MAM
Group M’s game plan
The media business on an average has been growing at about 10 per cent per annum. Last year, saw a little more optimism with the growth mark pegged at 12 per cent. With inflation under control and a very need based business market, Group M, the media investment arm of the WPP conglomerate, bagged almost 75 per cent of the in transit accounts it pitched for last year. HSBC, ICICI Prudential, LG Electronics, Britannia are just a few of the notable clients that came on board.
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Andre Nair
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That was on the business front. 1 October 2004 saw a significant change in the working of the management of the Group M companies. The handing over process has actually been in the making over the last four months. It was in early May that the announcement was made that MindShare South Asia and Group M India CEO Andre Nair was being elevated as chairman and CEO of Mediaedge:cia (MEC) Asia Pacific. He, however, has not severed his links to India in that he remains the chairman of Group M India.
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Ashutosh Srivastava and Vikram Sakhuja
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The men in charge in India of WPP’s media investment arm are Ashutosh Srivastava – Group M South Asia CEO, Vikram Sakhuja – Mindshare South Asia and Mindshare Fulcrum MD and CVL Srinivas – Maxus MD.
Zenith Media also now a part of the Group M fraternity after its acquisition in some countries last year was renamed as Mediaedge:CIA Specialist units within the group being ATG, Broadmind and mOne will be headed by V Balasubramanium, M Suku and Tushar Vyas respectively.
Apart from that, specialised units peculiar to India delving into below-the-line (BTL) activities, micro marketing and film marketing are units called Dialect (micro marketing) and D’Mart (retail ambience), both of which were launched last year.
Group M today commands a significant share of what it estimates is a Rs 80 – 85 billion media market. So, clearly the challenge from 1 May 2004 was for the group to trace the map of the future business model. Expanding on the same Srivastava says, “The challenge from 1 May was to figure out the future business model because that’s pretty much what we have faced in mature markets like the US or Europe. We may not have great expertise in analytics or in sports sponsorship management but in India these are the nascent markets. Whereas media planning and buying is a very mature market especially for someone like us as we entered the market with a very large share of the business. So, the mandate was ‘how do we develop the business as we needed to build ourselves as a complete media solutions company.’”
The transition from a straightforward media buying agency to a one stop shop that Group M agencies have evolved into happened when they started pioneering talk about brand insight and consumer insight – terms that one usually hears only in creative agencies, says Sakhuja. “In fact some of the large pitches we have won this year are due to our adopting these strategies. Britannia for example, was a pitch with seven other agencies and what came through finally in the end as the biggest differentiator was that we didn’t go to them as a media agency; we went to them as a communications agency. Today a media plan – as to which channels and which programmes to have the spots on, is just one of the many outputs that we give our clients,” he stresses.
The areas that Group M agencies operate in on the planning side are as follows:
- What is the right budget?
- Who is the right target audience?
- Which market to prioritize?
- What is gong to be the role of different communication mediums – television, print, radio etc?
- How money spends will be divided across the 52 weeks of the year?
- What is going to be the channel mix?
“Therefore, what we do has a direct and quantifiable link to at least 10 per cent of our clients’ sales,” reiterates Srivastava.
New and key strategic business units (SBUs): Capacity building is essentially the key task at hand at Group M. “We have achieved whatever we wanted to in terms of creating a house of media proposition and capabilities over the last three years and now our aim is capacity building in each of those,” explains Srivastava. More people, more clients is primarily what the focus is going to be hereon.
Some of the best communication and ROI work has already happened in India in a big way, says Sakhuja. Two examples he cites Gillette and Frito Lays. The work that was done by ATG and MindShare is supposedly showcased to clients as global standards of excellence. It has also resulted in setting up of the Global Analytics Center with Balasubramanium heading it. Also, another point of note is that MindShare offices around the world have started backending their analytic work to India. A few examples in case are Gillette and Motorola. “This unit has been a tremendous success. This a classic BPO model with a value add; in the sense that we have a huge database and we can add our own perspective to the numbers. The same with Dialect, which was conceived here and has now began global operations,” says Sakhuja.
