Goyal-Rediffusion Deal: Bold Yet Reliable, Says Industry

After a hiatus of sorts from the traditional ad land, Sandeep Goyal has returned to the advertising world taking over Rediffusion and its network agency Everest Brand Solutions. The operations of the acquired company would come under Goyal’s integrated marketing and communication investment company, Mogae Media, and he would lead it as Managing Director. 

This development comes in when the industry is enduring repercussions of the second wave of the pandemic in India. In this backdrop, for most marketing gurus, Goyal’s move is seen as “bold” and “inspirational”, and “exemplary” even, which can “bolster some courage among the potential investors”.

Smart Move, Right Time

For some, the sheer timing, and the brand acquired, make for a clever move. Explaining this school of thought, Lloyd Mathias, Business Strategist and a former senior marketer at PepsiCo, Motorola and HP Asia says, “It’s smart for Sandeep Goyal to acquire these iconic Indian advertising brands – Rediffusion and Everest – that were once amongst the top ad agencies in India. The current downturn, thanks to the devastating pandemic, may have helped in a considerably discounted price as well.” 

Mathias believes, in an agency scenario dominated by global networks, the equity of these well-regarded agency brands can be rejuvenated.

Santosh Desai, the MD and CEO of Futurebrands, sees this as a “great piece of news for the advertising sector”. “I am glad to know somebody who has been associated with the sector for such a long time, is investing in it now. Our industry needs people, who can work both as an entrepreneur and as an advertising professional,” he says.

For many, the time is right for mergers and acquisitions in the creative and advertising space in India. It is not only about the valuation at the time but also because this can inject some much needed optimism in the sector itself. “The pandemic has stressed out the best of businesses. The valuations of businesses in this space are at exciting levels, especially for buyers with the long-term picture in mind.  I see this as a substantial move,” states Harish Bijoor, Brand Guru & Founder, Harish Bijoor Consults Inc.

Creative Entrepreneurs Redefined

India has seen its share of creative independents, but fact also is that sooner than later, equity dilution and even exits are preferred to become part of a larger international network. Add to that the fact that the advertising industry itself is changing with consultancies now proving to be part of the ecosystem, the options for growth, for creative entrepreneurs, has also multiplied.

“There has been, over the past few years, an increasing blurring of service lines. Traditionally consulting firms have been focused on corporate transformation and IT projects, whilst the domain of marketing services has primarily been advertising strategy and implementation. But in today’s digital world, consulting projects are increasingly framed around enhancing the customer experience,” notes Mathias.

He explains that creative entrepreneurs who produce quality work will always remain viable targets for both international networks and domestic players.  Also, creative agencies are now on the radar of large business consulting firms such as Deloitte, Accenture, BCG, McKinsey, Bain & Co, and Capgemini. “These are increasingly buying out small innovation agencies that can become part of their solution offerings to clients,” the veteran marketer reflects.

Rediffusion acquisition is a reminder that India is still seen as a potent market not only for companies within the country eyeing growth but also for global holding companies that are still eyeing acquisitions in India. The time for this move is also critical because as advertising comes under restrain during the crisis, the independent agencies will face a higher brunt of challenges on most counts.

Boosting Investor Morale In Advertising

Companies that reach a certain level can seek help financially to reach another level or extract support in terms of bringing in new knowledge or ability to hire top talent. Creative entrepreneurs with a strategic mindset would rather think about a dilution than a complete exit because no one would want the main management step down as well. This is hence something that gives a shot in the arm for mid-size agencies that are looking for inorganic growth,” points out Manish Porwal, MD, Alchemist Marketing & Talent Solutions. 

Goyal’s move can bring other Indian investors to consider investing in the Indian advertising companies, which would be a slight divergent trend than seen otherwise.

“With Sandeep Goyal acquiring an Indian company, the norm has been shifted too. It’s extremely good to have local professionals from the industry, who can create and build partnerships over a period of time. Alliance building and collaboration are the name of the games today. As long as you can do that, you don’t have to be part of the network. While it is too early to talk about the expectations from the acquisition, there will be more aggression and a renewed focus in terms of looking at ground reality,” observes Desai.

More specific to the Rediffusion deal, he reminds that Goyal’s other line of businesses also involve being in touch with what is happening in today’s media landscape. “We might see some interesting convergence of technology with advertising. It will be an interesting space to look at,” Desai states.