The State As An Ad Venture

A few days ago I was forced to visit the offices of a large public sector company to clear some unsavoury matters when, at the reception, I met a friend who works for an advertising agency. And he was not alone. There were at least a dozen more smartly-dressed men and women waiting patiently to present their company's credentials to the man I had come to meet. In these times of squeezed budgets and shrinking bottomlines, I figured that what I was seeing was nothing unusual. "Today, everybody and their uncle are pitching for government and public sector accounts. Whatever the size of the agency, they are all running there like mad," explained my friend.

And the PSU advertising pie is not small. Annual budgets vary between Rs 5 crore and Rs 25 crore at the least, which compare very well with the private sector, which has anyway put the leash on adspends. Says Ashutosh Khanna, senior vice-president, Grey Worldwide, "A good 50 per cent of the Rs 2,500-crore Delhi market is comprised of PSU business. And if you are not dipping in, you are not there."

And dipping in they are. Most big advertising agencies which had kept away from government business decided to enter the fray about a year or two ago when the more exciting corporate well started to dry up. Public sector giants, state governments and various ministries are on the other hand, however unrealistically, quite immune to seasonal recessions and to top it have sanctioned budgets that need to be exhausted. Says Sanjeev Bhargava, vice-president, FCB Ulka, "In today's day and age, if you want to beef up your portfolio, you have to go after PSU business." His agency has in the last three months made three pitches to tap government business.

Some advertising agencies are also planning to set up separate divisions that will concentrate solely on government accounts while some have hired former bureaucrats to help them access such business. And whenever an agency smells a meaty PSU account, it doesn't leave the rest to fate and junior managers; it is the top brass who fly in to give the hardsell that sharp edge.

Money of course makes the world and all the ad agencies in it go round but the current thrust towards tapping government business is also driven by the fact that privatisation has made the former monopolies more market-savvy, especially in the telecom, power and financial services sector. They have realised that the government advertising arm, DAVP, is not going to give them an image lift which they so badly need in the age of disinvestment. So enter the professional agencies, who are trying to make these "government types" accept good creative work.

But for many who might not be in the business of selling creative work, there is a lot of bland work like tender notices and appointment ads going around that make for very lucrative business. They don't have to put their big and best guys on the job, in fact it is money for jam. And where PSUs are concerned, the money always comes, even if there is the occasional delay. "They don't haggle over money and they can't cheat you whereas a private sector client can and does sometimes take you for a ride," confesses an advertising professional.

But government business comes with a lot of strings attached and some agencies swear that it's not worth the trouble. To begin with, PSUs do not have a single agency handling their business. Several agencies are empanelled and work, as it comes along, is distributed among these agencies. No agency thus owns a brand and at times there is no consistency of thought. But some argue that in a sense this system provides a level playing field for smaller and larger agencies. In fact, many smaller agencies have all along survived and then thrived on PSU business. Says Bhargava, "Once you get an entry, there is a stream of money. Business comes in small pieces all the time."

But at times the promised adspend may never get spent. For example, one large public sector company managed to empanel several top agencies because of its huge Rs 120-crore adspend for the year. But these agencies finally got business worth just Rs 10 crore to share between them.

The other problem is that most government bodies treat ad agencies as suppliers. "There are no partners, only suppliers and users. It is difficult to build relationships with PSU clients," feels Suhel Seth, CEO of Equus Red Cell. His company does not handle government accounts but he understands why big-ticket agencies are making a beeline for such business. "There are a lot of releases. For example, at any given point of time the Delhi government has six ads going," says Seth.

That could explain why the head of an agency who quit an empanelment because he claims it became necessary to grease palms continues to run after PSU accounts. "In these depressed times, I don't want to lose out," he justifies himself.

Says Vibha Desai, executive director, north India, O&M, "Even in a slowdown, public sector budgets don't get slashed so easily. There is always money to spend. And for any agency, it is extremely critical to have a healthy mix of public and private sector business."

So the bigwigs of the ad world who for long deemed it infra-dig to dabble with the babus have taken a virtual U-turn. While their line may be that it is not just the money but the desire to make a difference to the public sector image that is driving them, the bottomline for most is that if the tap dries up, so do the creative juices. And now together with the Levers, Nestles, Pepsis and Cokes, IOC, LIC, and HP are also making advertising pundits queue up.