Outsourcing: David Bonthrone, Executive Vice-President, Group FMG (Part 4)

SM: There is an effort in India to move certain types of outsourced functions into the smaller cities or towns, not Chennai, Mumbai, Bangalore kinds of places, which are pretty crowded, pretty saturated places. Some of the types of functions that you are talking about have shown up, on my radar at least, as functions that are good for this kind of small town or rural outsourcing type of model. Have you had any exposure to this trend?

DB: I personally haven’t, though I’m sure my chairman and group CEO have. A couple of our senior executives here have got rich backgrounds in NSO, BPO, whatever kind of balance of offshore/outsourcing that one wants to talk about.

SM: So, let’s have a discussion around opportunities. We’ve look at what you are doing to take advantage of some of the trends of your industry in this emerging space of the post-production work on creative assets being done in offshore locations. Where are the opportunities at this point in that general space?

DB: Partnering with agencies in a white label function to help them do the work at a more cost-effective rate while retaining the quality of the standard. Similarly, it’s not just the agencies that are looking to cut costs and thereby increase margins. It’s big organizations. The leading CPG companies and retailers alike are looking at their space in conjunction with their agencies, and you’re seeing consolidation instead of having an agency network around the world that’s got 150 offices in 100 countries. By default, that means they’ve got 150 studios and 150 production directors. They’re going, OK, we can have 30 production directors, and we have a hub-and-spoke model or we have a production facility where we put everything in India. So, there are people looking at it in great detail, and we’re in contact with them. Given that we have an established, world class ISO 9000 certified production facility established in Chennai, we want to partner with leading creators of digital assets to help them realize the value from such efforts.

SM: What is your current revenue from the business? Or your projected revenue for 2012?

DB: For 2012, let’s go for $35 million.

SM: What kind of growth do you anticipate, based on your assessment of the market dynamics?

DB: Significant. I would say … 50% year on year.

SM: Interesting. Is there anything else that you want to discuss?

DB: Yes, I just want to make the point again that because our people have been to India and built the center there and lived there for two or three years and then come back to London or New York, the seamlessness with which the work flows and the process has been established is commendable. I’m excited about the opportunity. A lot of our senior executives have been successful in balanced onshoring and offshoring. They believe that the marketing services area is right. If you can provide all of this digital content and then give the customer a chance to buy by having an e-commerce function, then you’re really closing the loop.

There are four key pillars to the ad agency business. Number one, research and insights, strategy planning; number two, creative concepts, creative development; number three, production; number four, media planning and buying. Media planning and buying has already been spun off and is running in separate P&Ls. Where agency people are passionate is in uncovering consumer insights and truths and developing creative concepts around that to help change consumer behavior and/or drive brand value, equity, volume, sales. Production, with all due respect, historically has never really been a core competency and something that agencies are passionate about.

SM: Not only that, the more technically complicated it has become, you know, from apps to e-commerce or whatever …

DB: You’re absolutely right. Across whatever device, whichever screen, with all the versioning and stuff, it’s expensive. So, we believe you can offshore the non-mission-critical work. There’s an area, always an opportunity for tremendous value, not just to agencies directly but also to brands.

I’ve been in the agency business for 20 years. I started in the agency business when it was done on TV and in print. I became a direct marketer, and it was about one-to-one through mail, and then it was one-to-one digital communications because it was much more reasonable. With the onset of mobile and the consumption of mobile data, wherever you are, whether you’re in the bath at home or standing in front of the product in the store, there are so many more touch points now that complement television. They’re very interesting times.

You’ve had agencies all the time, and then you’ve had specialist agencies. What tends to happen is marketing budgets get broken down into silos: that’s for the general agency; that’s for the direct agency; that’s for the interactive agency, the PR agency, the mobile agency, the social agency. That’s a lot of agencies, a lot of overhead , a lot of fees and a lot of content development. What about if you’ve got one centralized production resource running through that that can develop content for all of those channels and touch points.

SM: Also, I think the more that this world is moving to digital advertising and digital marketing, there’s a tremendous amount of execution. Before you create something and then hand it over to television channels to run it over and over or print to publish it over and over, now there’s a lot of repetitive tasks that happen because you have to push certain applications in social media and create all of the execution infrastructure to give it as much viral reach as possible. That has actual activity on your end. It’s not something that you can put on auto pilot.

DB: That’s absolutely right.

SM: There are some things that you can put on auto pilot like Facebook ads or Google PPC ads. That’s fine, but that still has this whole tracking and analytics and optimization areas. The whole advertising business has changed so much. There’s so much more execution and production than there used to be. So, it’s an interesting trend that you’re taking advantage of. Other people are as well. If you look at the how many small businesses are doing offshoring social media marketing services or search engine optimization services. There are thousands and tens of thousands of companies that generate business on Elance and oDesk and 99Designs and so on and so forth. This whole space is an active space today.

DB: Yes, for sure.

SM: Thank you for taking the time to share your story with us.

DB: Thank you very much.

This segment is part 4 in the series : Outsourcing: David Bonthrone, Executive Vice-President, Group FMG
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