U.S. brands are beginning to turn to agencies in this country for some of their advertising needs.
According to the McKinsey Global Institute, outsourcing will lead to a net savings of $390 billion for the U.S. economy by 2010. As global production grows progressively specialized and companies are increasingly faced with new modes of competitive pressure, offshore locations provide U.S. firms lower operational costs while providing their customers with quality work.
Let’s take a look at the advertising industry as an example. The U.S. accounts for half of the world’s $500 billion advertising industry, which would make many think that America is number one in this industry. However, if one looks at a volume-to-award ratio, one can’t help but admit the creative power of countries like Brazil, India, Thailand and Singapore. For instance, at the last Cannes Awards, the president of the Jury was Piyush Pandey, Group President and National Creative Director of Ogilvy and Mather, India -- a country quickly becoming a viable online advertising center.
U.S.-based brand name advertisers such as MetLife, Johnson & Johnson and DirecTV have all tested the global outsourcing trend in their advertising operations and have found, that because all major multinational brands are now available in India, Indian professionals are skilled with the global positioning and advertising of these brands.
Capitalizing on India’s enormous potential as an online advertising center is Dave Banerjee, founder and Brand Strategist of Banerjee & Partners, a mainstream advertising agency that offers a blended outsourcing model comprised of onshore strategy, offshore production and creative execution.
I asked Banerjee that if the global outsourcing trend is starting to emerge in the advertising industry, are ad agencies, in response to client demands, learning to do more with less in an increasingly competitive global economy?
His response: “Today, agencies are definitely working on thinner margins than as recently as five years ago. The traditional agency structure doesn’t give management much opportunity to cut down drastically on costs. Blended outsourcing is possibly the only way to offer substantial savings to clients, without compromising on quality of communication. We have a massive cost advantage over any comparable agency. At the same time we are offering some of the best advertising and creative talents in the world. It is literally the best of both worlds.”
It is perceived that the biggest challenge of globally outsourcing online advertising is the lack of a deep understanding of the local market of the customer. However, according to Banerjee, “What convinces a client is actual work. When we present some of our work, and some of the work that’s going on in India, clients simply can’t believe that the advertising industry is so evolved in India. There are hundreds of campaigns, created and run in India, that are as American as any American campaign. The reason is that a certain socio-economic segment of the country is heavily influenced by the American culture and lifestyle. They watch the same TV shows as we do, Hip Hop is a rage, and it is impossible to get a ticket to a rock concert a week in advance. People drink as much Bourbon as they drink Scotch. Marlboro Lights is the standard cigarette brand. English is the official language at work as well as at play. The major cities in India have gone through dramatic change in the last ten years or so. So much so, that some of the advertising professionals can write better ads for Americans than they can write for Indians.”
With such expertise, expect the online advertising market in India to heat up. As Lionel Lim, Sun's VP and MD (Asia South), recently stated, “Over the next three to four years, we want to help create up to 100 dot-com companies in India, each with a market cap of around $10 billion. That is, perhaps, the biggest investment we can make in this country.”
Additional resources:
Op-Ed: From Bangalore to Brand-Galore
Elizabeth M. Lloyd is the Director of Corporate Marketing for Netblue, Inc., an online direct marketing company based in Silicon Valley. Previously, Lloyd was the Director of marketing for opt-in email provider, NetCreations, in New York City. Prior to NetCreations, Lloyd was responsible for the PR department of ValueClick, Inc.