When the news broke today that the Tata Group outsourced its Public Relations mandate to Adfactors, not too many were surprised because of three reasons –
- For many, this was on expected lines as there was adequate speculation from October 2017
- Most permutations and combinations, ever since the news went public eight weeks ago that the Tatas would allow the contract with Rediffusion/Edelman to lapse, pointed in the direction of India’s number one Public Relations firm, by revenue. It is the only Top 5 firm to be headquartered in Mumbai (headquarters here is defined by where the top ranking executive officer of the firm resides)
- There were already conversations in the social media sphere and a half-baked report online by Fortune India about this possibility
While everyone writes from the media release, I decided to burn the midnight oil and analyse this new client win so that there are some takeaways for those following this development closely.
Adfactors did not win this mandate today. They won this in October 2016 when the then 60-year-old Managing Director of the firm left a global summit in Miami, which had just started, half way through. I was sitting with other Indian delegates, along with Madan Bahal in one corner and listening to the opening keynote address. The next moment he had disappeared leaving a message that he was advancing his flight to India because he felt he could offer his services to one of the two parties in the brand-new boardroom battle that had just been ignited at Bombay House. The rest is history. The first win was an Investor Relations mandate that the firm bagged at eye-popping retainer which was more to test the mettle of the firm.
Over the last one year at various trade events when I met several corporate communication directors of the Tata Group companies, I could sense that they felt a fatigue had set in among some of people at the incumbent firm and they were seeking a change. The five-year contract had run its course and there was not much one could do to get another extension.
The Tatas have never opened the business of the entire conglomerate to a pitch. It is humanly not possible to run a pitch for such a large mandate and then derive the economies of scale. Much as several consultancy leaders would have preferred to win the business in its entirety or in pieces the Tatas have been in business too long to be at the mercy of multiple firms. In the early 2000s the entire mandate was handed over on a platter to a newly formed Vaishnavi Corporate Communications. Similarly, in 2011, the business was given to Rediffusion who in turn zeroed in on Edelman India to be its partner and a separate unit was created, this time too the system was no different.
My assessment is that the mandate was handed to Adfactors for the following reasons –
- Solid bench strength – The Mumbai office is a powerhouse that has been carefully built. Investment in atleast half a dozen professionals who had previously serviced or worked for the Tatas, including the likes of Roger Darashah, Ipshita Sen, Atul Takle, Ajit Pai, Vikram Kharvi and several others. Adfactors have been the first port of call for many companies when they needed counsel in the boardroom and that word of mouth would have played in a favourable manner in the decision of the Tatas.
- The game of elimination – Tatas have been used to a certain kind of ‘big-firm style’ client servicing for close to two decades now. Of the five large firms Perfect Relations had worked for Cyrus Mistry and Edelman was the incumbent. So, these were ruled out. That would limit the choice to only Genesis BM and MSL India besides Adfactors. I don’t think both GBM and MSL got a chance to advise the Tatas during the crisis of 2016 and therefore the Group would not have had a chance to experience them in the recent past putting them on a weaker wicket.
- Proximity to Headquarters – Both GBM and MSL India are technically headquartered in Gurgaon and New Delhi respectively. City Hall (the name of Adfactors Mumbai office) was the closest in geographical proximity to Bombay House. If you took the next set of four firms in random order – Weber Shandwick, Text 100, Ketchum Sampark, Avian Media – none of them barring Ketchum Sampark would have had the big boss based in Mumbai, something the client of this size would have preferred.
Some media outlets incorrectly mentioned the names of some PR firms stating that they had pitched for the business, when they reported the announcement. In reality there was no pitch. That was highly unethical to do without prior confirmation.
- Least amount of conflicts – Except for Mahindra Group and Infosys there are very few Adfactors clients that compete head on with Tata Group companies. If you took any of the flagship Tata brands, the Group would have felt that most of the firms would have sister companies that serviced competition.
- The Power of Independence – Whether it was Vaishnavi, Edelman and now Adfactors, the Tatas chose an independent PR firm over one that belonged to a holding company. This is linked partially to the previous point that ultimately leads to avoiding conflict situations. But more importantly the amount of money that the firm has invested in the past year on learning and development is easily close to a few crores of rupees.
- Hunger for more business – The Adfactors culture that I have witnessed from a distance is one that is hungry for more business. The beauty is that they are generous as well in their support of trade events. The firm has had a turnover of Rs 150 crore last year. With this win they are likely to touch Rs 200 crore in 2019.
- Madan all the way – You can love him or hate him, but you cannot ignore him. I have not seen a more hard-working consultancy leader in my fifteen years in the business. I get to see most of them atleast twice a year. Madan is apparently on a flight to Delhi every week for a day-trip. For a 62-year-old this is not easy, but Madan makes it look like a cake walk. He brings in the energy that few people, even half his age can match. He manages over 20 banks of different sizes as clients with ease.
At PRAXIS 2017 while several younger professionals were smoking and chatting while keynote sessions were in progress, Madan was seated inside the conference hall with a notebook in hand jotting down points.
- Lastly, Tatas know what is best for them. And they have decided to go with a firm that they believe best serves their needs. One can debate whether their approach to the selection was right or wrong, but it is their money and their reputation, so they know best.
Well, what happens next.
As I see it five things will happen –
- There will be some unease in the PR consulting fraternity for 3-4 months and there is no denial about that. A few people will lose jobs, some of whom may get hired by Adfactors, some will struggle for a while. This happened in 2011 as well.
- Edelman India will drop from being a Number 2 firm in India to a number 4 or number 5 firm overnight. It narrowly missed becoming the second 100-crore firm. But it will now go after every new client with vigour to regain the loss of revenue.
- I’m not sure what happens to Arun Nanda in the current context, who wielded influence when it came to Public Relations. I hear he is not enjoying the best of health.
- Tata Motors will be up for grabs after the Auto Expo and this will be the first time in a long time that Tata Motors will be serviced separately due to the conflict with Mahindra. The same maybe the case for Infosys which competes with TCS.
- Over the next five years a new Madan Bahal will emerge in some other firm who will be hungry for this business and will do whatever it takes to throw his hat in the ring in 2023.
These are my personal views based on reading publicly available information and my basic understanding of the Indian PR business.