Time for full-service as Publicis buys Beehive?

23 Oct,2013

 

By Pradyuman Maheshwari and Fatema Rajkotwala

 

The Publicis Groupe announced the acquisition of Mumbai-based Beehive Communications, a 10-year-old full-service independent integrated marketing and communications agency. Beehive will be absorbed in the Paris-based advertising conglomerate’s Publicis Worldwide agency network and will operate as a unit under the rebranded name, Publicis Beehive.

 

Since mid-2012, this marks the Publicis Groupe’s seventh acquisition of an Indian company and Publicis Worldwide’s third. The first two being brand marketing consulting firm MarketGate and digital agency, iStrat.

 

Beehive Communications has kept a low profile in the industry but been operational since a decade. With in Mumbai, Delhi and Bengaluru and a team of 130-plus, Beehive has its strengths in full-fledged teams for creative and strategy, a strong media agency offering, a full-circle digital solutions basket and research and BTL teams across 20 states in India. Its client portfolio has its key strengths in verticals such as tourism, education and real estate with brands such as Tourism Malaysia, Korea Tourism Organisation, Maharashtra Tourism, Gujarat Tourism, Indiabulls, Rolta, Palladium hotel group, Chambor, MT Educare and more. Almost 40 percent of the business comes from the media planning and buying activity and it has many clients which make use of its integrated functions.

 

Partha Sinha

While making the announcement in Mumbai, Nakul Chopra, CEO, South Asia, Publicis Worldwide, said this was part of the agency’s growth journey in the last year.  Clients and business have grown and the agency now has in its fold, the threesome of Bobby Pawar, Partha Sinha and Ambika Srivastava. From the Beehive side, the current leadership team will continue to lead the agency under the direction of Founder and CEO Sanjit Shastri who will now report to Mr Chopra.

 

Bobby Pawar

Explaining the thought behind the move, Mr Chopra said, “We have a broad strategy of what we want to achieve. We are clear that we want to be among the Top 3 in the country in terms of size, reputation and recognition.” While not revealing the money invested in the acquisition, Mr Chopra added: “Publicis is a latecomer to this market compared to others who have a huge lead due to historical circumstance. Catching up that scale is an intrinsic part of our strategy. Acquisitions are not born out of need but more when you have an opportunity to fast track your strategic direction.”

 

Ambika Srivastava

When asked what would be the primary advantage for Beehive post-acquisition by Publicis, Mr Shastri said: “The excuse that we are not aligned therefore we can’t grow fast, doesn’t exist anymore.” On why his agency has been keeping a low profile thus far, Mr Shastri said: “In the beginning, when we started winning travel and retail clients, we were terrified that bigger agencies will come and swat us like flies and pick up the business and go. That’s when we decided to keep a low profile.”

 

Meanwhile, the move to have a full-service unit is sure to lead to some discussions in the trade given that media planning and buying and creative now work separately. Talking about the benefits of an integrated entity, Mr Chopra said: “There is considerable benefit that can be provided to the client with creative and media capability residing within the same organisation. This is especially true in the digital space where the divide is getting blurred. Media agencies do creative work and creative agencies do media work. This is a future-facing decision according to what we can see happening in mature markets. In the advice that we give to clients as a creative agency, we welcome the fact that media and access to media data are within the same agency. There may be merit in looking at them as separate functions but the end-consumer of advertising is concerned he/she experiences the media-creative strategy and execution all at one time. It will helps immensely in the quality that we provide by bringing the two together. The client is beginning to think one-stop shop again.” Clearly, we haven’t heard the last on this one.

 

It’s been happy days for Nakul Chopra, CEO, South Asia, Publicis Worldwide. His agency is finally looking up with the acquisitions and the hires. Beehive founder-CEO Sanjit Shastri was with Mr Chopra when the interview was been done…

 

You are a large creative agency. Was there need to acquire another agency?

I don’t think need is what defines this. It is not that when you need an acquisition you go shopping for one – what are the chances you’ll find one with the right talent, the meeting of minds, financial agreements – it doesn’t work that way. We have a broad strategy of what we want to achieve. Publicis is a latecomer to this market compared to others who have a huge lead due to historical circumstance. Catching up that scale is an intrinsic part of our strategy. Widening of scale may have to be done within the organization. Acquisitions in that sense are not born out of need but more when you have an opportunity to fast-track your strategic direction.

 

What kind of strategic direction did you see with this acquisition? For instance, in the case of MarketGate and iStrat the service specialisation was clear. This is a full service agency and a fair number of these services you provide too. You have a digital resource that may not do social media or some other services done by Beehive and you have to supervise media within the group too. Hence what was it that made Beehive a strategic move?

