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MONDAY 30 JUNE 2014

Ahmedabad, Bangalore, Bhubaneswar,Chandigarh, Chennai, Hyderabad, Kochi, Kolkata, Lucknow, Mumbai, New Delhi and Pune

GUEST COLUMN

The growing cult of personalisation

Whythe death ofmass production could actuallybe good news for brands

T he age of mobility and digitisation gave us soaring spires and enlightenment, while the industrial age accompanied

consumer. However, while pushing the tradi- tional envelope, businesses will have to answer a fundamental question: Will customisation

smoke stacks with mass production. And now with globalisation, we are entering a new era — of mass personalisation of products and ser- vices. This has put tremendous power in the hands of the consumer who is now very gen- uinely the king. This digital age, symbolised by developments such as the wireless internet and mobile applications, has led to an information revolution where consumers are choosing to reject the hitherto universal principle of “one

size fits all”. This is particularly true for the so- called millennial consumers who desire a personal experi- ence and embrace products or services based on their novelty value often sidestepping stan- dard products. The examples of mass per- sonalisation are evident in the wake of customised offerings across domains such as travel, computer hardware design for cars, tele-medicine, financial products, m-education, m- health, on-demand content etc. Taking a cue from numerous

studies, brands have started inte- grating consumer engagement in their outreach strategy and ini-

dilute the power of my brand or actually help unlock value from the same? Essential to the debate around customisa- tion is the availability of demographic infor- mation on consumers. Telecom companies stand somewhere in the middle of the value chain with the capability to create magic because of the availability of demographic information, behavioural patterns and prefer- ences. Companies are developing services aimed at liberating customers from the worry of ‘unused seconds’ basis the insight that consumers will never be able to control the duration of their calls. Such initiatives have been wel- comed and accepted by consumers. With the introduction of mobile devices, there was a sudden spike in use of data services and mobile applications. Taking a cue from that, mobile operators today aim to offer special data plans that charge the consumer strictly on the basis of their usage. Considering that 96 per

cent of the mobile market in India is pre-paid, such customisation initia-

tives are seen in sync with changing trends, dynamic consumer usage and spend patterns.

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GURINDER SINGH

SANDHU

HEAD, MARKETING,

TATA DOCOMO

tiatives. Examples similar to per- sonalised cans of Coke can be seen across categories in apparels, beauty prod- ucts, laptops, and even smart phones. A recent Bain survey found that customers are willing to pay 20 per cent more than stan- dard equivalents for customised products. There are predominantly two schools of thought around brand customisation. Institutional brands such as International Olympic Committee (IOC) and FIFA and luxury brands such as Louis Vuitton, Cartier and Prada hold a traditional perspective on brand, maintaining control and compliance. At the same time, brands such as RED Bull, Coca-Cola and Pepsi are pushing to create the personal impact on the

Adopting such data analysis has helped telecom operators from time to time to create mass personalisation services for its consumers. With the rise of social media, companies are also taking the concept of per- sonalisation to social platforms. In 2014 and 2015, it is anticipated that customer-obsessed companies in verticals such as retail, finance, and insurance will introduce and develop proac- tive features in their mobile loyalty apps. Putting customers in control makes business sense. Mass personalisation is an opportunity for brands to not only develop and deepen rela- tionships with each customer, but also to make them active co-producers and partners eventu- ally turning them into loyal brand evangelists.

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Personalisation can be a source of massive strength for brands in the future and we believe that there are two clear pillars to back this asser- tion. First is the increase in unequivocal expec- tations of today’s millennial generation. For a millennial, the attitude of a brand can be as important as the qualities of the product itself. About 56 per cent of mainstream millennial customers believe that brand loyalty is impor- tant; this reflects the more personal approach of this generation towards brand relationships and points to what the next generation of consumer

will seek from their brands. Second, since peo- ple are busy sharing their lives on the web, a vast amount of data is available to collaborate and co-create products that offer a distinctly per- sonalised service. With this, mobile operators look at person- alised insurance plans, shopping deals and machine-to-machine communications among many other possibilities. With the wireless mar- ketplace already cluttered with similar look- ing options, personalisation will play the role of a catalyst for operators to attract and retain

high value (ARPU) customers and maximise wallet share. Well executed personalisation not only demonstrates brand confidence, but has the power to help drive brand equity and loyalty enhancing all aspects of the business value chain. It drives unprecedented brand loyalty among customers and creates powerful market differentiation for products and ser- vices. In short, brand personalisation stands as the single most important brand promise of them all.

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THINKSTOCK

DISCUSSION BOARD | AD AGENCY REMUNERATION

PAY AND PRODUCTIVITY

At the Goafest 2014, when corporate clients took stage to voice their unfulfilled expectations from their agencies, little did they expect to be at the receiving end with creatives voicing their concerns over remuneration. An audience member even sent out a note, anonymously of course, questioning the judiciousness of comparing creatives to daily wage labourers, when paying them on an hourly basis. We continue this discussion, asking stakeholders about their views

BABITA BARUAH
BABITA BARUAH

EXECUTIVE BUSINESS DIRECTOR, JWT (DELHI)

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day it is what it is — controlled! The true test lies in the shelves and in consumers’ lives — the dif- ference we have created as market leaders. Retainers are also becoming important in a fragmented media environment. Every client has on-board several specialised agencies today. For a holistic marketing plan, it is essential that each of these partners collaborate. It is imper- ative that agencies work together to deliver the best plan to the client. We, at JWT, have held several joint briefings with our clients, with all partner agencies ( media, digital, activation, PR) present in the same room. The advantage is that ideation may be a collective effort but execution is left to the specialised agencies. Such open collaboration is more encouraging on a retainer basis where the partners are not solely concerned about staking claim to ideas and proving itself better. One brand, one agen- da — that’s how it works the best.

