CIO: In a slowdown, advertising spends are the first to get cut. How do you manage?
R. Balakrishnan: We start by cutting costs and being a little tight on ourselves in terms of spends and investments. But more importantly, I think recessions call for greater communication. You need people to work harder and stretch for your clients so that payoffs happen. We've found that in industries such as ours, a recession is a far more challenging time to do better work because you need to ideate that much more and ideas have to be that much more cutting-edge and focused. So, for me, it is less about cutting costs. It is more about working harder.
CIO: Have you seen a dip in advertising budgets?
R. Balakrishnan: It's not that advertising budgets are being slashed, but advertising revenues for agencies are not going up as much as they should. The compensation models for advertising agencies are a bigger problem than just revenues. We run on a fee system. We are yet to crack a model where we grow or de-grow as much as our client. I think the growth model for agencies should not just be based on fees and incentives but should let us grow with our clients.
If you're accountable and put your money where your mouth is then the best model would be to say: "We will share your growth." Here's where the real growth in the advertising industry will happen.
We are trying this new model with a few clients. But a lot of our clients are global and have a global compensation model which is agreed upon at the center. Therefore, it takes a little longer for all these things to happen. But I am sure it will because it makes ad agencies more accountable and gives them a share of good results.
CIO: Can IT help lower costs?
R. Balakrishnan: IT has already saved us a lot in terms of cutting costs, streamlining processes, liaisoning with clients, and reducing service costs. It continues to play a huge role in these aspects. The fundamental costs — human costs — however, are not going to be saved by IT alone. Ours is a business where you can only save so much through IT.
You could, however, cut down on travel and meetings and IT has already improved efficiencies in a huge way. IT has automated a lot of our studio work and has saved time. For example, you don't have to wait to see the rushes of a film; all of us can see it at the same time as it's all online. IT helps improve co-ordination. We are already quite wired in a lot of ways. A lot of us have iPads, are on the Internet, and are well-connected.
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