Like most other industries, media agencies were worst hit due to the Covid-19 pandemic in 2020. Though the sector is expected to grow by 20% this year, it still remains in de-growth over the year 2019. However, Wavemaker believes that unlike the rest of the industry, they would grow by 25% or at least cover up to the 2019 figures this year. The optimism comes from their higher-end value added services—martech, data, creative content, e-commerce and performance.
In an exclusive interview to BestMediaInfo.com, Ajay Gupte, CEO, South Asia, Wavemaker, said, “During Covid times, we have been able to grow a lot of our other services such as performance, content and e-commerce. In 2021, I expect around 20% growth with our existing clients and we should manage around 10% with the new services.”
Apart from focussing on these services to gain higher remuneration, the agency has also fully automated the media implementation process to make it more efficient and cost-effective.
Excerpts:
What kind of percentage growth is Wavemaker looking at for 2021 over 2020 and 2019? What role would new business acquisitions and retention play?
2020 was a shocker and all plans we had made at the beginning of the year went down the drain. Most estimates say the industry went down by about 20% in 2020. I estimate that the industry should be able to grow by about another 20% in 2021. So in effect that would still mean degrowth of about 5-6% from 2019. However, we are fortunate that we have a very large client base and that keeps us a bit insulated. We were not as badly affected and our drop has not been as severe. In 2021, we expect to grow by a minimum of 25% over 2020 and at least cover or go up by another 5% over 2019.
We have typically been quite successful with new businesses every year and about 10% new businesses get added and I expect that to continue. During Covid times, we have been able to grow a lot of our other services such as performance, content and e-commerce. I am expecting around 20% growth with our existing clients and we should manage around 10% with the new services.
People have almost stopped talking about margins? Have agencies accepted the current margins as the new normal?
The media costs have been going down year on year and margins have not been easy. We are fortunate that two areas have really helped us. One, we have been able to stay ahead of the curve, whether it is with content or technology or value-added services, for which clients are willing to pay a little bit more. This has helped us ensure the sustained profitability. Two, there are several clients that pay a little better remuneration to get the right kind of people on board. So, the balance of loyal clients, who remunerate you according to the value of the agency, and the added services that we have been able to offer, has helped us to keep our business profitable and to look after and nurture our people.
Do you think the margins are going to improve?
On the base business, it is unlikely that margins will improve. So to make it efficient and cost-effective, we have fully automated the entire media implementation process. Then, there are the higher-end value-added services—martech, data, creative content, e-commerce, performance. We have been building and focussing on them for many years but they received a lot of thrust this year. The margins are slightly better there.
Does automation also mean job losses?
No, it means people get to focus on things that machines can’t do. We are investing a lot of money in training and upskilling our people. We are ensuring that they are ready to take on this new world, which has a lot of data and technology involved. So it's not about job loss, it’s getting people to focus on areas of growth and the future that will help drive the business better. Our hiring needs are constantly on the rise. We are focusing on areas where you can use your mind to add more value rather than just a rudimentary process that a machine can do. Our staff strength actually increases year-on-year because of our ability to add on newer services.
What were the most frequently asked questions from clients in the biggest crisis ever in a lifetime? What did it take for the agency to find the answers?
I would put this in various stages. In the first three months, the clients were looking for information on what is happening around the world and how different categories and different countries were dealing with it. They needed to understand what was happening around them to make informed decisions. As GroupM and WPP, we work across so many countries that we had a regular flow of information coming in and some from markets that were ahead of the curve. For example, China was affected in December. Looking at how Chinese customers went into revenge shopping, we were talking about this with our clients in April itself. So we shared their experiences. In the second stage, from September to November, they were looking for support in executing their plans. So e-commerce, performance, data management, data collection and usage of data for making decisions, martech, influencers and content became extremely important. They were looking for our ability to execute these requirements for them and help them set up their capabilities or their business in these areas. In the last quarter, we consolidated on these shared learnings from different categories. We improved on our skills and our clients also gained experience, enabling them to further refine their efforts.
Wavemaker has been investing in AI, data, content capabilities, among others. After such a financially tough year, is it going to be a measured and slow process?
No, on the contrary it was a slow and measured process for the last five years and we steadily, consistently made these investments. These investments have dramatically gone up during Covid because we realised that our clients need this today. It was kind of a tipping point for these areas. Now, they will only grow because our clients know they are getting better results from here. So our investments here are not going to be a trickle effect anymore rather they are going to be massive chunks.
As business is coming back on track, how would you go about with talent acquisition?
We are growing in so many new areas and we need to get talent on board. The challenge is that they are coming from different areas— creative developers, video filmmakers, even data scientists, who are conventionally never a part of a media agency, and we need to work together with them. We need to source these diverse talents from other industries. The first biggest challenge is in identifying where we can get such talent and then attracting them to our business as they have never been a part of this kind of business. Once they are in, we need to make sure they feel a part of the culture, because a place that conventionally has 600-700 people who do media planning and buying suddenly have five art filmmakers and four data scientists also among them.
How is Wavemaker playing its role with brands increasingly banking on martech for the future? Will it change anything in the agency business?
So there are categories, brands and advertisers who are already on top of the curve in terms of adoption of e-commerce, data, and that is just the tip of the iceberg. However there are many businesses that dabbled in it during Covid and that is a big area that we have been able to help. We, as a team, are very proud of the fact that we were in a position to guide some of our clients into this area to set up their infrastructure, to access and use the data and martech. We have been working around this for many of our FMCG clients. Some of our durable clients realised that they need to reach out to the consumers digitally. It is very gratifying that we were in a position to help them. Earlier it was just 5% of our business, but now we are being able to deliver this kind of higher end services to at least 80-90% of our clients.
What will rule 2021?
E-commerce will rule 2021 and it is not only just products but it is also services. It’s the whole thing of being able to browse, decide and purchase online. It's something that is here to stay. In 2021 we will see this blossom and bloom and become really massive.
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