Hamish McLennan on India, Y&R and the advertising industry
NDTV: Joining us today on our show is Hamish McLennan CEO & Global Chairman, Y&R; welcome to the show Mr McLennan what brings you to India this time?
Hamish McLennan: We have a board meeting tomorrow and on a yearly basis I like to come out to India and say hello to our partners and to see what's going on and just to get the feel for the market.
NDTV: So what is the market feel like right now in India ?
Hamish McLennan: Well it's always amazing that the markets continue to grow at such a fast rate there is a sense that India coming off just a little bit but not to the extent we are seeing in the western market. For me living in New York and to live through what happened on Wall Street last week was pretty remarkable so I think certainly the western markets will see a pretty tough time, I think the emerging market like India and China will still do well maybe not to the extent they have done in the last few years but I think we are heading for some tough times around the world.
NDTV: You've looked at Australia before this and then America and now you are also looking at India what is the difference that you see?
Hamish McLennan: Look all those markets are at different stages of development. I think we just see the enormous potential here in India, China and some of the big markets. You know the truth is that we like to make long term investments we feel very good about that we are in India. I think the growth will continue to be extraordinary over the next 5-10 years so it really is just a matter of developing the market as we stay fit.
NDTV: Is there anything particular that you are expecting from this trip for a short term or on a long term basis?
Hamish McLennan: No we just periodically get together and guys from India come to our regional and global management meetings all the time and I just like to come out here. I've been travelling to India for more than 20 years- I'm always amazed every time I come out here there is something new and different that’s happened and I think it’s extraordinary the way the whole country is transforming so it's much as pleasure it’s business- because I like India and I like the people and Indians love cricket as I do too so that's always good.
NDTV: Like you've said you've been here a couple of times and it's been for a long time- 20 years is a long time; how have you seen it develop in the last 20 years for ad agencies in India?
Hamish McLennan: Look it's just the growing sophistication of marketing communication and what puts it interesting to now is to see how the internet starts to affect the way people consume media and it's the same trend all over the world but India has enormous potential and I think the people are smart and fantastic and I just think there are huge opportunities here.
NDTV: Y&R is as iconic as you know as a lot of brands that it services but today a lot of marketers are looking at smaller agencies which deal with so to say with non-conventional means of advertising so how does a huge agency like Y&R known stereo typically to do to traditional advertising competition with them?
Hamish McLennan: It's a great question- if you look at the big agency and the good big agencies are continuing to grow; so I actually think we will hit through golden period of growth from the big agency point of view- the little agencies are the ones that can also do very well because they offer intermit service, they are very nimble. The ones which are very venerable, the myth size agencies they neither have global coverage or dip resources and they don't even offer intermit services so you know we feel very good about our growth prospects around the world and we are very confident we will do very well. So we are getting good growth out of our existing clients, we also see a lot of local clients want to tap into the big international network because they have got a high pay.
NDTV: A lot of changes have taken place in this industry over in the marketing and communication industry over a period of time. What are the things according to you that give you that strength because they are fundamentally constant?
Hamish McLennan: Well, clients at the end of the day want to have agencies that can come up with great ideas and content and we do it across at the range of clients so we feel we can attract better talent because we offer more variety. The challenge for us is to try to depth out thinking our analogy into the digital world and that’s what ultimately clients look for- what's your experience and how you can transfer that so that's a competitive advantage for ourselves and we just need to leverage it.
NDTV: According to you when we talk about the payments to an agency do you think it should be on the basis of quantum of work or how do you think an agency be evaluated or paid?
Hamish McLennan: Yeah, a great question again- I mean you have to look at agency by strong the disability of management and if you again look at the Rediffusion team we had the single partners since many many years and I think clients look at that. I think their ability to have business conversations as well as to deliver great creative which ultimately is why clients come to us. But I think equal measures over all those things is really important you want to know the people you're dealing with now are going to be there for 5 years.
NDTV: A lot of time at the end of the campaign even though you know all the creatives have been passed through the clients before they have gone on air or before they have made it into print, the agency at the end gets all the flak if the campaign bombs. Comment how would you deal with that?
Hamish McLennan: Well that's just the world we live in. I think ultimately for us we want to have deep relationships with our clients we can get beyond that but that's the nature of the game too. So the work you do is there for everyone to criticize and when it goes really well everyone loves the glory and when it doesn't go so well then you have to wear the flak which goes with it but then that's the nature of the beast.
NDTV: A lot of times there's a conflict in the fee system between the client and the agency- almost always the agency would prefer a commission to be paid on the commission bases while your client necessarily wants that; so what's the solution?
Hamish McLennan: Look it does not matter to me; both the systems have there pluses and minuses- I mean the reality is that if the agency moves to a fray their great predictability the commission system you can make money if a client goes into recession or they encounter tough time you can lose a lot of money too. So for us that predictability phase is very good but the commission systems can also be argued that real insensitive to try and sell sales and get sales for our clients because of that system.
NDTV: Would you think PBR is a possible solution for this kind of problem?
Hamish McLennan: Yeah I would encourage that for every client- again it depends on what the levels are- but philosophically I think it’s very important the clients look at the agencies and want to know that they are putting their own money in stake so you know it needs to be meaningful both ways- so if the agency does perform quite often we can get more money doing it that way but a lot about long term clients actually subscribe to that system.
NDTV: Would you from the kind of work you've done have a favourite brand not necessarily because you've used it because it means something to you- because the kind of things it has done for the market?
Hamish McLennan: I think one of the most interesting and amazing case studies we have with Y&R is our Colgate relationship where we worked with them for 25 years and I really respect them for what they have done from a multi-national point of view where they are very global. They have moved their people around. It's a very trusting relationship at all levels and they are producing record profits and they really believe in advertising and it doesn't matter if you're dealing with Colgate in America or India or China or Latin America. It's the same all around the world- they are very professional.
NDTV: And finally what forms would you see advertising taking in the future- is it digital, or what are the other mediums that are not so common that you'd see that are not popular?
Hamish McLennan: The exciting thing for the agency is that if you came to Y&R 5 years ago we would have delivered to you press radio's and television's ads very adequately and now with media fragmentation digital we are doing all those things in the past plus we are doing all of the new stuff and that means the revenue base grows and we are doing more with our clients- so I think it is really exciting. I still think broadcast television is very very powerful and again it does not matter in what market your in so I think all of it is really fascinating and most of our clients are coming to us and saying look we don’t understand what new media is really, you know, doing to the market players how people behaving is differently so for us it means we are doing more better client relationships, they are more transparent and you know they are more trusting because we've got to work out this through together.
NDTV: Thank you for talking to us Mr McLennan.
Hamish McLennan: Thank you.