Monthly Archives: March 2010

ibibo, the anti-thesis of social media marketing

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They have been all over TV for the last 2 months, but if you missed them for some reason, watch them here before you read on: ibibo ad #1, ibibo ad #2

ibibo_300



Notice something strange – its an internet company, that too a social network using a mass media platform to advertise, huh. I wonder who is running their marketing, but whatever they are doing goes completely counter to the concept ( of social networking ) that they are selling.



So whats wrong here – a couple of things:

1) Mass Media = Old Media. This is the age of sending specific, targeted messages to people who are interested in listening to them, not blasting people with messages they don’t want to hear. Imagine a joint family watching a movie and one of these ads shows up in the interval – how many of them are the real target audience?

2) Mass Media is for branding. Mass Media is used by companies that want to build brands, like HUL or P & G, who want you to remember the name of their soap so that you pick it over others in the shopping mall. Using a Mass Media approach for intent driven advertising has all signs of failure.

3) Mass Media is costly. Every time your ad runs on TV, it sets you back by a few lacs at least. For a company that is offering a free service, that can be a huge setback in the balance sheet and will make it extremely hard for them to become profitable. Yes, they may get some users, but how long can they sustain by pooling in money from their other businesses.

4) To top it all, the concept of social gaming has been copied from facebook, which is not only going strong globally, but also making inroads into the Indian market. Plus, they have an extremely viral strategy going for them which means that everyone that is on ibibo is probably also on facebook. Which of them is going to stick – the answer seems obvious.

5) Finally, you need to scream when your product doesn’t speak for itself. I haven’t used ibibo games, but my guess is that they don’t have a good product out there which is why they need to burn so much money in marketing to get noticed. Good products, especially the ones that are social, spread quickly through word of mouth ( or mouse ).

What they should do? Here is my advice:

1) Come up with a unique product concept, think about something that has a local zing to it, something that facebook is not going to do. So when you copy farmville, you have direct competition from facebook, but if you choose to do something around IPL for instance, that is something that the nation is already crazy about and can ensure visibility for the product from the word go.

2) Stop burning money in Mass Media for God’s sake. That is for companies that sell soap, not for internet social networks. Instead, spend more time planning an internet strategy that would spread the word – a bit of adwords, a bit of SEO and lots of social media could be the perfect mix.

3) Most importantly, focus on building virality inside the service itself. This is an intensive process and requires depth in product management to pull off. But if you have the money, why not get some good guys who can figure it out and turn the service into one where every new user brings in 10 of his/her friends rather than wasting that money in Mass Media.

4) Specifically regarding social gaming, a neat thing to do would be to have a strategy that lets other sites embed games inside them. That opens up avenues for partnership and several distribution channels which will spread the word far and wide with very little cost.

What is your opinion about their strategy? Any solutions you would like to propose?

VC Circle Bengaluru Investment Forum

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This week, I was invited by VC Circle to be a part of the panel discussion on “Bengaluru’s Ver 2.0 Technology Story” in the VC Circle BengaluruInvestment Forum.

panel-discussion

The discussion was themed around how the technology story of companies in Bangalore is in a next generation transition and was ably chaired by Jessie Paul. Other eminent members in the panel were Sanjay Nayak of Tejas Networks, Sean Blagsvedt of Babajob, Manohar Atreya of o3 Capital and Sunil Maheshwari of Mango Technologies.

The discussion started with Jessie doing a recap on the formation of software services industry in India as a result of globalization and posing a few questions to the panelists.

Sanjay, who has raised 5 rounds of private financing till now added that companies in the west are more focussed on marketing and adoption of products whereas companies in India are more focussed on building great technology. He emphasized that technology does not build great companies, great marketing does. He also stressed the need of participation by the government to help take the sector to the next level and push India into the reckoning as the hub for software products.

Sean emphasized on the fact that while the services industry was timely and was responsible for creation of a lot of jobs in the market, it has not done anything for the masses. Until we setup an infrastructure where it is easier for entrepreneurs to come in and create companies out of India, we cannot move to the next level. He also stressed that the current venture funding setup seems to work in the west but may not be suitable for India where a lot of companies can benefit from a small amount of capital vs a few companies benefiting from a large amount of capital.

Sunil added that companies that do not wait for the next game changing opportunity to become obvious and drive change will be the ones that will be successful. He cited the example of iPhone which was conceptualized by Apple with zero experience in mobile device area – the product has been extensively copied by competitors but no one has been able to dislodge Apple from the slot it has occupied.

Manohar gave his perspective on the venture business where he said that venture funds are in the game to make money and hence they remain extremely choosy about their investments. He also pointed to the fact that venture industry in US started in early 70s whereas the one in India started in 90s – as a result, the industry is still in its learning phase and will take some time to mature. He advised entrepreneurs to be patient, persistent and remain passionate about the idea and be prepared to slog it out for a year and a half to receive capital for their venture.

For my part, I added that to build a successful business, you need to have a combination of Market + Idea + Capital. With the mobile phone market exploding in the past few years, this creates a lot of users and plenty of opportunity for new business to use it as a channel to enable their services. In 2000, a similar proliferation of web services led to the dot com bubble, but the market seems to have learnt from it and the investment in mobile companies, though growing at an encouraging pace is not yet showing the signs of a bubble.

The salient points from the discussion were summarized by Jessie and followed up with questions from the audience. Overall, it was great connecting with the fellow panelists and I had a good time in the panel and overall at the VC Circle conference.