Most of the big Western agency groups, led by WPP, have been operating in India for years. But they face new competition from smaller agencies that have challenged them elsewhere. At least four so-called hot shops - boutique firms with only a handful of offices, compared with dozens or hundreds for the big agency networks - have recently opened, or announced plans to open, offices in India.
One of them, Wieden + Kennedy, which is based in Portland, Oregon, hung out its shingle in Delhi last year. Bartle Bogle Hegarty and Naked Communications, both based in London, say they plan to open in Mumbai over the next few months, as does StrawberryFrog, a hot shop based in New York.
The agencies are trying to keep up with big ad spenders, which are shifting more of their marketing budgets to India and other fast-growing Asian markets and away from Western Europe and the United States, where economies are slowing.
Today in Business with Reuters American-style credit ensnares consumers overseas For ad agencies, the Asian prize is India Just what are American homes worth, anyway? "Our view is that we ought to go where our multinational clients are," said Simon Sherwood, chief executive of BBH. The office in Mumbai will be the seventh worldwide for the agency, which works with clients like Unilever, Diageo, British Airways and LG. Marketers are taking advantage of new ways to reach Indian consumers. Every week seems to bring news of a different global media outfit expanding in India; last week it was News Corp., which announced plans to spend $100 million to start six new television channels in India. But the proliferation of media outlets also makes it more difficult for individual brands to break through the clutter - a challenge that hot shops say they welcome.
"The media fragmentation that happened in Europe and the U.S. is happening there now," said Scott Goodson, chief executive of StrawberryFrog, an agency that works with marketers like Procter & Gamble, Pepsico and Microsoft. "That gives us an opportunity."
The influx of the small agencies also reflects deeper changes in India, as a more sophisticated, consumer-oriented economy takes shape, said Anant Rangaswami, editor of Campaign India, an advertising trade publication. Not long ago, manufacturers and retailers were primarily concerned with getting products into stores at prices that consumers could afford. Advertising was often rudimentary; sometimes the big agencies simply adapted bland, international campaigns for the Indian market. Now, as in other, more developed economies where dozens of similar products jostle for attention, marketers are trying to connect with consumers for the long term rather than just to clear the latest shipments off the shelves. Some of them are even trying to establish their own brands in Western markets - a strategy also being pursued by Chinese brands like Lenovo and Haier.
"The ambitions of young Indian entrepreneurs has changed," Rangaswami said. "They want to start brands afresh."
Hot shops specialize in this sort of thing. Wieden + Kennedy, for instance, helped turn Nike, another company with Oregon roots, into a global powerhouse.
Jon Wilkins, a founding partner at Naked, which develops communications strategies for marketers, said he saw an opportunity to work with Indian companies looking to go global. "There is a slightly untapped market for international strategic and creative thinking about brands," he said. One challenge for foreign agencies opening in India is recruiting local executives. Though the government several years ago dropped a requirement that outsiders must work with local partners, many still prefer to do so, because it helps open doors. Meanwhile, Indian retailers and other companies are snapping up executives with marketing skills. That has created what foreign ad executives and Indian analysts describe as an acute talent shortage.
Though StrawberryFrog has yet to name its local partners, it already has one big Indian client lined up - Mahindra & Mahindra, a carmaker that plans to start selling its vehicles in the United States next year. The agency is developing a campaign to introduce the Mahindra brand to Americans.
"It's a whole new proposition for India," Goodson said.