We are clear that we want to be among the top three in terms of size, reputation and recognition. Size can also be a critical factor. If I go out and buy an agency which has more or less the same client profile as I do, then an acquisition would be pointless. Here, there have a width of service that I currently don’t have. It can be argued that we already have two media giants. Of the seven acquisitions that the group has made four may have been for digital strengths. Then why acquire one more? It is intrinsic to the holding group’s strategy that individual components of the individual brands, while they cooperate with one another, they also compete. We, Leo Burnett, Saatchi compete fiercely; we would pitch against one another. Some other part of the group having an offering is good to lean on and seek cooperation. It does not mitigate the fact that if I believe that it is essential to the growth of this brand, then I must have it here.

 

In terms of the media agency business of Beehive, if a client is willing, would you now look at routing business through this agency as against the other group agencies?

I am neither here as a spokesperson of the group nor are group media strategies decided by me. As far as I am concerned, there is considerable benefit that can be provided to the client with creative and media capability residing within the same organisation. This is especially true in the digital space where the divide is getting blurred. Media agencies do creative work and creative agencies do media work. This is a future-facing decision according to what we can see happening in mature markets. When you can see something in tomorrow and you have an opportunity like this, it makes imminent sense to do it.

 

Having seen a time when there were full service agencies to later a branching of more specialized agencies… what is your personal view on what works better?

In the advice that we give to clients as a creative agency, I welcome the fact that will have media and access to media data now within the same agency. There may be merit in looking at the two as specialized functions but the end-consumer of advertising is concerned he/she experiences the media-creative strategy and execution all at one time. It will help immensely in the quality that we provide by bringing the two together. I suspect as you look in the future, as the analog world gives way to the digital, the divide that we had in the past will get blurred to a large extent.

 

For an academic discussion, do you see a time where you see yourself merging with a Starcom or ZenithOptimedia and becoming a large full-service integrated advertising agency?

I don’t see merging happening in my working lifetime. However, the client is beginning to think one-stop shop again. There is a lot of new territory to be negotiated. Unlike the world of television and print that came about in spurts but had long periods of stability where learning curves were defined and verticals were formed, in the digital space, it’s changing every other day. You can’t say what element is having what impact if you cant look at it in a more holistic way.

 

After interesting buys such as MarketGate and digital agencies and now, Beehive as a full service agency, are you looking at any more acquisitions?

We didn’t sit down one-and-a-half years ago and decide to do three or four acquisitions. That’s not the way we approach it. What we did sit down at the start of last year was to set out a roadmap of where to where we want to take the organization. We are going to be very busy until the end of 2014 in capitalizing the deep and organic changes such as bringing in Bobby and Partha in. We believe this is the period in which we will create the future-facing organization which can genuinely engage with clients. That will take some re engineering within our organization in terms of training, putting in new processes in place etc. There will be a period of digesting all the change.

 

Like in the case of healthcare, do you see possibly specialized sub-agencies focused on the verticals that Beehive as their strengths in such as tourism and education?

In the case of healthcare, we were talking about something that is remarkably different. Here I don’t think vertical expertise will result in separate agencies. I definitely think that as we look at our organization in the future, it will lean into having specialists vertical as teams within the organization. We do currently have knowledge in verticals such as the food space, strength in the beauty and personal care space in Mumbai and now we will have much more knowledge in tourism and retail. But I don’t see us branding and selling it as separate services.

 

And have Bobby and Partha settled in?

I cannot believe how quickly and smoothly it has been. With Partha, the advantage we had is that he has spent five years in the past working closely with me. For Bobby, the word that comes to my mind repeatedly is – remarkable. It has been seamless.

 

Did Bobby’s Ford Figo controversy bother you given you have large clients yourself?

I was very clear much before the actions spewed out of that controversy that I don’t think any individual in the agency or at the client’s side can individually be held responsible. It was a breakdown of process. I am clear that he was not personally involved but as the guy on top of the team he took the blow, which if anything, should be all credit to him.

 

Is there a parting line for proactive work at Publicis Worldwide?

I think I have been quite unfavourably featured in the press for taking a simple stand when I say that I don’t understand certain terms such as ‘proactive work’. I understand only one thing – festivals have rules, most of them being the same. You should have a client. The client should be kept posted. It should be released in the media. I think we are celebrating creativity here. This is not a race; you don’t get money here, you get recognition.

(Sanjit Shastri leaves the room)

 

But there should be substantial release to the media and not just to few select publications for the sake of awards…

I have asked this question before and I ask it again. A big client wants to put a Diwali ad which will be released in a publication once. He genuinely gives the brief and releases the Diwali ad but because it didn’t perhaps meet the definition of substantial, it does not qualify. Now, take the same example and flip it around to what is called proactive work. Agency turns up and tells the client that they have a great idea for a Diwali ad. Just because the story started that way, do you think it should be disqualified from an award? It’s rather silly. So, I have been very clear on this front.

