Talking Heads with Pinstorm's Mahesh Murthy

Durgesh Gupta - Televisionpoint.com | Mumbai

Mahesh Murthy

Pinstorm Technologies, set up in 2004 by Passionfund's Mahesh Murthy who's currently its chief executive officer, was perhaps the only pure-play search engine marketing firm since inception.

The impetus for SEM came around in 2004, with individual investors from eBay, Cisco and Intel backing his venture, but the investors own barely 5 per cent of the company.

What is the inception story of Pinstorm ?
I have been in the media business since 1984, but over time I saw advertising break up and got two separate ways into a brokerage business and a consulting business. After 15 years in this business, I realised that because you never got paid for your good work, you could never get rich.

In 2004, I started Pinstorm in a 550 square foot office with one person, and we proudly declared ourselves the first pay-for-performance advertising firm in the world. We did something truly crazy - we didn't charge a retainer, we didn't charge for creative, we didn't charge a media commission - in fact, we paid for media from our own pockets - but we put it all together - and charged the clients on the basis of the results our campaigns delivered.

Our clients were curious at first. When they saw results coming in, our business grew as theirs grew. In fact, once we moved them to this model, they didn't question us on the creatives or the media plans - but only on the results.

Who are your biggest competitors today ?
We have a few types of competition. After we started offering performance advertising, we have helped change the market in India - today over 65 per cent of the digital ad market in India is performance-driven and we are the leading player.

Many independent digital agencies had to change their models to match our offering. So there are a couple of smaller performance ad firms, who copy our every move. We keep a close eye on them.

That apart, we have the digital arms of the big ad agencies. We are not so worried about them, because they don't have the flexibility, the technology and the approach we have to delivering results to the client - but they are good at client service.

Moving ahead, do you feel that social networks are better for branding ?
Social networks are not useful for ROI based advertising and relatively they are better for brand awareness advertising. Unlike search, where people go to a site like Google or Yahoo to click away and go somewhere else, social networks are impressive and users tend not to click on ads here.

So don't expect a high click-through rate on ads on social networks, which can hence be better used for general demographically or behaviorally targeted brand messaging.

What pros and cons do you see for advertisers on social networks ?
Social networks are a double-edged sword for advertisers. On the one hand, they offer large numbers of prime young audiences with high purchasing power, who spend a lot of time online.

While typical viewership of a TV programme might be in the 10-15 minute range, the successful networks are used for 3 to 5 times as much. And the audience is more urban, more influential and more amenable to new brand messaging.

On the other hand, the very popularity of social networks can be the problem – people are going there not to see ads or click on them – or even to get entertained, like they go to a TV channel. They are going there to connect with friends, acquaintances, lovers and the like.

So, they're not exactly in a mood to welcome brand messaging and you run the risk of somewhat becoming wallpaper on Orkut or Facebook. But then again, most advertising on television has a similar fate.

What kind of brand is benefited the most on social networks ?
Social networks will be happy hunting grounds for brands which have a core focus around the urban young between 18 and 35 years, with high disposable incomes, and who are trend-setters by nature.

In addition, there are also vertically specialised social networks like LinkedIn, Xing and such. We use these for B2B advertising, where advertisers like large consultancies, IT/ITES companies, can be run very well.

Do you think the only factor attracting online advertising in this recessionary time is the cost ?
Well in these recessionary times, the choice that marketers are making is between brand awareness and response generation advertising. And the former is losing ground to the latter. So the big gainer is actually response - generation advertising online – publishers like Google and others who offer pay-per-click or pay-for-result solutions.

The media losing business across the board is awareness media. I can only imagine that social networks are losing out as much as television channels are. After this down phase is over, I predict a strong growth in online awareness ad options, including social networks.

What are the factors that advertisers should keep in mind while deciding on social networks ?
Most importantly, who are you talking to ? Depending on which social networks you choose, you can target by age, sex, location – or even by interest, keyword or forum.

So you have both demographic and behavioural axes to make a media pick on. Use both. After this, realise that people aren't coming there to click on your ads. Do not harbour hopes of high click through rates.

Further, if you want to engage audiences, you have to try harder than just doing a flat banner ad. Try interactivity, humour, fun – remember you have to make it more compelling content than what your friends are saying to you online.