Friday, May 3, 2013

The Airtel - Warid Buyout: The Grim Agency Future Ahead



Two weeks ago when the news broke that Warid Telecom, Uganda’s 3rd largest telecom company had been acquired by India’s Bharti Airtel in a move that has effectively polarized the market there was a lot of acrimony over “another change” just as people had grown to love and enjoy where they were getting comfortable. The truth is that Airtel has changed its name 5 times since it first launched and still bears residual angst towards it from the public because of their very early transgressions when they launched as Celtel. Let me point out here that despite all appearances the seemingly apparent reason for the merger is to take on South African telecom behemoth MTN.

After reading Ruthaine’s thoughts on the matter I started asking what would happen to the employees of Warid. Poor suckers. The usual toll of a merger is that about 75% of the acquired firm is shed and replaced with more technologically efficient systems. And with over 500 employees, there would be no less than 350 jobless people soon. Then it hit me even harder what about the advertising agency? Those who know what I am saying a company’s advertising and marketing agency is critical to its success and in most cases has its fortunes interred with those of its clients(it must be said though, those retainers always create comfortable cushions for agencies to sit on).
A new Airtel promo where they are promoting the Nokia Lumia 620 

Airtel’s advertising is done by the experienced Moringa Ogilvy team seated in Bugolobi. They have done quite nicely for themselves. The Moringa Ogilvy team gets its Ogilvy name from its Ogilvy Africa affiliation by paying a nice handsome fee every year to ensure they keep using the name. In return, they get first pick of any Ogilvy businesses coming into the market territory. Ogilvy East Africa was bought out by Scangroup back in 2010 where they acquired the larger share of Ogilvy Africa’s holdings outside South Africa. What did this mean? That Ogilvy East Africa would go under Scangroup. When Ogilvy &Mather pitched for and won the Airtel Africa business, they rested it there because Scangroup, the parent company was already handling too many telecom accounts what with Safaricom, Vodacom, Warid and Tigo across the region. Anyway this explains how the affiliate agency in Uganda ended up with the Telecom account. Anyone who has had to pitch for a telecom account will tell you how serendipitous it must be to just have one handed to you.

Attaining Superbrands status in 5 years, the Warid brand is a force unto itself.
On the other side of the pond Scanad Uganda, largest and by far the most efficient ad machine has been handling the Warid advertising and marketing account. It must be said that they did not give Warid the Pakalast name and fame, that award goes to a smaller but equally ingenious agency – Maad. What they did do was bring Warid to a point where it has had all of its competitors shitting bricks with ad campaigns that have literally remained top of the public’s mind year in year out and have created such a high bar for the industry and anyone trying to get people to remember anything. If you think I am lying ask anyone next to you to tell you the Samona or Omo or Standard Chartered tagline or ask them who Onesmus, or Milton or the Kungfu Master is? Simply marveling. Scanad is part of Scangroup. Their revenues are reported as part of the Scangroup success story. Now that they have lost their beloved Warid Telecom what will they do?

If I were Bharat Thakrar what would I do?

Airtel Nigeria proved that you don’t need to work with an Ogilvy affiliate after they appointed STB McCann to run things for them (with all the ensuing drama). This simplifies the task of Bharat explaining to Sunil Bharti Mittal that the Airtel Uganda should sit with Scanad Uganda. I presume the conversation would go as follows:
  1. Scanad Uganda has a larger; more experienced team directly connected to the Scangroup resource superstructure and therefore would present as a better agency to work with.
  2.  Because Scanad is directly linked to the group and is not an affiliate its revenues would be going directly to Scangroup hence revenues and profits would be kept within the group.
  3.  If market prevalence/awareness is anything to go by Scanad have produced more memorable work in the last 2 years which gives them the best advantage in their david-goliath match up against MTN – the market leader if they were to lead the Airtel onslaught.
  4. After this article and recent news in Tanzania and if the move of buying Warid was for Airtel to solidify their numbers, grow their revenues, increase the brand’s market share in order to eventually offload the telecom to Vodacom/Vodafone while they focus on West Africa where its bloody, then they would need an agency that had the capacity to deliver on that promise – Scanad.
  5.  In the worst case scenario, this account goes to a pitch in order to give the existing account holder (Moringa) a chance to compete. I personally think this would be the cruelest thing anyone could do; put your worst enemy in a pitch against Scanad because even hell won’t forgive you. Resources, tools, manpower and experience all seem like mundane things which are merely business jargon but nowhere else, and I mean NOWHERE, do they coalesce with such fervent ferocity to petrify and debilitate as when pitch fever is at fever pitch.
So that is how I see it and while I’m very very happy to be wrong you have to consider the possibility that I might not be. Any chess player will tell you “you don’t look at the now, you look at five moves ahead” So the market just got a bit tighter for the smaller agencies out there and since markets, like businesses are grown and shaped by the players in them it safe to assume that also much like in the jungle, we shall all eat when the lion is satisfied.