Making Things Better?

THIS is what the global economy is all about. A rethinking of strategy thousands of miles away at Eindhoven, Holland, and one of the biggest advertising accounts in India shifts to two agencies that do not even exist in the country. The Philips account—reportedly worth around Rs 50 crore, and slated to go up to Rs 72 crore in 1996-97—has shifted from Contract, Lintas and Ogilvy & Mather (O&M) to Euro RSCG and D’Arcy Marsius Benton & Bowles (DMB&B). Neither has a presence in India currently.

And right now, Philips India may be in a very strange situation—its principal agency has refused to handle any Philips business. On Friday, October 27, Contract CEO Ram Sehgal shot off a letter to Philips India washing his hands off the Philips account from Monday, October 30. This has left Philips with successful running campaigns created by Contract on its hand, and no agency to do the media releases. Philips and Contract executives refused to comment on record. Said a Lintas spokesman: "We are just completing whatever previous assignments we have been committed to. All new work will be done by Euro RSCG."

 The story began early this year. Philips Worldwide had just managed a massive turnaround and wanted to position itself once more—and very strongly—as a winning brand. The company’s Corporate Image Board (CIB) recommended that the power of Philips’ communication budget could be maximised by selecting one common theme and one advertising agency which would handle the corporation’s business across the planet. The agencies selected—not one, but two—were Euro RSCG for all products except domestic appliances and personal care products, which would be handled by DMB&B. The theme approved: "Let’s make things better."

 In countries where Euro RSCG and DMB&B did not have any presence, they were expected to get cracking and set up shop by the end of the year. The agencies had three options: the transnational agency could start an office from scratch, or buy an existing Indian agency, preferably one which was already working on the Philips account, or accord one of these agencies affiliate status.

At the presentations the three agencies made to Euro RSCG, Lintas and O&M reportedly offered to sell their subsidiary agencies—Karishma and Artig, respectively —to Euro RSCG. After all, Rs 72 crore is a lot of money, 21 per cent of Lintas’ 1994-95 capitalised billings, and 38 per cent of O&M’s. Contract’s chief negotiator, Executive Director Ishan Raina offered that Euro RSCG and Contract set up an agency together to handle the Philips business. Euro RSCG was amenable to this, since Contract was Philips’ principal agency, handling more than 50 per cent of the media budget. However, Contract’s international parent J.Walter Thompson (JWT), shot down the idea: it preferred to lose the Philips business in India than get into a partnership with a rival agency.

In the meantime, Cor Boonstra, chairman of the CIB, noticed, while on a visit to India, a print advertisement for Sony Entertainment Network released by Lintas, and immediately decreed that the agency should not be considered at all, since it was handling the advertising for a subsidiary, however minor, of Philips’ global rival. That left only O&M, which handles just a small part of Philips’ Indian account, and which is also part of a global agency that competes with Euro RSCG in many countries. The European agency has, as a result, decided to set up its own operations in India from scratch. Till this happened, the three Indian agencies would continue to handle Philips, but would get 11 per cent of the standard 15 per cent commission for their efforts. Four per cent would go to Euro RSCG.

Contract, which will be the hardest hit by Philips’ departure, received another body-blow when Ishan Raina, who had been dealing with the European agency on Contract’s behalf, handed in his papers. His next job should not surprise the alert reader. He will be nominally a consultant to Euro RSCG (India), but for all practical purposes the CEO.

Philips sources claim that the company is ignoring Sehgal’s letter, but what Contract’s refusal to have anything more to do with Philips means in terms of ad releases or STAR TV shows like Philips Top 10 and Philips V People, both con-ceptualised and handled by Contract, remains unclear. And Raina’s slot, No 2 in Contract, is being filled by Ambar Brahmachary, former chief of Contract Delhi, currently on secondment with a JWT agency in Taipei. That’s global for you.