Reckitt Benckiser owns some of India’s best selling cleaning brands like Harpic, Colin and Dettol. In June this year, it mixed all of them together in one big metaphorical bottle and emptied it on top of MPG, its media agency. Reckitt thought its new blockbuster, all-purpose cleaner — putting up its media account for review just seven months after awarding it to MPG — would help eliminate all the grime, grease and hodge-podge in its media buying operations, one of the largest in India at an estimated $40 million per year. At over 12 percent of its sales, that was one of its largest expenses and there was pressure to either reduce it or get more results from it.
Illustration: Sameer PawarIn the normal course, this event would not have made much news because advertisers keep evaluating, benchmarking and changing their media agencies every few years. But this wasn’t normal course, because Reckitt had expected bidders to meet three significant conditions: Any agency that wanted to pitch would need to pay Reckitt $10,000 for the privilege of doing so; the winner would need to guarantee a certain level of Cost Per Reach Point, or CPRP, an advertising metric that computes the average cost of reaching one percent of an advertisers target TV audience; finally the winner would also need to pay back 2.5 percent of the overall spend back to Reckitt itself by negotiating that discount from media owners.At a recent trade conference in Delhi, Rahul Welde, Unilever’s VP of media for Asia, Africa, Turkey and Middle East, set the cat among the pigeons when he described media as a commodity that could just as well be handled by the procurement department. And almost on cue, a host of leading clients are either calling for media reviews to play off one agency against another or explicitly demanding lower rates from their incumbents.
“Though CPRP is the right metric to judge a media agency, it is also very dynamic and may not be in the control of the agency. Asking them to guarantee CPRP is like asking your financial advisor to promise you exact returns, he can only give you a range. It would therefore be prudent to put a CPRP range instead in your contract,” says Vivek Sharma, the chief marketing officer for Philips India.
(This story appears in the 13 August, 2010 issue of Forbes India. To visit our Archives, click here.)