In an exclusive interaction with Finance Outlook India, CA Chetan Borkar, Chief Financial Officer of Madison World—India's largest and the world's fourth-largest communications agency—shares his perspectives on navigating the complex financial landscape of the media and advertising industry. He discusses how media agencies can build sustainable growth by balancing operational efficiency with creative excellence, while implementing robust financial controls that drive profitability without compromising service quality. A Chartered Accountant from the 1997 batch with over 28 years of experience in finance, accounting, and legal domains, including 23 years dedicated to the advertising and media sector, Chetan Borkar brings deep expertise in financial leadership across multiple economic cycles. At Madison World, he has been instrumental in implementing financial systems and processes that enable disciplined growth while maintaining the agility required in this dynamic industry.
How does the media industry's revenue model make it particularly vulnerable to economic fluctuations, and what strategies help mitigate this volatility?
The media agency landscape is essentially reliant on how advertisers are spending, and as such it is directly susceptible to the economic swings. The advertising budgets are usually the first to be trimmed down when the economic climate becomes poor or when the consumer mood is suffering. It is a short-term jump reaction on the part of advertisers who are attempting to demonstrate short-term profitability and safeguard share values, which is counterproductive as advertising results in brand recognition and demand. Media agencies have a critical problem since our revenue is based on a commission formula, so that when an advertiser spends 100 rupee and we make 3 to 5 rupee, when they spend 80 rupee, our revenue will fall accordingly. However, our cost structure cannot adjust with the same flexibility.Our cost of human resource alone is normally 50 to 60 percent with infrastructure consuming an additional 20 percent. You cannot morally inform employees that their wages will be cut by 20 percent this month due to the low client spending. This poses a sustainability issue that needs to be handled carefully with regards to short-term strain as well as long-term planning to survive the economic shocks.
What are the major financial challenges media companies face when scaling operations rapidly?
The biggest challenge in scaling is maintaining profitability while growing revenue. It is easy to say we want to grow 100 rupees to 500 rupees in revenue but keeping salary costs the same at 60 percent that would result in 300 rupees in salary costs at 500 rupees revenue- which would be a waste of growth. The trick it is to have it so that as we increase and reach 500 rupees, the salary expenses decrease to maybe 250 rupees as a proportion of revenue. This demands the development of operational efficiencies by multitasking processes, process enhancement, and employee capability enhancement. When you train people well and optimize processes, tasks that required eight hours can be completed in six hours, freeing capacity for additional work. It is similar to knowing the path between where you are to where you want to go, the first time is more laborious but after experience and knowledge you are more effective. The issue is how to attain this efficiency gain without reducing the quality of the services or the satisfaction of the employees. It is important to optimize costs in line with revenues. I do not necessarily mean cost control at any cost, but cost optimization, which is the ability to get the structure of our expenses to flex according to the increase and decrease of revenues and retain the capability to serve our clients effectively.
How important is budgeting and forecasting to ensure optimal financial discipline in today's competitive media market?
Budgeting is absolutely critical. Regardless of your calendar year basis or a fiscal year basis, you have to begin planning two or three months before year-end. You need to make a projection of your revenue next year and, accordingly, estimate on your salary expenses, overhead expenses, and the desired profitability. However, the budgeting process is not a one- time task it is also vital to oversee the budget all through the year. By the end of every month when you have some actual revenue, cost and profit, you must evaluate the implication of that on the remaining months. Are you on track? In case revenues are not coming in, what should be changed? When there is a growth on revenue, then that is great, however you need to know whether it will mean that you will need an increase in the cost or that you can attain better profits using the current cost structure. The point is not to maximize the margins at the cost of customer service level. Budgeting gives the map but proactive monitoring supplies the steering wheel. The absence of either will put you in effect in a competitive market that is already slim-margin by nature and that client relationship is the key to long-term success.
What strategies help balance short-term ad revenue targets with long-term business sustainability?
The profitability in the short term is the most important objective we should attain first- we should meet our annual financial targets to stay afloat. But it is the customer relationship that will make the difference in terms of long term sustainability. Customers are the revenue drivers and hence we must have a strategic approach towards every client that we serve. Failure to derive value in what I am selling to them would mean the end of the relationship and this would pose serious risks to my organization. On a long-term scale, we need to make sure that our customer grows so that we can grow with them, a win-win situation where both parties are mutually benefiting. This is a positive loop, as clients expand, the agency expands with them, the industry as a whole is also benefitted and so is the economy at large. The short-term profitability keeps us alive and viable today, whereas the long-term customer focus is what ensures us that there are the relationships and reputation to be profitable tomorrow.
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How can financial discipline be built within creative and sales departments that naturally focus on their core competencies rather than financial metrics?
This is very difficult, but not impossible. I'm currently with my fifth agency, having worked across various sectors—Out of home, CRM and loyalty, advertising, and media agencies. Financial discipline does not come naturally to non-finance people, so building it requires two fundamental approaches. First, training is essential, but even more important is hiring the right people from the start. Not everyone is suited to working in a financially disciplined environment. You need to hire people in non-financial roles who understand the business but also have the aptitude and willingness to track finances and follow processes. Second, you must establish systems and processes that guide behavior—essentially idiot-proofing your operations.
For example, you can't start work on a client unless there's a signed contract. You can't issue a purchase order to a vendor unless the client is registered in your system. You can't register a client in your system without a signed contract. These systematic controls create guardrails. If you receive a media release request for a client, that client must be registered, and registration requires documentation. Once work is completed, it's critical to bill the client promptly. After billing, it's essential to collect those receivables, because you need that money to pay your vendors on time, which ensures they'll continue providing quality service.
This entire cycle—from contract to delivery to billing to collection to vendor payment—must be systematically managed. This doesn't come naturally even to some finance professionals. Many accountants know how to make accounting entries and produce balance sheets, but transitioning from accountant to finance leader requires understanding cash flow management, working capital optimization, and strategic financial planning—skills that benefit both finance professionals and business leaders across the organization.
How do you see technology shaping financial discipline in the media industry over the next five years?
Technology is absolutely critical because it should enable people to do the right things while preventing them from doing the wrong things. As I mentioned, having a signed contract should be mandatory before starting work, and the system should enforce this—not rely on people remembering to follow the rule. If client payment hasn't been received, the system should prevent vendor payment. These are financial discipline fundamentals, but human beings naturally think, "What if I just do this small thing now and tell my boss later?" That approach doesn't work because ultimately the organization suffers.
Everyone should work in a manner where the organization benefits and grows, because when the organization grows, we all benefit. Error is human, which is exactly why we need technology to prevent those errors. You should design your systems based on understanding where your employees are likely to make mistakes, and then use technology to eliminate those opportunities. For example, in our industry, if I don't collect a rupee from the client, I shouldn't pay 95 paisa to the publisher. How do I control this? The publisher payment simply doesn't get triggered in the system until client collection is recorded. That's a technological intervention built into the financial software. This is how technology helps build a better organization with stronger controls, better cash flow management, and ultimately greater sustainability.
Over the next five years, as technology becomes more sophisticated with AI and advanced analytics, the opportunities to embed financial discipline into daily operations will only expand, making it easier for creative and business teams to focus on what they do best while the systems handle the financial guardrails.
