Over the last three years, Pinstorm, a Mumbai-based full service interactive agency, its founder Mahesh Murthy claims, has been approached by two large advertising networks at least seven times: by giant WPP thrice and Publicis Groupe’s Starcom twice, among others. And all the seven times, 42-year-old Murthy claims, he’s had to say no. Why? He’s got plans of his own. Pinstorm is expected to log Rs 25 crore in revenues during 2007-08, but “we will be three times this next year and would be qualified to be among the top five mainline agencies by billing,” promises Murthy, who runs angel and VC funds called Passionfund and Seedfund, respectively.
If self-funded digital agencies like Pinstorm can afford to thumb their nose at global advertising giants it’s because they are in a sweet spot that the latter desperately want to squeeze into. Internet advertising, already a $15-billion industry in the US, is set to explode in India. According to a recent Lintas Media Report, internet advertising stood at Rs 215 crore last year (a 43 per cent growth over the previous year), but industry watchers say that it could grow more than ten-fold (to Rs 2,500 crore) by 2011. In fact, GroupM, the media buying arm of WPP, predicts that by 2010, most other forms of media will either barely maintain or start ceding ground to the online medium, besides radio.
The digital landscape
Communicate2, Webchutney, which prefer to call itself a full-service interactive consultancy, Connecturf (launched in 2000 by V. Ramani), Regalix and Interactive Avenues (promoted by former Mediaturf executive, Ratish Nair) are some fullservice agencies. “We are a marketing services firm with focus on online and do everything from placing ads to generating market intelligence,” says Nimish Vohra, country head, Regalix.
Then, of course, these are the ad aggregators or networks such as Komli and Ozone. Founded by 31-year-old Amar Goel, Komli is just over a year old and offers advertising products for the online market in India. “Our ad network uses technology to aggregate advertisers and online publisher and helps them match effectively. We are already serving a billion ad impressions every month,” boasts Goel.
Mobile2win, mGinger, and Webchutney are some other players in this space that have received VC investment (fresh or follow on).
Way to go
Despite the hubbub in online marketing and advertising, it’s early days in terms of business models. Take SMS advertising, for example. Most of the companies here are “push-based” (that is, they still need to be shoved to consumers rather than consumers ‘pulling’ such ads).
Therefore, “it’s too early to say if this model will be the dominant model or not,” says Alok Mittal, MD, Canaan Partners. “I feel most of the companies (in this space) do not have a scalable business model, but there’s no denying that there’s a lot of interest in the Indian market,” adds Ganesh Rengaswamy of Greylock Partners, who co-founded Travelguru and is going back to being an entrepreneur.
In fact, some of these players aren’t looking to get acquired at all. Ybrant.com, which owns a clutch of digital marketing firms, has filed for an IPO, and Pinstorm plans to make acquisitions of its own. “I believe we can build a bigger business and we are among the very few digital agencies that can be called Indian MNCs,” says Murthy a bit dramatically. And surely it’s the promise of growth that is driving every other player in this business.
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