 

Now that Sanjit has left the room, I can ask an impolite question: tell us what is it that attracted you to Beehive

Other than what I have mentioned, there was nothing that I was looking at such as a client that I wanted. I saw a great fit between what they had, the scale, the chemistry that we developed during our conversations and there was little overlap and no conflicts. So I am adding and growing my exposure to clients and width of services.

 

But surely Beehive’s size is…

You’ll be surprised on what Beehive’s revenues are. It can’t be spoken about, but they are substantial.

 

Now there are a fair amount of agencies in Chennai, Coimbatore or the East that are doing a fair amount of good work. Are they now part of your acquisitions radar?

It would depend on the scale.

 

For an agency that’s got a handful of transnational clients, Beehive Communications has been particularly low profile. We started this Q&A with Sanjit Shastri, Founder and CEO, of the agency with the obvious question… “kahaan thhey aaj tak?”

 

Beehive has always kept a low profile. Is that by design?

I am not very good looking and I don’t speak too well so I’d rather concentrate on what I do best which is work hard and servicing our clients. Speaking to media is something that one does when one has to. We kept a low profile for very good reasons. In the beginning, when we started winning travel and retail clients, we were terrified that bigger agencies will come and swat us like flies and pick up the business and go. That’s when we decided that let’s not do PR and press releases and keep a low profile.

 

It’s interesting that you say that because you are in a business of keeping people high profile…

Our job is to keep clients high profile; not ourselves high profile. And that’s the way I like it.

 

As an entrepreneur, you have built your agency from 2003 to a fairly large independent middle-scale agency, how does it feel now to have sold your enterprise?

Prior to being acquired, we would have been in the top one or two independent agencies in terms of revenue. I don’t really see it as a sale because the spirit of entrepreneurship that we had at beehive will continue at Publicis.

 

Is it a 100 per cent sale?

Yes, a 100 per cent sale.

 

I agree that the spirit of enterprise will continue but if were among the top three, you could have grown bigger…

First, we will grow much bigger as part of the Publicis Groupe. Second, there is a debt of gratitude that I personally, and the Board of Directors at Beehive have to the very people who have been with us since ten years. For example, our Creative Head, Group Heads have been with us for 10 and eight years and they want to stay with us for another five years. The opportunity to grow in an international environment is much more than the opportunity to grow in an independent environment. There is only that much that we can do and with this, we can really do.

 

In your old structure, did the team have stock options etc?

No. But we looked after them well which is why they have been with us. Our Head of Media and Creative have been with us since 2003, our Head of Advertising has been with us since the time he joined us in 2007.

 

Pardon our ignorance, but in terms of clients, who is your biggest? What according to you is your outstanding work?

Tourism Malaysia is our biggest client. In my estimate, Malaysia is the largest individual international travel destination for leisure. And that is great victory for us. It is the only client with whom we have been working with for ten years and the contract is for two years more. It’s a 720 degree service where they make you go round twice. We do even food festivals for them; we do promotions in schools, painting contests etc. We have done a lot of work for Total Malls in Bengaluru, MT Educare, Century mattresses.

 

Now as part of Publicis, apart from the scale that a multinational brings in, which are the specific areas that you think will see a value add?

We had a pitch for a cruise company. I think we’ll win that. I just asked Bobby and he came down to our office within minutes and ensured that the creative was what we needed. The rest of the team, including Bobby, Partha, Nakul and Ambika’s knowledge of media is all that you need.

 

Where do see your unit headed in terms of growth?

We grow at around 15-20 per cent each year, which may be difficult this year but it will be maintained. I believe that will have about 180 people with us within the next year and a half. Of these, 30 per cent would be in digital and 30 per cent in the shopper-marketing space.

 

How is the shopper-marketing space looking, especially with some international biggies joining the race?

I believe for shopper-marketing client to be successful in India, it has to have a little bit of the Indian flavor in terms of execution, implementation and experience is it has to work. That’s where margins are and customer satisfaction is. I’m not saying that others won’t work but our focus will be to do this. There is enough space in shopper-marketing for everybody. It’s like an operational strategy where you have to run a kitchen with 1500 people working in it.

 

For digital, it has been announced that there will be a synergy between the two company’s departments. How will this pan out?

We will ask iStrat to carry out a lot of our execution. We will provide digital marketing solution to their clients and together we will provide a lot of execution and marketing solutions.

 

How large is your media agency arm? Who are your clients in media?

It’s fairly large. It brings in about 40-45 per cent of our revenues. We have Bisleri, Tourism Malaysia’s SAWAF region – South Asia, West Asia and Africa, which is about 30 countries.

 

Since the acquisition has been announced, if there were one marked difference between yesterday and today at Beehive, what would it be?

The excuse that we are not aligned therefore we can’t grow fast, doesn’t exist anymore.

 

 

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