Pricing consensus efforts fell short: Vikram Sakhuja of Madison

New Delhi: Vikram Sakhuja, Group CEO of Madison Media and OOH at Madison World, honoured with the AAAI Lifetime Achievement Award earlier this year, isn’t holding back on the media industry’s pricing woes.

Speaking in an interview with BestMediaInfo.com before the Competition Commission of India’s recent raids turned heads, he said, “We’re driving the industry into the ground with cutthroat pricing and by agreeing to work under unsustainable terms.”

Conceding that the growing role of procurement is behind the falling agency margins, Sakhuja noted, “Instead of being seen as a driver of growth and demand, it's now treated like an expense to be trimmed. That shift in perception — especially at the CEO and CFO levels — has tilted the power dynamic toward procurement.”

Excerpts: 

Media agencies are now building their capabilities on the consultancy side as well. But how viable is offering consultancy services to brands as a business model?

It’s a good practice to develop, but I’m not sure media agencies can genuinely monetise it. A perennial challenge for media agencies has been getting clients to pay for our thinking — they mostly pay for execution. Agencies invest heavily in planners, and a planner with a different profile essentially becomes a consultant.

However, very few brands seek planning-only assignments, where they pay just for the strategy and exclude execution. Media agencies typically offer both planning and buying, but the revenue primarily comes from pricing and delivering efficiencies — not from planning. While planning is closer to consultancy, agencies aren’t really compensated for it.

That’s why I don’t see it as a profitable practice for media agencies.

Can the industry align to say: no agency will offer services below a certain cost?

We've tried. In fact, over the last two years, there have been sincere efforts to build that consensus. But success has been limited. There will always be agencies desperate to grow — always someone willing to take the deal for less. And that keeps undercutting the entire value chain.

Why has procurement gained so much power in this equation?

Instead of being seen as a driver of growth and demand, marketing is now treated like an expense to be trimmed. That shift in perception — especially at the CEO and CFO levels — has tilted the power dynamic toward procurement. And in that environment, it's hard for agencies to push back on pricing, let alone defend the real value they bring to the table.

That said, the CEOs who are true, passionate marketers — those who’ve come up through the marketing function — they still get it. They understand the long-term value of brand building and overrule the CFO when needed. For them, it’s not just about cutting costs. They’ll say, “It doesn’t matter what the spreadsheet says — we’re investing in growth.”

Most of the media companies, including the large networks, are either witnessing stagnancy or decline amid global headwinds. What would it take for the recovery and by when do you expect a return to normalcy?

A lot of an agency’s fortunes depend on how well advertisers and clients are doing—that’s just the reality. Of course, we should be able to help drive their growth, but the challenge right now is the broader economic slowdown we're seeing globally. Heading into 2025, it's likely to be a year of cautious optimism.

There is a huge gap between the payout to publishers by big tech companies and what they charge from advertisers. This is more or less like the death of brick-and-mortar shops with the growth of quick commerce or e-commerce. Clients avoid direct deals for convenience from tech giants. Would publishers ever get their good old days back?

One of the biggest challenges publishers face today is their inability to clearly define and defend what qualifies as premium digital inventory. In print, it’s straightforward—think of the front-page jacket of The Times of India, which commands top dollar due to its visibility and impact. But in digital, everything has become commoditised. Unlike print, where there’s a clear hierarchy of value, premium placements on digital often get bundled and sold like any other inventory—stripping them of their potential value. If publishers had ringfenced their premium digital assets and sold them selectively at a higher cost, while treating the rest as commoditised inventory, they might have maintained pricing power and differentiation in the digital age.

So, what exactly is the challenge for publishers to be unable to sell premium digital inventory directly to advertisers?

The real challenge for publishers isn’t just selling premium digital inventory—it’s defining what qualifies as premium in the first place. Unlike print, where placements like a front-page jacket are clearly premium, digital is far more fragmented.

Most users land directly on an article or come through aggregator apps, bypassing any 'impact' inventory. Publishers haven’t yet cracked how to surface or package premium digital inventory effectively. And to make matters worse, they simply can’t match the scale or sophistication of tech platforms like Google or Meta when it comes to ad tech infrastructure. That imbalance makes it even harder to retain control over high-value digital real estate.

What’s your viewpoint on brands focusing more on performance marketing over brand building?

There’s branding, and then there’s performance. And for me, marketing is simply this: getting more people to use more of your brand, more often, at a higher price. That last part—at a higher price—is key. Because a strong brand commands a premium.

The unfortunate reality is that performance marketing, especially through e-commerce platforms, isn’t really “marketing” in the classical sense. It’s more about acquisition and visibility—buy me, click me, discount me.

That’s not inherently wrong—self-presence and visibility matter. But when brands start putting all their marketing budgets into performance, ignoring brand-building altogether, that’s where the long-term damage happens.

Think back 20 years. Indian advertising was often praised as being far more emotionally resonant and brand-driven than its American counterpart, which leaned heavily on promotional messaging—"Buy now, get one free," etc. Ours built icons. Say "two minutes," and you know which brand I mean.

Branding builds equity. Performance drives volume. You need both—but not at the cost of forgetting what makes people want your brand in the first place.

According to you, what are your unfinished tasks for the industry?

Making effectiveness matter as much as efficiency. People invest in marketing to build brands, but somewhere along the way, the focus shifted. Marketers often act as though the goal is simply to keep bringing down the cost of marketing — not to drive growth. In my view, the rise of procurement thinking over the past 20–25 years has done a real disservice to marketing effectiveness.

At some point, the CEO and CFO began looking at marketing purely as a cost centre: “Marketing is my biggest cost — how do I control it?” And while cost control is important, that mindset missed the real point. Marketing is meant to be a demand-creation engine. The conversations should have focused on what marketing is doing to generate and grow demand — not just on reducing cost. If more decisions had been guided by effectiveness rather than just efficiency, we’d be in a different place. So, for me, the key message is this: Let’s make effectiveness at least as important as efficiency.

Secondly, we're driving the industry into the ground with cutthroat pricing and by agreeing to work under unsustainable terms. This race to the bottom is damaging everyone. It's turning the game into one of monkeys and peanuts — where we can neither attract top talent nor deliver the kind of impactful brand-building work we once took pride in.

The third big question is: how do we combat—or rather adapt to—the age of AI? Because the reality is, as we speak today, the core principles of marketing remain inviolable. But the methods? They’re changing fast—so dramatically that soon they may be unrecognisable. Success will depend on how well we embrace this shift without losing sight of timeless fundamentals.