Saturday, November 17, 2007

Online ad giants spin their web over India

Call it the digital invasion. Global online advertising giants are making a beeline for the computer savvy sub-continent, planning to take over independent agencies and launch their own brands. Indian agencies that have been ruling the roost till now are feeling the heat as salaries touch the sky and strategies to acquire funds are quickly chalked out. Some are even bullish about their own acquisitions within the country and outside. But will they last the onslaught?
Globally the digital advertising market is worth $30 billion, and in India the Rs 500 crore market is growing rapidly at 50% annually. So the blitz is not surprising. Traditional advertising giants such as, Publicis Groupe, WPP, OMD Digital, Aegis Communication Group and Euro RSCG are planning to launch their global brands in India and have aggressive acquisition strategies. But at the same time, top Indian independent agencies such as, id8 Labs, Quasar Media, Pinstorm and Web Chutney are also gearing up to the face the challenge.
"We already declined five acquisiton offers," says Mahesh Murthy, founder and CEO of Pinstorm, one of Asia’s largest search engine marketing firms. "All these big players want to acquire Indian firms because though their media departments are formidable their digital arms are weak.

And they don’t want to lose the Indian market. At the same time we are fighting back by declining acquisition offers, growing our own offices and hiring good people. We are planning our own acquisitions abroad and will expand to eight from six offices internationally."

Others are also getting active. Take for instance id8Labs one of the country’s largest online and digital media agencies. It has acquired the business franchise of eDesign Tree Inc here, which specializes in providing interactive and digital marketing services to the IT industry. Meanwhile, Indian advertising agencies have also launched their digital arms. For instance, Percept Holdings launched Percept Knowrigin and Arms launched Arms Digital recently.

Amit Tripathi, MD of id8Labs explains the reason for the frenzy. "Worldwide interactive ads account for 8% of media spend and is slated to grow to 15-16% shortly. In India it only accounts for 1.5%. So the opportunity is huge", says Mr Tripathi.

The Indian agencies are also keen on raising funds to expand. For instance, Pinstorm is looking to raise money to fund global acquisitions and Interactive Avenues received VC funding from Sequoia Capital.

Mr Tripathi of id8Labs adds; "We are also planning for private equity funding of $7-10 million." And the word is out that salaries have also touched the sky in this sector. Manish Vij, co-founder of Quasar Media, points out, "There are limited professionals in the country to understand online well. This is a case with most of the other high growth industries. There are other strategies to counter this and one of them is developing people from other industries, which we have successfully achieved."

Agrees Murthy of Pinstorm, "Salaries have gone up tremendously. We have also opened a Digital Marketing Institute with IAMAI (Internet and Mobile Association of India). This industry will soon require around 30,000 professionals." Even id8Labs is hiring 150 people during the year to scale up operations.

It’s a big story waiting to unfold. In fact, IBM Global Business Services in its new report, forecasts greater disruption for the advertising industry in the next five years than what occurred in the previous 50 and all because of the Internet.

The report states that increasingly empowered consumers, more self-reliant advertisers and ever-evolving technologies are redefining how advertising is sold, fashioned, chomped through and tracked. And soon who knows, we might soon find premier management institutes in the country offering diplomas in digital marketing!

Friday, November 16, 2007

There's more to IIM entry than just CAT

Don't pin all your hopes on the CAT exam. That's because your admission to a B-school does not just depend on your CAT score. For instance, if you've scored well in your Class 10 and 12 board exams, it could well be the make or break factor in getting into IIM-Bangalore.

That's because the institute gave 80 per cent weightage to previous academic records and work experience in the admission process of 2006 and 2007. Cat scores were given only about 20 per cent weightage.

"While it will take some pressure off students who have had good marks in their 10th/12th and graduation levels — for others, who do not have a good record, it will mean extra pressure. I would say, you can't change your past academic record — what you can do is maximise your CAT score and, going forward, prepare well for your group discussion and interview which account for 40 per cent weightage," Gautam Puri, Vice-Chairman of Career Launcher, points out.

Of course, each IIM has its own unique selection criteria. To a petition filed by CNBC TV18 under the Right to Information Act, IIM-Ahmedabad stated that it does not consider Class 10 and 12 scores while selecting students for the group discussion.

Although the institute revealed that work experience accounted significantly in the personal interview. The institute, however, refrained from stating exactly how much weightage does it carry.

Wednesday, November 14, 2007

Google Makes it to the Top Five Companies

When Google was trading at $350 a share people said that it is overpriced. Google’s share price has now crossed $700 and Google is now the fifth most valuable company in America if market capitalization is the basis. The market capitalization of Google (number of all shares multiplied by the market price of a share) is now at an astounding $217 billion. Google is now worth more than Procter & Gamble the famous consumer goods company. Google is only behind Exxon Mobil, General Electric, Microsoft, and AT&T.

With Google at number five it is obvious that it will set its sights to take on Microsoft which is still ahead. Google’s products are not critical to the operations of businesses like Microsoft’s are. At work I can’t think of life without Microsoft’s operating system or its office suite. I like Google search but I can also live without it. Moreover it is important to note that a company’s worth is also a measure of its assets. What are Google’s assets? A brand value and people who love it and use it. Google’s assets are the audience. Their assets unlike an old economy company are not tangible assets.

Fifty years from now P&G will still be selling Gillette, Duracell and Pampers but will Google be still around then? Will the Google bubble burst some time in the future? This is the question that comes to any ones mind. Google is now at the heart of a historic information age. Computers have displaced TV sets, advertising models are changing, and artificial intelligence has assumed amazing power. Google is in the midst of this revolution.

Google has carved a name for itself with its Search, Gmail, Picasa, Google Maps, Google Calendar and their advertising model. But this is not to say that Google can rest on its laurels. In the internet economy people can desert their love of a service or product as fast as they fell in love with it. As an example I used Yahoo search before, then shifted to Google search because it was superior and now Yahoo search has again improved. It is quite likely that I might have a change of heart from Google Search to Yahoo Search.

I have a message for Google “Don’t stop reinventing and innovating if you want to climb the ladder and make it as the top company in America”. Google has unlimited potential if it continues to ‘INNOVATE’. Google can also go down as one of the most infamous falls from grace in American history, if it takes it easy and rests. This risk forever hangs on Google’s shoulders.