In the retail space Group M has come up with a work model called D’Mart and mOne, which focuses on understanding how channels work with consumers and therefore where, how and what the spends should be. mOne will cater to the Internet, mobile and offline space in an alliance with Active Media which will act as a technology partner to ensure building this platform across the country.
Broadmind, a specialist in non-traditional media solutions has progressed to dealing with almost every content provider in the country today. “A lot of group synergies already exist, so all we need are software and hardware solutions, which is what Active Media is bringing in. The property that we have taken up is 3636 which we are building as a property across the country,” says Srinivas.
The 3636 property will be incorporated in any communication that is done for clients. Publications like the ‘Dainik Jagran’ or ‘The Hindu’ will carry this number and if it is a response ad then will enable consumers to respond to that number and hence in the process create a database.
This year was marked as a landmark for content integration. Although, cinema per se has seen a lot of headway in this area, television seems to have been less receptive in adopting this phenomenon. “Sony’s Kunal Dasgupta, for instance, doesn’t believe in the concept of content integration, although his marketing team seems to be fighting tooth and nail to incorporate the same. Star India, on the other hand has commissioned a research with us in an attempt to figure out how to monetize this process and what should be the value ascribed to it,” says Srivastava. This market still is in its nascent stage and is a disorganized sector, which is currently in the process of ratification and an attempt to ascribe a value to the same is in the pipeline. Markets like Hong Kong, although have progressed to a rate card for services like these.
Key concerns at the media pad: One of the biggest challenges that the media industry seems to be facing today is the three per cent game. “If you take a FMCG company, they have a carrying and forwarding (C&F) agent who doesn’t take ownership of the stock and just pushes it to the go-downs and then forwards it to the stockists, charging three per cent is acceptable. But applying that same analogy to the media houses is ridiculous,” says Sakhuja.
Interestingly, the allegation across media agencies towards Group M was their slashing of rates when they made their foray in the Indian sub-continent. There definitely seems to be a realisation within the industry about their under priced commission rates. “We realized the rut from day one. It was the expediency of getting the company started as there was a lot of resistance towards us setting up. The focus initially was having to rate this game and that’s where all our energies went in the first two years,” says Sakhuja. The aim, now evidently seems to be a transition from being a C&F agent to a full fledged communications planning agency.
“It has to be over three per cent. There is a problem here, as all the other agencies that are coming in are undercutting,” gushes Sakhuja. Incidentally, this was exactly the game plan followed by Group M agencies when they entered the market.
“Our vision to get out of the rut will be aided by our tangible proof of reaping better returns from your marketing dollar or rupee from us. Secondly, this is a one stop shop, so as a mean average the best rate to be profitable is three and a half per cent. We do work at this rate across Asia Pacific. From three per cent (2.8 per cent is the actual mean) then it is just an increase of half a per cent but if you look at it holistically then it is an increase of 20 per cent,” points out Sakhuja.
Group M’s focus this year in moving forward will be making media real for decision makers and thereby get out of the 2 ? per cent – 3 per cent rut.
Holistically speaking, 2004 for the media industry has been essentially trying to raise the bar. On the other hand, this industry has failed to attract talent and is not being looked at as a great career option. “There is a limited amount of talent available today and hence a lot of ‘musical chairs’ are happening across agencies. One of the related benefits of the house of media is that we can actually give our staff career options and career plans unlike most other agencies where you have a burnout after seven – eight years. In our agency we have our SBUs where people can actually choose an alternate career after four five years in media. The specialist units that we have account for 90 per cent of home grown talent that we moved from the media space into the special units,” says Srinivas.
