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Exclusive Interview with Vivek Bhargava, CEO of Communicate2 - On the Synergy between Aegis Media & Communicate2
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Aegis Media had recently acquired stakes in SEM Firm Communicate2, which would help Aegis to add search engine marketing capability to its media planning arm Carat in the country and launch Isobar as a digital marketing solution for the Indian market. 
There have been a lot of speculations regarding the nature of the deal and how Isobar could be used in tendem with Carat. So, WATBlog decided to go ahead and get the inside story from the man himself, Mr. Vivek Bhargava, CEO, Commnicate2.
WATBlog : Has there been any other company offering for a partnership, other than Aegis? If yes, then what made you choose Aegis over the rest?
Mr. Bhargava : Search Marketing has become 55% of global online advertising spend. Communicate 2 has 150 plus people team all focused on Search Marketing and therefore we got the opportunity to talk to most of the large media groups as well as some of the independent digital networks.
About 12 months ago we decided to focus on a strategic partner rather than private equity as technology and best practices to us are more important than capital. Over the last twelve months, we were able to meet multiple people from different global networks. I must have spent several hundred man hours understanding technology, people, processes, strategy of each of the prospective partners.
Choosing Aegis over others was more of subjective factors rather than objective ones. Culturally, we have a great fit with Aegis – Aegis is a network of great entrepreneurs rather than great professionals. The concept of Isobar is quite unique– Isobar does not rename the companies it acquires but just adds “linked by Isobar” to the name of the company. The concept of a digital strategy hub called Isobar supported by spoke kind multiple agencies who dominate their precise digital disciplines such as “paid search” allows Aegis to get a competitive edge over networks that don’t have a hub and spoke approach. As an entrepreneur one has a gut feel about any strategy, I believe that Isobar strategy seems more relevant to the digital domain.
Aegis Media is the only group in the world where nearly 30% of their revenues comes from digital endeavors making Isobar as the world’s largest digital network. This also demonstrates their seriousness about their focus on digital. One other thing that helped us choosing Aegis is that it is the only large groups that does not have a creative agency in the non-digital sector. We believe that If a network has large creative agencies in the ATL sector, those networks may find it more difficult migrating to performance-oriented ROI-based mediums.
WATBlog : Could you elaborate a little on the nature of the agreement with Aegis? What are your plans regarding the integration of Carat & Isobar?
Mr. Bhargava : Isobar has always acquired 100% of the isobar network companies. India and Communicate 2 seem to be the only exception where they have taken a strategic stake rather than a 100% acquisition. We believe that the Indian Digital Market is going to explode over the next three to five years, thus the only way to create maximum value for the current stakeholders of Communicate 2 was by working with a partner in creating the leading digital network in India rather than selling out today. (even though Bahamas Beach looked quite inviting. *smile*)
India is an important market for Aegis, thus we have already initiated building the Isobar Hub in India. Aegis Media has aggressive investment plans in India, and digital would be key components of those investments.
Isobar works very closely with Carat in all the global markets, the same will be replicated in India. Carat has many clients that need digital solutions, Isobar with its presence in India now shall be in a position to deliver the same.
WATBlog : What, according to you, is the growth potential of SEM in India?
Mr. Bhargava : SEM was a USD 100 million market 5 years ago, today, globally it has become a USD 14 billion plus market. This astronomical growth is due to two factors, the ability of the medium to display ads to the people who are searching for specific products or services and charge advertisers only if the user clicks on the advertisement.
In most emerging markets including India, this attribute of the medium is even more important. In most developed companies are in mature stages of their advertising / marketing initiates. They have understood how to use ATL mediums to create user engagement and appropriate branding for their brands. In the emerging markets, most companies are looking at Advertising to have a direct relationship to Sales, they are looking at mediums that are measurable, they are looking at mediums that can be paused if they are not delivering results. All these factors makes SEM a preferred medium. I believe that SEM will grow faster in all the emerging markets of the world.
WATBLOG : Do you plan to go beyond SEM and offer other services as well?
Mr. Bhargava : We believe that we are in Contextual Advertising. At this moment, only SEM is truly contextual. Contextual for me means a combination of factors, identifying the target audience, understanding their intent, having a flexible pricing and the ability of changing the creative as per the changes in any of these factors. Most mediums are becoming contextual – Communicate 2 will surely enter any medium that becomes contextual. In a nutshell, we are medium agnostic, if television becomes contextual, we don’t see why we would not be creating advertising for television.
WATBlog : How do you think will the deal benefit both the companies?
Mr. Bhargava : Yes, but it would benefit our current clients even more. Most of our current clients need to exponentially increase their spend at fixed costs, I-seba is probably the best bid management tool in the world. We are quite excited of making the same available to our Indian clients very soon.
WATBlog :ZenithOptimedia claims the search market to be just 92 crores What is your take on this estimate?
Mr. Bhargava : I believe that this estimate is quite inaccurate, if SEM is 55 % of total online digital advertising market place worldwide, I believe that SEM in India will surely grow to much more than 55 % of the total digital marketing market in India. Many of our clients are already spending more than 55 % of their budgets on Search, I expect that percentage to grow in India as well as globally.
WATBlog : Do you see a consolidation phase, that is, big international players acquiring home grown Indian players in the Indian advertising space?
Mr. Bhargava : I believe that consolidation will happen. The consolidation will not be only global companies taking over home grown players but also digital companies taking over non-digital players — as most mediums become dynamically priced, measurable and contextual. Companies like Communicate 2 that are building the above skill sets across their entire team will automatically get a competitive advantage in the new contextual ATL mediums. This transition of ATL mediums becoming contextual may trigger a new wave of consolidation, hopefully Communicate 2 shall be able to use that to its advantage.
Well, we just wish he had replied to our query on the percentage of stake that Aegis acquired in Communicate2 :-P. Anyways, WATBlog wishes Aegis Media and Communicate2 a “Happy Marriage” 
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