agencies accredited by the Indian Newspaper Society or INS. The advertising agency places the ad in say, a newspaper, after negotiating a rate with it. Sometimes, as in the Thomas Cook case, the advertiser and media group negotiate the rate directly. After the ad is published, the newspaper bills the agency. In this case, the bill was sent to the agency without the bonus/ discount that was discussed between Thomas Cook and the media group, The Times of India, in this instance.

Goyal says he had gone ahead and cleared the media group's dues. But when Thomas Cook did not pay him, he approached the AAAI seeking arbitration and dialogue. "First they sat quiet and later just issued a communiqué stating the problem, without hinting at any action," Goyal says. Goyal and Desai have conflicting versions about the arbitration option. Goyal then filed a petition in court seeking the winding up of Thomas Cook, and got a payment of Rs 90 lakh. Thomas Cook's Desai says the decision to pay it was taken before the court order was served. Goyal claims Thomas Cook cleared the balance only after he approached the INS and it put an embargo on all advertisements by the company in member publications.

JWT chairman Colvyn Harris, who had stepped down from the AAAI president's post half-way into the usual twoyear term, says the fracas could have been avoided. "Such disputes require careful, mature handling and there are no instant-coffee-like solutions. We suggested a discussion where all the parties could sit together and sort out the issue, but he (Goyal) did not agree," he says.

Desai says he settled because he did not want the dispute to escalate ("it was unworthy of so much attention"), but he feels frustrated. "I am not saying this discrepancy was deliberate. But the advertising agency has an industry association to go to — what happens to clients like us who face such an issue?"

Goyal is upset for being seen as a "troublemaker". "I cannot sit quiet when someone tries to falsely accuse us to basically get out of their dues," he says. For Goyal, the dispute was the excuse he needed to shake up the AAAI. "It has just been working on auto-pilot…. The interest of the small agencies and regions are not considered and it has become a coterie of a few big agencies," he complained before the elections. Quite a few agency bosses had, in fact, bet on Goyal's chances. "The fact is, Goyal is a doer… people may not agree with his methods or his aggression. But, in my own guarded way, I support him," the head of an agency that is part of a large network had said. Goyal said: "...the important thing is that I have at least managed to kick awake a sleeping body." Regardless of the outcome of the July 30 vote, he has clearly achieved that.

Start-Up Hiccups
If Goyal is rough, how has he managed to snap up the choicest of clients? Well, Goyal seems to be great at making longterm friends and networking, even though he shuns late night parties and prefers a home-cooked dinner at 8 p.m. with wife Tanya and daughter Carol. He is also known to really pamper his clients. Every Diwali, for example, Goyal's clients look forward to his gifts of studio pottery, 40 pieces specially created and signed by an artist commissioned by Goyal.

In Japan, studio pottery is a major art form, so the gifts are a natural fit with Dentsu's parentage. In recent years, Goyal's clients have got signed pieces from Darroze, Ange Peter, Manisha Bhattacharya, Madhur Sen and Abhay Pandit. "At the end of the day he's a great builder and he's just the kind of guy who I would want on my team," says Kamal Oberoi, Chairman, M&C Saatchi. Oberoi was Goyal's senior, first at Delhi University's Faculty of Management Studies, then at Goodlass Nerolac. Later, Oberoi hired Goyal at HTA (now JWT) in Delhi.

Jagdip Bakshi, global business director for Unilever at JWT London, also has some praise. "Goyal is an acquired taste, but you cannot deny him his ability in getting things done and he's extremely good at client servicing. And he's very hard-working," says Bakshi, who was Goyal's senior at HTA, where Goyal started his innings in advertising. Goyal is also good at building teams and getting them to pitch non-stop for business. "We were pitching for business even before we formally rolled out in October 2003. I was his first employee and started working from home," says Ruchira Raina, Managing Director, Dentsu Communications, which was set up in Bangalore to handle the Toyota account. And accounts did not fall into Dentsu's lap just because of the Dentsu Inc. link, as rivals claim. "We had to convince them of our strategy, they had to be comfortable about a woman heading a business and, eventually the work had to have impact," says Raina.


Here's where Goyal's loyalties and faith in friends paid off. "I remember Goyal being very friendly with Gullu, who was heading the creative side, and it was a great partnership between them," recalls JWT's Bakshi, referring to Sabyasachi Sen, now Dentsu India's Executive Vice-chairman and Chief Creative Officer. Gullu was behind the Aamir Khan commercials for Toyota Innova and HDFC Standard Life Insurance's Sar Utha Ke Jiyo campaign that set the tone not just for the brand, but defined the category. Another success story: Aircel's social communication on tigers which got great media buzz.

The Dentsu organisation in India has a good collection of talent as well as accounts. At Dentsu Communications, there's Shivanand Mohanty as National Creative Director. Its accounts: Toyota, Yamaha, Panasonic, Aircel, Acer, Indian Oil, Delhi Government. At Dentsu Marcom is Mohanty's counterpart Adrian Mendonza, with Nitin Suri as the Executive Creative Director. Some accounts: Honda, Canon, Raymond's, IndiaBulls, Crabtree. Dentsu Creative Impact, where Kunal Gill heads the creative function, has Maruti Suzuki, Unicharm, Jaypee Greens, FedEx.

Dentsu's team has been able to get business outside its international affiliations. Dentsu won the HDFC account just a year after it set up shop, competing against Ambience Publicis, JWT, Capital and incumbent Canco. "The pitch was done across two rounds of extensive strategy and creative presentations by all the agencies involved," affirms Sanjay Tripathy, Executive Vice President for Marketing at HDFC Standard Life. He credits the agency for "a superb idea, which actually set the tone for the brand for years to come".

