While the first wave of premedia agency adoption leveraged the decoupling of production from creative and the centralization of print implementation with specialist ‘production’ agencies, the second wave focuses on global scale execution.

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dj@intermediaglobal.com
MEDIA & COMMUNICATIONS INDUSTRY THOUGHT LEADERSHIP
DJ BALODI July 2013
Copyrights Intermedia Global, 2013
TheTransformed
GraphicsSupplyChain
Premedia Agencies:
The Second Wave.
MEDIA & COMMUNICATIONS INDUSTRY THOUGHT LEADERSHIP
INTERMEDIA
GLOBAL

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AUTHOR’S NOTE:
The Graphics Supply Chain includes all businesses involved in the creation, production and implementation
of visual graphic communications in the print and electronic media as well as all ‘enabling’ businesses such
as technology, consulting and logistics that help in the automation of processes and exchange of data across
the supply chain.
“The Transformed Graphics Supply Chain” series of though leadership articles aim to capture the
sweeping changes across the media and communications industry. Further, they seek to analyze the
viability of traditional business models in this changing industry landscape and propose new thinking.
Your opinions are welcome.
DHANANJAY BALODI
dj@intermediaglobal.com
T: +91 (0) 98923 23661
www.intermediaglobal.com
AUTHOR BIOGRAPHY:
Dhananjay Balodi (DJ) is a Mumbai, India based management consultant
and entrepreneur with over a decade of experience in setting up and managing
businesses in the media services, publishing and graphic arts industry.
DJ currently serves as a management associate & board advisor to Encept
Premedia - the US $ 550 mln. Enpee Group’s packaging premedia services
venture.
Previously, DJ was core member of a global leadership team involved in the strategy, design,
development and market launch of Eastman Kodak’s “Managed Media Services” - Kodak’s
foray into the enterprise services business focused on print & multi-channel marketing
management. DJ was earlier, Managing Partner in a joint venture with a large, Indian pre-press
company where he led the business’ efforts at transitioning into an offshore premedia supplier
for the global packaging, advertising and magazine publishing markets. In October 2008, DJ
was invited to be panelist at the US FTAA’s (Flexographic Technical Trade Association) annual
conference to speak on “Premedia Offshoring” for the packaging graphics market.
DJ also runs Intermedia Global – a b2b marketing and communications consultancy focused on
helping businesses maximize value from their marketing and branding programs.
He can be reached on email (dj@intermediaglobal.com) or by phone at +91 98923 23661.
Cover photo sourced from photolibrary.com and used for illustration purposes only.

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remedia agency businesses focused on the packaging and print
advertising markets derive their raison d’être from three fundamental
values they deliver to brand owners:
• Cost rationalization - from centralized graphics production &
print implementation.
• Quality standardization – assuring brand integrity in print.
• Faster time-to-market – rapid implementation capability
for brands.
Across evolved markets – North America, UK, Western Europe, & ANZ – home to the
largest global brands - multi-brand consumer products companies have benefited
from engaging specialist premedia agencies. These premedia agencies have
successfully combined deep-domain print expertise with IT-enabled services to
manage the complexities of brand implementation and deliver economic value. Core
to the premedia agency value proposition has been their ability to enable decoupling
of production from creative agencies & centralization of execution. This strategy of
decoupling and centralization has however, outlasted its economic value with the
law of diminishing returns playing out.
Premedia Agencies: The Second Wave of Evolution
As brands become more global and sharpen their focus on future and emerging
markets, service providers involved in brand implementation and execution need
to keep pace with their clients’ new priorities. Growing market maturity and
intensifying competition even in the new markets means that brands can ill afford
to ignore the value of standardizing product packaging and brand identity globally.
So while the first wave of premedia agency adoption leveraged the decoupling
of production from creative and the centralization of print implementation with
specialist ‘production’ agencies, the second wave focuses on global scale execution.
P
The ability to not
only meet brand
owners’ needs
for local market
fulfillment but also,
across multiple
markets and time
zones, is becoming
essential to retain
and grow business.
FIRST WAVE SECOND WAVE
Business Value
Proposition
Capabilities Focus
Delivery Focus
Services Footprint
• Decoupling production
from creative agencies
• Centralized brand
implementation agency
• Graphics technical knowhow
& print domain expertise
• Print quality
• Costs
• Country/ Regional
• Global execution
• Multi-timezone, multi-lingual
service delivery
• Information Technology
& global delivery models
• Packaging standardization
• Rapid, multi-market launch
• Multi-region/ Global