“Creative output is best judged by the market”

A s an industry we have moved away

from the commission-based remuner-

ation model (where the client paid the

agency a percentage of the total media spends on the campaign executed by the creative part- ners) to a retainer model (where the client pays the agency a pre-decided amount on an annu- al basis). With the new media landscape and the increasing importance of media agnostic

integrated communication ideas, the dice is loaded in favour of the retainer model that dri- ves brand ownership, value creation and col- laboration. With retainers, the conversation around the economics of the exchange are taken off the table at the very beginning. Clients and part- ners can then proceed to building a successful marriage. There is a sense of ownership on behalf of the agency, a sense of loyalty that comes only with a longstanding relationship.

The retainers work very well in most cases. Except when there is a mismatch of expecta- tions, questions on the agency output and val- ue creation. Value creation and output must be and in most cases, is quantified at the very start of the agreement. Broad parameters are tabulated for the purpose of evaluation at the end of the year, either to discuss bonuses or possibly to serve as a base for the contract to be renewed the following year. However, as creative output goes, how do you really quantify it? The market is the best judge of the work and if the needle shifts, one can see the impact. Most clients, especially the ones we have on retainers, invest heavily in tracking metrics like ad trackers, brand health trackers etc. They can keep tabs on the efficacy of a particular campaign using these metrics. In my view, a controlled environment is a tried and tested method for research, but at the end of the

“The variable component will play a large role in remuneration”

T he remuneration structure for

creative agencies has evolved

quite a bit in the past couple of

years. We have gone from compensat- ing based on a percentage of media spends to retainers or even project-

based remuneration. This has been a result of many factors playing at both agency and client ends — lower spends in certain industries, the movement of media monies to different, newer avenues and agencies themselves becoming more specialised. Retainers work best when the quan- tum of work is fixed. However, the quantum of work alone can't be enough to judge the out- put from an agency and creative agencies cannot restrict themselves to developing communication but con- tribute to the larger objec- tives of the brand. Considering that the sought after talent at the agencies is mostly at the

top rung, getting strategic thinking and quality work on various projects is always a challenge. The

recommendation and of course the plans are tracked and measured at reg- ular intervals to course-correct and learn for future campaigns. They seem to have a better handle on the return on the investment by the client. Retainers do not put the onus of improvising and delivering beyond expectations. Like any other corporate situation, you can only get the best out of an individual when you incentivise her. Hence, I see the variable compo- nent playing a large role in the agency remuneration, with periodic reviews to ensure expectations match deliveries and course corrections happen along the way. While creative is highly qualitative in nature, it is important to put some structure to evaluate the output. Some of greatest companies around the world look at creative from one major filter: Is it in line

with the brief? Second, is

the benefit being commu-

nicated in the best possible way? An innovative creative can communicate effec- tively hence leading for bet-

4 Ahmedabad, Bangalore, Bhubaneswar,Chandigarh, Chennai, Hyderabad, Kochi, Kolkata, Lucknow, Mumbai, New Delhi and Pune GUEST COLUMN

SANJAY TRIPATHY

SENIOR EVP AND HEAD, MARKETING, PRODUCT, DIGITAL AND E-COM- MERCE, HDFC LIFE

other side of the story is that sometimes agencies get overloaded with work and multiple iterations in this fixed model. It is always easier to compensate what you can easily measure, objec- tively. Media starts with the marketing objective, provides data to back every

ter RoI for the campaign. The other measures are on overall agency performance. The review I mentioned earlier should con- sist of parameters covering both strate- gy and execution, and help document expectations and the minimum stan- dard of delivery.

MANISH BHATT
MANISH BHATT

FOUNDER DIRECTOR, SCARECROW COMMUNICATIONS

“Shelf life of the campaign should be defined. Usage beyond that must be charged”

T he classic 15 per cent commission

model was aborted as few advertising

agencies started charging a lower per-

centage to undercut competition. The oth- er reason for the ousting of the commis- sion-based model was the influx of new media avenues like radio, out-of-home, dig-

ital etc that don’t follow the norms set by

typical above-the-line media. As a result of this media fragmentation over the years, lots of silos got created and multiple, spe- cialised agencies cropped up. The earlier

simple math of calculating media spends got rather complex. Against this backdrop, we saw agencies moving to the time-cost or retainer remu- neration model. The flaw with this model is that while a few international agencies and multinational clients may follow the rules and calculation methods of remuneration as fixed by the retainer model sincerely, the minute Indian clients come to the table, the negotiation process begins and the one who charges the least invariably wins. The adver-

tising industry has failed to check this behav- iour and is split on the issue of the remu- neration conversation at large. Everyone is a loser in the process. Without the required funds, agencies can’t invest adequately in personnel. If I have an IT company account, I would ideally like to bring on board a resource conversant with the sector. But if I lack the funds I will have to use the existing manpower, possibly not best suited to service the account. In this equation, smaller agencies with limited

resources end up charging more whereas larger agencies apply economies of scale and pool together a team, charging lower fees. It is a question of using the existing, unattached to any project manpower. It is time that the role of creative partners in generating profits gets acknowledged. Agencies and clients can work together to quantify the gains made by the brand numerically, and share a portion of the prof- its made. We also need some intellectual property rights to protect the advertisers’

claim over their work. If a production house creates a piece of work to be used in a certain market or designed for a specific medium, any diversions from this agreement attract additional charges. So, say a production house shot a commercial to be aired on tele- vision in India, if it is used in Sri Lanka, over digital, they will charge additionally. Advertising agencies should have similar rights. A shelf life could be defined for the campaign.

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Compiled by Masoom Gupte