From the highs of 2015, when startups and young tech companies in India looked unstoppable, the year so far has been a series of bad news for the ecosystem. Much of this is largely emanating from available and easy funding drying up. As news headlines fill up with financial controllers being placed in companies to monitor spending or the rush to investment banks to get in monies or newer talent joining otherwise established brands or even the questioned valuation of some of the tech firms, it is evident that year 2016 will put startupland through the litmus test.
According to multi-asset alternative investment firm BainCapital, if the current pace continues, private equity investment in India will be 25 per cent lower this year compared to 2015 when deals worth a whopping $22.9 billion were recorded. In general, average deal sizes have dropped significantly, and that has turned the heat on companies. The first obvious fallout of this will be a cut in spends that are seen as ‘peripheral’.
Unfortunately, for some companies, advertising spends are in that category. Over time, the more mature marketers have understood that brand building is an investment, not a cost. A large number of startups are, however, not in that category yet. Among startups, it was largely the e-commerce players such as digital wallets or mobile solutions who were truly going out there to attract consumers that were not online or not transacting online.
For many industry observers, it is déjà vu of sorts. The post-Lehman era had seen the biggest spenders cut down on advertising budgets. The result was two-fold — marketers who made the best of the slowdown prospered and it saw the birth of newer forms of advertising demanding more bang for the buck. The current situation is different no doubt, but startups can take a lesson or two from the biggest recession of recent times.
Among everything else, now is the time to re-evaluate the spending medium of choice. Legacy media has taken lion’s share in India not only because it was seen safe but that is where the masses are, and it was the best way to bring in incremental audience. What can startups do now to ensure their brand building is not affected and they are able to manage this without overshooting allowed budgets?
The three possible answers are content, collaboration and marketing technology. I deliberately do not say advertising technology because that conversation ends on the programmatic route — effective but too technical. Marketing technology on the other hand, takes the conversation above just ad placement and buy. From three-lettered acronyms (CPM, RTB, DSP, DMP, bla bla), we are in two-lettered world — AI (artificial intelligence), VR (virtual reality) and AR (augmented reality). Too new, but if now is not the time to test it, then when? And these connect back to content. Because where advertising stops, content continues.
The likes of HUL and P&G among others have established that brands need to be part of an ongoing conversation, and be part of something that moves people. The need is not super-jingle, high frequency ad; it is to identify a cause to connect with. And in times like these, the best way to do it is with other like-minded partners.
The best thing about being a technology-led brand is that it has the capacity to embrace, and to come together in ways that competing brands lose out on. The question now is, who will make the first move and be a trendsetter, again?