The primary reason for this talent paucity is media agencies not being able to offer good salaries at the entry level unlike corporates. “So, people tend to spend two or three years here and then move to a channel or a client’s marketing side. Also, we can’t afford too many people so the same person has to do much more work and the nature of grunt work is also quite high here,” adds Sakhuja.
Coming to key revenue drivers this year, telecom, services, automobiles and two wheelers seem to be rated as the aggressive players aiding in sizable growth of the overall industry. Print this year will see new entrants from retail, real estate, housing and education sectors. “Typically, print seems to be a precursor to television. Today the growth happening in print is at a very fragmented level basically due to local players. If some major players at the national level come in then we will probably see a much larger revenue jump,” says Sakhuja.
All in all, making media real and demystifying it making it more relevant for people is going to be the order of the day at Group M. Being the preferred marketing partners to clients and capacity building will ensure Group M’s further dominance and success ratio in days to come.
India’s early education sector is growing fast, making preschool franchises a profitable business option for new entrepreneurs. However, success depends heavily on clear budgeting and realistic financial planning in the first year. From initial setup costs to monthly expenses and expected revenue, every detail matters.
This guide breaks down the year 1 costs and explains how long it typically takes to reach break-even and start generating consistent profit.
Initial Investment Breakdown
The initial investment includes the key costs required to set up the centre and prepare it for admissions. For anyone evaluating a preschool franchise in Chennai, this breakdown helps explain where the money goes at the start and supports better financial planning during the launch stage.
Franchise Fee
The franchise fee is usually the first fixed outlay. It may include onboarding, training support, and access to the operating model. This amount should be separated from the premises budget, since it does not usually cover fit-outs, hiring, or local compliance.
Infrastructure Setup
Infrastructure setup often takes a major share of the budget. Interior work, child-safe flooring, washroom changes, classroom partitions, storage, and entry security can all affect the final figure. Costs may also vary depending on whether the property needs basic modification or a full fit-out.
Furniture & Equipment
This includes classroom seating, storage units, play materials, learning aids, outdoor play items, office furniture, and basic technology. A realistic estimate should separate essential purchases from items that can be added later, so the first-year budget stays more controlled.
Monthly Operating Costs
Monthly operating costs are the regular expenses needed to keep the centre running smoothly after launch. While reviewing the overall playgroups franchise cost, these recurring payments are important because they directly affect cash flow and the time taken to reach stable returns.
Rent
Rent is usually the most predictable recurring cost, but it can create pressure if occupancy grows slowly. A Year 1 plan should include security deposits, possible rent increases, and the risk of low enrolment in the early months.
Staff Salaries
Teacher salaries, helper wages, and administration support form the core of monthly expenditure. Payroll planning should consider the minimum staffing needed to run safely and consistently.
Utilities & Maintenance
Electricity, water, internet, cleaning supplies, repairs, sanitisation, and routine upkeep can add up throughout the year. A play school for young children must also plan for regular wear and tear. A small maintenance buffer can help cover these repeated costs.
Revenue Potential in Year 1
Revenue in the first year depends on how the centre earns from admissions and how quickly enrolment improves. A clear view of fee planning and student strength helps in understanding how soon the business may move towards operating balance.
Fee Structure
Revenue depends on how fees are structured across admission charges, tuition, activity components, and other school-related collections. It is equally important to map when payments are received, since cash flow timing can influence working capital during the first year.
Student Capacity
Student capacity plays a central role in the profit timeline. A centre may open with room for more children than it can initially enrol, so profitability often depends on how quickly seats are filled. Fixed costs begin immediately, while revenue builds gradually, which is why some centres reach monthly break-even earlier than others.
Conclusion
A good year-1 budget for a play school franchise should balance setup expenses, monthly commitments, and the likely pace of admissions. The key issue is not only the opening spend, but how long the centre can operate before enrolment supports recurring costs. When each cost item is mapped clearly, the profit timeline becomes easier to assess, and financial decisions become more measured from the outset.
