Industry's ethical code has eroded: Sam Balsara

Sam Balsara, the chairman and managing director of Madison World, is a soft-spoken and gracious man. Those traits dramatically amplify his forthrightness and espousal of probity. In an exclusive interview with Adgully, Balsara reflects on his long and rewarding journey. When Balsara laments the erosion of values of the industry, his views will be received as a solemn call to implement correctives. Indeed, the utterances of Balsara, a universally respected stalwart, are not only considered inspiring, but also inviolably true.

Adgully: Twenty-two years of Madison, and more than three decades with the industry...how does the present measure up against the initial years?

Sam Balsara: Back then, advertising was a gentleman's game. Despite the fact that there were not too many rules, people were genteel, and instinctively followed a certain code. I think advertising is still very small in India; though, of course, it has grown phenomenally over the years and rough estimates suggest that it is a Rs20,000 crore industry. Even I find it unbelievable...when I started my career in the industry, it may have been a less than Rs100 crore business. That is a big jump. But as I recently said at a business conclave, while we can delight in the massive growth rate, the advertising industry in Indiaâ€ in terms of volume â€ is still at a nascent stage.

AG: What is your assessment of the prospects for growth?

SB: Seventeen percent of the world's population lives in India, but we contribute less than 1% to the global advertising market. Our advertising-to-GDP ratio is 0.35%, I think the global average is 0.7%, in the US, it is almost 1% and in some smaller countries, it is as much as 2%. Clearly, the advertising market is going to get bigger, and as it grows, it will become more competitive. And people like me will have to concentrate on making advertising deliver more for the advertiser. I am of the firm belief that advertising will grow in India only when we make it pay fantastic dividends for the advertiser.

AG: Will the escalating competition erode the values you spoke about?

SB: I have to shamefully say that the code has already eroded. Perhaps we can take solace from the fact that it has eroded all over the world, and India is probably the last place where it eroded. But that is no consolation, and there is little one can do about the erosion. I won't say that our efforts have failed, but they have not been strong and unified enough to work.

AG: How will you compete and yet abide by the values you cherish?

SB: We are fiercely competitive in the marketplace but it does not mean that we would compromise our values and principles. While I believe that the objective of a business is to serve a customer at a profit to the company, it is important that all companies have a value system. If you don't have that, you become a bit rudder-less...you swing like a pendulum. I am reminded of the motto of my school: "Nec Dextrorsum, Nec Sinistrorsum', which means, neither to the right, nor to the left ' just go straight on!

AG: Has that principle served Madison well?

SB: Madison has survived and grown despite some severe disadvantages which we operate with. We are fiercely independent, we don't belong to any network, and we win or lose clients based on our own actions. And as I look back, I can say that while we have been disciplined and principled, we have been able to adapt to the changing times and we have been able to take advantage of emerging opportunities. I hope these traits of Madison will endure, because they are crucial to survival in the rapidly changing world.

AG: What do your numbers look like?

SB: Our numbers are made up of three elements. First, the organic growth of our clients: our clients become larger and then they have to spend more on advertising. Second, we are fortunate that we get a fair share of new clients. And finally, we have been slowly but steadily increasing the sphere of our influence by opening newer functions and venturing into newer geographical areas. For example, some time ago we were not in the mobile space, we are now. We were not in Sri Lanka, we are there now.

AG: The industry, as a whole, has survived a rough patch...

SB: In 2009, for the first time in my living memory, advertising industry de-grew (sic) by 10%. But this de-growth (sic) was not uniform across the media, but I think it was the English print media that unfortunately led the de-growth. But things are looking up now, and that is why the theme of the business conclave was "Time to Grow'. I think growth to us should be a by-product: we should focus on clients' growth. When our clients grow, we can reasonably expect to grow as well.

AG: What is the industry's principal frailty?

SB: More than half the problems faced by the advertisement industry has arisen because every advertising agency wants to achieve growth which is twice the industry's growth. At a macro-level, that is not possible. Besides it [the unrealistic expectation] leads to the degradation of sound industry practices.