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This shift - playing out over the last 3-5 years - is being driven by brand owners’
need to look at consolidation and rationalization of premedia service providers
across multiple markets. In the second wave, the ability to manage execution acoss
geographies and time zones, is becoming an essential capability for premedia
agencies to retain and grow business.
Fortunately, maturity in information technologies and established operating models
for remote service delivery offer a ready path forward for premedia agencies. Many
new age implementation agencies have emerged over the last decade that have
their DNA founded on this vision of a global execution capability. This is particularly
evident in the advertising premedia market. Agencies such as TAG (now part of
Williams Lea), Hogarth, Redworks (Ogilvy), Deliver (WPP) and Craft Worldwide
(McCann) among others represent this new breed. Within the packaging premedia
industry, players like Schawk & Sun Branding (Gilchrist) have led this change.
Services Globalization: The Larger Trend
Today, services globalization has become mainstream across industry verticals.
Many of the larger global corporations have been leveraging this by focusing on
building “shared services capabilities” i.e. consolidation of business processes and
functions and execution from global locations that deliver best value. Food major
General Mills’ Global Business Services (GBS) for instance, is a case in point. Its
GBS unit provides business support services to the company’s worldwide locations
out of India. Yet another example is Tesco’s Hindustan Service Centre (HSC) - the
operations and technology centre for Tesco worldwide based in Bangalore.
But the larger trend that has more long-term significance for premedia agencies,
stems from the fact that low cost countries (LCCs) such as India are no longer just
the backend providing cheaper labour but the new frontend market itself. This trend
has accelerated over the last decade with the BRIC (Brazil, Russia, India & China)
economies leading the way. A 2008 McKinsey & Co report titled “The Great Indian
Bazaar” suggests that by the year 2015, India is set to be a US$ 450 bln retail market.
In 2008, Italy was at US$ 462 bln and Brazil at US$ 258. It goes on to add that
organized retail in India is estimated to be 14-18% of total retail (5% of market in
2008) and will cater to 300 mln shoppers – about the size of US’ population!
A Wake Up Call?
For global brands, these are trends that are hard to ignore. A fact, that can’t be
lost on premedia agencies servicing them either. For instance, Unilever – amongst
the most sought after client for premedia agencies across markets – is already
rationalizing its premedia vendor base from over 200 suppliers globally to around
a dozen. The critical filtering criteria; agencies with service coverage in at least 2
regions worldwide. Agencies without the ability to service Unilever’s brands on
a larger geographic market footprint, simply lose out. Much the same is likely to
happen with other major brand owners over the next few years. For premedia
agencies, this must surely be a huge wake up call.
A practical way
forward is to work
with qualified
partners in low-cost
countries that can
set-up and manage
dedicated studios
that extend service
coverage into new
time zones and
markets.

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The core DNA
of the premedia
agency business
is already shifting
from “technical
and print-domain
knowledge” to
“global delivery
management &
technological
knowhow”.
A Way Forward
Not all premedia agencies however, have the warewithal to set up shop in offshore
locations. A practical way forward is to work with qualified partners in low-cost
countries that can set-up and manage dedicated studios that extend service
coverage into new time zones and markets. Over the years, India has emerged as the
best option for establishing such a capability. India’s success as the destination of
choice is propelled by several factors that work to its advantage.
Source: A.T.Kearney Global Services Location Index, 2011

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Clearly, the second wave of evolution is here. The capability to embed a global
delivery model that addresses brand owners’ needs to further rationalize costs,
enable synchronized global product launches and standardize quality across
markets is becoming critical for premedia service providers. Indeed, the core
DNA of the premedia agency business is shifting from “technical and print-domain
knowledge” to “global delivery management & information technology knowhow”.
To realize this global delivery strategy, setting up managed delivery centres in places
like India is an undeniable and real business necessity. While conventional wisdom
suggests that companies leverage offshore production out of India purely for labour
cost arbitrage, the real value stems from its relevance to core business strategy i.e.
staying competitive.
Copyrights Intermedia Global, 2013