Dipstick: Is separate creative agency for start-ups a viable business model?

Two major creative agencies recently launched a separate and dedicated division to cater to the needs of start-ups. FCB Ulka launched Bushfire, while DDB Mudra launched Karma. They believe start-ups want quick solutions to their marketing and communication problems and a dedicated unit can fulfil the requirements.

By launching such units, the agencies tend to block resources only for start-ups, incur a cost, and maintain a separate P/L. With venture capital funds drying up, Indian start-ups are expected to spend less on advertising. In such a scenario, BestMediaInfo.com caught up with industry business leaders to understand the pros and cons of the model and asked them if a separate creative agency for start-ups is a viable business model.

Ashish Bhasin

Ashish Bhasin, Chairman & CEO South Asia Dentsu Aegis Network

It is a little late in the day to start something like this because the euphoria and the irrational exuberance that existed around start-ups is clearly on the wane. It is a hard time for start-ups that don’t have a great revenue model. Earlier there was a lot of venture capital funding and they were spending without pain but those days are now over. However, start-ups are going to be a part of the culture in a smaller or a bigger way and every agency needs to build the capability. But it’s not necessary in my view to have a separate unit for it.

Kunal Jeswani

Kunal Jeswani, CEO, Ogilvy & Mather

You need to approach marketing communication development for a start-up with a different mindset. In most cases, the people you work with in start-ups are first-time advertisers and they need a little more patience, a little more personal assurance and a little more of a sense of partnership in the early stages of the relationship. Trust doesn't come easily from reputation, it needs to be earned carefully through hard working marketing communication interventions built and deployed together. That said, I don't believe agencies need to set up different units to service different types of clients. Start-ups operate across a range of industries and I do not see what purpose it would serve to have a team that works exclusively with start-ups. You need teams to be more sensitive, that's all.

Subhash Kamath

Subhash Kamath, CEO and Managing Partner, BBH India

I don’t specifically understand the need to start a separate division or agency for start-ups. You may have a separate team but not a separate agency as such. People who have launched separate agencies for start-ups may have their reasons. For me, a start-up is as good as any business. You should partner and invest in it. Look for long-term gains instead of short-term ones. It all depends on how much belief you have in the particular start-up idea. In the beginning, start-ups don’t have much budget, unlike established players. Once you believe that if start-up will become successful you can earn more. So, in the beginning, you can invest your time and efforts and help the start-up become successful. Also, it depends on how your agency is structured. In our case, I won’t launch a separate division. I would evaluate every start-up on its own merit.

Virat Tandon

Virat Tandon, CEO, Mullen Lintas

It depends on the culture of that agency. If the agency culture is not right to support a start-up, then they may want to launch a separate set-up. There are a lot of agencies, including ours, that are kind of flat in structure, more hands on, closer to the clients and briefs. So, that’s the difference. Probably, it makes sense for some large agencies to cull out a small team. I don’t know what agencies mean when they say that they are setting up a different company. As in, do they have people 100 per cent dedicated and have their own P&L and things like that?

Sunil Lulla

Sunil Lulla, Chairman and Managing Director, Grey Group India

I believe that as a communication company, we are well-equipped to serve start-ups as well as the established companies, turnaround business or any other kind of services. Our job is to understand the business problems, provide a creative solution to a business problem, which may and may not be communication, and understand the culture in which the business operates and provide a solution on the basis of that culture. I am not a big advocate of creating separate agencies to cater to one particular kind of niche and that seems to be a fashion today. The definition of a start-up is not necessarily an internet-enabled company. Start-ups have been in big, small and medium sector over the years now and Grey is equipped to serve all.

Sanjay Panday

Sanjay Panday, Business Partner, Karma (Division of DDB Mudra Group)

 India’s GDP is currently growing at the rate of 7.5-8% with a goal to cross double digit growth and that is possible to achieve when we look beyond growth from big corporates or mega cities. Big agencies traditionally have always been structured to cater to the big clients. It’s rare that small clients find themselves comfortable working with them both financially and culturally. For me, start-up is an Indian entrepreneur’s state of mind. Like you need a different system and culture for different types of clients, you need a dedicated agency for start-ups. Digital start-ups may be under pressure but we are working with and for entrepreneurs and not necessarily with e-com start-ups. Hence a dedicated agency for a start-up is viable.

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