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GOZOOP's Ahmed Aftab Naqvi takes us through the many roadblocks that arrest a small and mid-sized agency's sail, along with some workable solutions
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It is apparent that the entrepreneurs in the digital marketing ecosystem are on a rise across the globe. India, in this space, reports a startling number too, with more than 50,000 small and mid-sized agencies operating in the country currently. Even in the adex that was 70,000 crores last year, digital ate most of its pie (33%). This year, experts anticipate it to be close to 40%, while in 10 years, it is expected to grow over 10 times.
A recent report also stated how India is the second fastest-growing market for digital ad spends, amongst the top 10. It is also the sixth-largest contributor to incremental ad spends last year.
It wouldn't be wrong to say that most of this has been made possible with the ease at which digital businesses can be operated today. All you need is a laptop, a creative mind and a brave heart! We do realise that a majority of these businesses are not just digital-first but digital-only. Their prevalence and acceptance in tier 2 & 3 areas are evident, with the swelling of the average time being a key signal. However, this growth of the digital ecosystem, most often than not, does not transcend to small or mid-sized agencies. Only the top 4-5 global listed non-Indian companies are seen to enjoy its many benefits.
Ahmed Aftab Naqvi, Global CEO, GOZOOP Group highlights some of the prominent issues that inhibit these agencies to reap a secured position, along with elucidating some implementable solutions:
1. When it comes to digital media, there’s always a factor as to what the media commission is being offered. Larger companies are certainly benefitted from the huge volumes, In turn, they are in a position to offer high commissions. This is the first area where smaller companies lose out. The advertising giants also benefit from the annual volume discounts where the platforms present them with different kinds of rebates. Hence, the standardisation of the media commission is crucial.
2. Clients and brands defaulting is another problem area. These small agencies are often made to pay on the brands' behalf. In case the brand backs out, the agency is pressed to pay the amounts, fearing the risk of blacklisting. Sure there is a redressal mechanism here, but it takes time, eventually compromising on the founder's bandwidth. A mechanism for brand defaulting and brand redressal will definitely carve a better position for the small agencies.
3. Digital agencies buy media slots on different social platforms. If the agency is not doing enough in terms of the amount spend, most of the social platforms don't give them a credit line. They ask the agency to put in their credit card. There is no option to deduct the levy at 6% which is there. This becomes an added expense for the smaller agencies. If this exemption of 1 lacs is increased to 10 lacs, it would be comfortable for smaller agencies to survive. Hence, equalising levy can make a huge difference.
4. When we talk of government tenders, the eligibility of the revenue part is kept higher, which automatically excludes most of the capable mid agencies. Also, in a world where a lot of international brand mandates are made at a global level and top 5 advertising agencies get hands-on most of these accounts. There should be an advantage or even a fighting chance for the Indian agencies to get these tenders.
Naqvi not only presented his valid arguments but also inspired how we all must join hands to promote the entire digital advertising industry. All hail digital entrepreneurs!
*The speaker was present at the Emerging Business Summit & Awards by BW SME World