Bates says it has not decided its precise investment in Clarion. Clarion is wholly owned by employees at the Calcutta-based shop, which recorded estimated billings of $17m in the year to March 31, 1997. It will be the second Cordiant shop to operate in India.
The alignment also severs Bates' ties with Contract Advertising, Bombay, a J. Walter Thompson Co. shop that handled on its behalf local media buying for Bates client B.A.T Industries' State Express 555 and Benson & Hedges cigarette brands.
"Our agreement of intent with Clarion will give Bates excellent representation in India," says Bates Worldwide Chairman-CEO Michael Bungey in a statement. "We see this as a very sound investment for our clients."
The Clarion link-up will be Bates' first financial commitment to South Asia. G.H. Thaver & Co. (Bates) in Karachi, Pakistan, and Bates Strategic Alliance, Colombo, Sri Lanka, are two non-equity affiliates in the region.
Bates and Clarion, however, haven't applied to the Indian government for joint venture approval. The government's reluctance to clear advertising or media alliances with foreign partners until a new broadcasting law is drafted has introduced an element of caution among potential applicants.
DDB Needham Worldwide was reportedly recently refused permission to raise its 10% interest in Mudra Communications, Ahmedabad, Gujarat, to 74%. A senior executive at Mudra, India's fourth largest agency, says the agency only sought permission to sell 74% in the future and its application did not refer particularly to DDB.
Bates, whose 1996 global billings were up 8% to $5bn and whose income grew by 8.6% to $611m in the same year, follows sister agency Saatchi & Saatchi Advertising Worldwide, London, into India. Saatchi took 10% in Bombay-based Sista's a few years ago, creating Sista Saatchi & Saatchi, currently India's 15th largest agency with 1996 billings of $22.6m.
Bates was not the only agency interested in the 41-year-old Clarion, however. Other potential suitors included Trikaya Grey Advertising and McCann-Erickson India, which was keen to add a third agency to its Indian portfolio. Once an affiliate of McCann-Erickson Worldwide, Clarion handled Coca-Cola in the years before the soft drinks marketer left India in 1977. Long plagued by employee and management tussles, Clarion hopes to end fiscal 1997-98 with billings of $28m.
Key Clarion clients include Berger Paints, Essar, Carrier Aircon, Tata Consultancy Services and ITC Ltd., India's largest cigarette marketer owned 31.7% by Britain's B.A.T.
Copyright August 1997, Crain Communications Inc.