MxMIndia spoke to a cross-section of media professionals to elicit their views on the JWT Singapore acquisition of a majority stake in Hungama Digital Services

Raghav Anand, Segment Leader-Digital, Ernst & Young (The observer and often advisor)

I think Digital is an extension that every creative arm should have, but the real efficiency comes from how well it is syndicated with the overall collusion. Most of the agencies which have bought digital companies have not been able to integrate them into the overall setup, and hence not been able to leverage the synergy. So, how well you integrate and leverage the synergies will really decide whether it’s a fantastic acquisition or not. Apart from that, the other important things is that companies like Hungama are not just agencies, they are more of digital workflow companies which do a lot more than advertising and creative. They integrate into mobile and few other things. So it’s important for an agency to fully leverage them.

Arvind Sharma, Chairman of the Indian Subcontinent, Leo Burnett (He recently acquired Indigo, a digital agency)

Setting up an outfit from scratch has its own merit as you don’t have to pay a hefty acquisition price. However, I think this is a chicken and egg situation as the challenge is that when starting from scratch, you lack the scale and expertise in the beginning which is a handicap when attracting talent or meeting the needs of a client. You get stuck in sub-optimal size and scale. Particularly in Digital, one needs technical expertise and should be armed with a suite of capabilities to meet the clients’ demand. Therefore, it makes sense to acquire an agency of 150-plus people who are specialists, especially in the digital category which is witnessing a lot of interest from clients too. It immediately gives you scale and expertise. Also today clients want gamut of services under digital. They are not looking for few pieces of digital work; hence having an in-house digital agency helps in delivering.

Mahendra Swarup, Former CEO, Indiatimes, Chairman, Smile Interactive (He’s worked with Pepsico, Indiatimes, Smile Interactive whose Quasar was acquired by WPP, and is now a well-known VC)

I think Digital is not an easy space to get into for traditional agencies. And at this point of time, digital agencies’ valuations are pretty realistic, so it’s always good for the traditional agencies to take over an existing team which understands digital. Also, the digital space is going to start growing at a fast pace, although at this point of time, it has a very low share of the total spends. But it will probably end up growing almost by 75 to 80 per cent year on year. So, it’s a big growth area. Also, I think organic development of a digital agency within an existing traditional agency is just not possible, the existing teams will not understand this space at all. So it’s more an acquisition of knowledge and competence, rather than of revenues. It’s only a question how do they (traditional agencies) get into a space which they will then grow faster.

Alok Kejriwal, CEO & Co-founder of Games2win (He’s a contemporary of Mr Neeraj Roy…)

Whatever be the nature of the investment, I think it is brilliant that Hungama Digital has managed to get a partner like JWT. It shows that people who have been around and helped build the digital landscape over the last 10-12 years have finally begun to see the fruit of their labour as it has been one long arduous battle. Neeraj Roy has fought many battles to get media owners and brand planners to get convinced about the digital platform for India.

Creative people are not like cement bags where you can go to the market and buy them. They are like yogis in the mountains. So when you get hold of a yogi, you’d do anything to keep him. It’s not one size fits all. JWT has a large client portfolio while Hungama has the digital capability. There are some cutting-edge creative digital agencies in the world that are the ones trying to set shop inIndia. For them to buy it makes a lot of sense, but then there are existing creative agencies inIndiathen why buy an outside agency when they are cutting-edge themselves? If you look at Quasar, which is a WPP company, they too are doing a good job. So it varies according to the needs of the marketplace.

Mahesh Murthy, Founder, Pinstorm (He embraced digital early and is known for his forthright views on everything!)

India is one geography in the world where MNC agencies are absent among the large digital agency houses. The basic reason is perhaps their unwillingness to give up on their bread-and-butter – that is media kickbacks and TV film production over-billing. Both of these tend to disappear when you move online and digital-first agencies like Pinstorm have built large practices by focusing more on new technologies and processes, having avoided the kickback-led business that still drives mainstream advertising. Given India’s importance on their global client rosters, the MNCs here have finally figured out that if they can’t build a digital business themselves, they’ll try to buy one. I personally don’t think these random purchases will make much of a difference.

Vikas Tandon, Founder & Managing Director, Indigo Consulting (Indigo was acquired recently by Leo Burnett)

It is no surprise at all. The pace of change in the world today is stupendous, and digital media is causing consumer behaviour to change very rapidly. There is no time to build the expertise from scratch, and scale is also critical to success. Another compelling reason is there is not enough digital talent out there – a lot of the experience and expertise resides in entrepreneurial outfits. Hence acquisitions make eminent sense.

Karl Gomes, Co-founder – AgencyDigi (He co-started the agency after a great run as a digital CD)

When it comes to digital, any news is good news. In fact if you look around in the media marketplace, there have been similar news developments that have happened in the recent past. The focus for agencies should be about coming up with the right idea and focus on the consumers and brands. In today’s world you have to collaborate. My only worry with these acquisitions is I hope they don’t treat them as another division but they work together and in a synergistic fashion. They need to be sitting together on the table when a brief comes across to them rather than just approach it passively. So, an acquisition like this should be good for both the people buying them and for people selling them. We have been approached by agencies but we are completely funded by clients and their business. So we will continue to run independently.

Compiled by Shruti Pushkarna, Johnson Napier and Tuhina Anand