For those who came late, Madison principal shareholder, and founder, Sam Balsara has acquired a 51 per cent stake in GroupM agency MediaCom, with the new combination landing the lucrative P&G planning and buying account in India.
P&G called for a review of its Rs 150-crore (US$80 million) account in India in November last year, ostensibly to consolidate its media spend.
Madison, being India’s last media independent, felt insecure enough to start looking at possible merger options.
“Madison’s potential loss of P&G weighed far greater than what it has gained by the alliance,” said an industry source.
For Madison, the benefit of retaining P&G may be more than just financial. The agency’s anchor client is the bedrock upon which the agency has landed other business from the likes of Coca-Cola and General Motors.
“Loss of the P&G account would have meant loss of revenue, internal morale and industry standing,” said a source.
WPP, on the other hand, had the Unilever issue to sort out. P&G’s bitter rival has always been antsy about a GroupM agency handling P&G duties, given its own alignment with MindShare.
While WPP could not have anyone but MediaCom pitch for the P&G business, it also possibly knew that the media agency, which it acquired with Grey in 2005, did not have enough bandwidth to bag the entire P&G portfolio on its own.
While MediaCom India submitted some strong years during the early part of this millennium, handling the ‘India Shining’ and ‘Incredible India’ campaigns, recent years - particularly since the departure of Jasmin Sorahbji to launch OMD in 2006 - have been less kind.
J&J and Marico have both left the agency, and Nokia - which was consolidated with MediaCom elsewhere in Asia – was housed with Maxus in India. All told, it seems that the decision to extract Mediacom from GroupM management was a small price to pay to ensure the successful P&G result.
“But would GroupM have let MindShare or Maxus out?” asks a source. “Under no circumstances.”
MediaCom’s entry into Madison World — the holding company that houses Madison Media, alongside various other agencies including PR and creative — will give it access to Madison’s renowned buying clout.
But the decision to sell a minority to Madison also ensures that media outfits such as Aegis and Omnicom, which are considerably weaker than WPP in India, will not be able to achieve scale through a Madison acquisition.
Speculation of a Madison sale has been reliable fodder for Indian advertising circles for several years now, driven by interest from Publicis Groupe, Aegis and Omnicom, but it is thought that high valuations have deterred a possible sale.
“The fact that Madison is very strongly associated with its founder is something that does not work well in its favour,” explained a source. “In a buyer’s market it has thus not been an easy sell.”