If Dentsu has bagged many big clients, it also has lost some, HDFC Standard Life being a case in point. Rajesh Aggarwal, President of Dentsu India, says it has lost some clients because growth had stretched its resources. "Only now are we in a position to sit back and actually review," says Aggarwal. In the early days, "business just kept coming and we had to simultaneously sit and decide on recruitments, negotiate office space, and even roll up our sleeves to do them up," he recalls. So it was that Dentsu lost the HDFC Standard Life's business within a year of doing the landmark creative.

HDFC Standard's Tripathi recalls that Dentsu was a very small entity when it won the business, and was still setting up the different functions required for a 360-degree service agency. "The Mumbai office was nonexistent… we had even given Dentsu our media duties, but keeping our needs in mind we parted ways later," says Tripathi. Dentsu's growth in the face of client losses prompts rivals to claim that it undercuts them to grab business.

Suggest this to Goyal and he growls: "Then why did we lose out on the prestigious UID project initiated by Nandan Nilekani? It was a multi-agency process and, at the end, we were listed by an independent panel at the top position on technical and strategy parameters, but lost out because our commercial bid was the highest." Goyal says that when big agencies lose pitches to Dentsu repeatedly, they complain of undercutting. "What do they tell their bosses? The easiest excuse to offer is we undercut....The fact is, the biggest agencies are the first to cut prices," he says.

Accounts are not the only thing Dentsu has lost: a host of top professionals have quit the various Dentsu agencies. Some left because they had problems with Goyal's top team, not Goyal. "Goyal gave me the one big break in my career. I joined Dentsu because of him, but quit because of issues with his senior management," says Shavon Barua, Director of Euro RSCG, Mumbai. Barua had joined to head Q-Pro, Dentsu Marcom's specialist division catering to HR-related and employee branding communications, in 2006, but left soon when the project could not be sustained.

Some quit over career choices. "I felt I had nothing more that I could give Aircel, the account that I worked on. I wanted to do something entirely different. I had no issues with the team and they are a very committed bunch," says Rajib Sinha, General Manager at LG Ads, who was earlier with Dentsu Communications.

Challenges Ahead
Dentsu's latest project: to create a digital-talent pool of nearly 300 people to handle multiple initiatives. One of these is Mogae Digital Momics, a venture that Goyal has launched separately along with his wife Tanya, in equal partnership with Malaysia's Astro Group. The venture has begun retailing comics for mobiles and mobile greetings with telecom players. Another unit, Screenagerz, will work on social networking. Then there is the Indian Fantasy League, which explores the internet, mobile and gaming space.

The most ambitious initiative is www.lastminuteinventory. com, India's first and only online media trading platform. Rupert Murdoch's STAR Group, Subhash Chandra's Zee Group and Bennett, Coleman & Co's Times of India Group are equity investors in it alongside Dentsu Communications and Mogae. As the name implies, the site will auction the spare inventory — advertisement slots, in plainspeak — that media owners are often left with at the last minute.

The response has been mixed. "It is a good concept and transparent process and we have used it often. Media owners do not fear their rates getting ruined as they give their spare inventory, the agencies are happy as the client has to go through them," says Mona Jain, COO of VivaKi Exchange, a media investment unit that leverages the combined scale of offline and online media for Publicis Group's Starcom MediaVest, ZenithOptimedia India and Solutions Digitas.

But there are others who still do not buy into the argument: "This is not fully compatible with the way media deals are done in the country ... the system mandates that the client has to go through a media agency to buy inventory. Why would we need this if we have our own resources," questions R. Gowthaman, Leader of Mindshare, South Asia. The Dentsu team is not interested in the debate. "There are plans on many fronts and the opportunities in sports, social communications and digital are simply tremendous," says Aggarwal, Dentsu India president.

It has started an advocacy unit that caters to the Delhi Government and has created the Dilli Ki Beti campaign. This uses the character of a young girl to urge the Capital's citizens to be more civil. While Dentsu seems to be in the thick of the action, its Japanese rivals have also been active. Hakuhodo, the secondlargest agency in Japan, already has a presence in India through an equal-stakes venture with Percept and also a separate entity, Hakuhodo India. In 2008, ADK, the third agency out of Japan, got into a 50:50 venture with Fortune, a JWT unit.

ADK Fortune's brief is to tap the growing business of Japanese companies in India, and it already has bagged Nikon, Shiseido and Toshiba. "Dentsu and Hakuhodo are the Big Two in Japan... But that their presence is increasing is growing testimony to the opportunity in India," says Ajay Chandwani, Director, Percept India. For the record, while Dentsu Inc and Hakuhodo are way ahead of rivals, there's a huge gap between the top two as well.

Now, Goyal needs to figure out if his organisation has the depth of leadership required to give shape to his dreams. What he knows for sure is that wife Tanya is there to keep him out of risky ventures. For example, Goyal and his Japanese partners were keen to bid for the Indian Premier League broadcast rights, but Tanya felt that the investment required would be too big for Mogae, the Goyals' company. Finally, Dentsu never bid for the rights.

While Goyal banks on instinct and intuition, Tanya, also an MBA, is the meticulous one driven by systems and processes. She is also the conservative face and deals with the banks apart from handling the back office. (Talk of being conservative: theirs was an arranged marriage.)

As he grows, Goyal has to realise that Dentsu may not be able to avoid the pitfalls of the ‘Big Boys Club' that he so hates. "He has to let go of his cowboy style… how long and how far can he keep rolling up his sleeves and jumping into the act?" says a former member of Goyal's senior team. Goyal seems to be easing off a bit, and over the past two months, the Goyals have been travelling a lot as a family: Russia, Israel, Dubai and South Africa. But this does not fool anyone.

— Additional reporting by Anusha Subramanian

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