‘Sales promotion is finally getting its due’

Candid Marketing, one of the oldest and leading sales promotions agencies in the country, is on a roll. With shrinking advertising budgets becoming a reality, most clients are now directing spends into more engaging consumer touch points that allow consumers to experience the product and generate sales. In such an environment, Candid is grabbing a lion’s share of the below-the-line advertising industry, as it continues to work with big spenders like HUL, Pepsi, Castrol, ESPN, Nokia and Sify among several other clients. DNA spoke to Atul Nath, co-founder and MD, to know more about the agency and get an update on the sales promotions industry. Excerpts:

Until a few weeks back, why had Candid Marketing maintained a low profile in the media?
We’ve been in the sales promotions and activations business for 13 years. So the industry knows us. That industry as a whole is now coming into the spotlight. And while that’s happening, it makes sense to get your fair share of mind space.

How would you describe the activation/ promotions industry in India right now?
You know, in India this industry has evolved a lot differently than in the West. Over there, since long, the mainline ad agency has been doing theme-based advertising, while a very well-defined sales promotions industry did the scheme-based advertising. We’ve been through several phases, wherein there was a time when people didn’t see any difference between us and events agencies. But that’s changed and brands have realised promotions are a serious marketing tool. Today it’s not a “let’s spend the leftovers of the marketing budgets on promotions” thinking anymore. Promotions are discussed when you’re planning for the coming financial year. We recently sat down to discuss with half a dozen clients how they should spend in 2009, and if they were to do promotions, how should they do it. For example, planning summer promotions in the last quarter of the year was a first for us. Prior to it, advertisers would start talking in April for June promotions.

How differently does the Indian consumer react to brand activations and sales promotions?
The Indian consumer is much more value-conscious than a typical Western consumer. Hence, when you give him the opportunity to interact with the brand, he treasures it a lot more, because he’s looking for value. He gets a chance to experience the brand before putting the money down. For that, he’s willing to give his time, and if required, engage himself enough to consider a purchase. In some product categories, consumers have an inordinate hunger for information. They’ll get very involved in asking about features, details. When I travelled abroad, I’ve observed a lot of activations and the consumers are not as forthcoming as they are in India. The Indian shopper is looking for an experience, rather than a product. And this is why, most mall owners complain that we get so many footfalls, but people don’t buy.

You expect growth rates in your business to remain consistent in the year ahead?
We grew by 40-45% in FY07-08. And we’re looking at a similar growth rate in FY08-09. I am expecting a slowdown from clients in certain sectors. But then, we’ve also got 40 national clients, who don’t work with us, but they should, in the cosmic sense. So I’m expecting at least 25-30% of business to get converted in our favour. Most categories like FMCG, consumer durables, telecom, media and entertainment will continue to spend. Gaming as a category could surprise us, with the kind of potential it holds. Also, the industry is going to get organised.

And while that’s happening, are mainline ad guys making a shift into below-the-line activities?
The ones who did, never did so successfully. They just don’t think 3D. And not just in creative, even servicing. They don’t understand the operations at all. As a thought process, they only think 2D. They can’t get to think how to get the customers to interact.

Some big spenders on promotions use multiple agencies. Is that a good thing?
Well, promotions are often centralised and decentralised. There might be some money which the central marketing team controls and some money which the regional marketing teams control. For example, Mirinda does well in the south. Thums Up does better in Mumbai. As long as there are multiple agencies, people work harder.

How much of your revenues come through events?
About 20-30%.

A lot of the event agencies are facing the slowdown blues...
Everyone’s cutting back and being prudent. I’m aware that people are in trouble. Clients’ spending on events has gone down much more than spends on promotions. Having said that, the bigger agencies are doing fine. The smaller ones will get affected.

Some media organisations are shutting down their events divisions altogether…
That’s an interesting thing you bring up. I don’t know why they set up these divisions in the first place. Why would you do someone else’s job? Thing is, when times are good, people just keep on expanding. Behti Ganga mein to sab haath dhote hain. But when things go bad, they’re on a shutdown spree.

A lot of radio stations have also started activation divisions!
Yes, and they execute nothing themselves, but outsource it instead. The logic’s very simple — when they started their FM stations, clients would go to them and say “you do the radio stuff” and I’ll get my agency to do the activation. So the stations instead proposed a combined cost, wherein they could call a smaller agency to do the activations bit and make a smart margin on it.

Will Candid expand overseas? Will you continue hiring?
Yes. It could be Singapore and/or Dubai. We originally planned to do this in the first or second quarter of 2009. I suspect it would be prudent to push it to the third quarter of this year. About hiring, we may add 40-50 people to our current strength of 140. The advantage is that top management of our company — eight of them — is at least 5 years into the company. Attrition in top and middle levels is negligible.