Networking Capital: Social media now crucial to India Inc

The Economic Times,

Networking CapitalSo , you’ve connected with long-lost friends and made tonnes of new ones via social media; you’ve hired a few people via professional networking sites; and you’ve even used such digital media to promote your business virtually for free. But beyond the buzz has social networking bumped up your bottom line? It can do that, too. Meet Kamesh Ramamoorthy , Chief Operating Officer, Ramco Systems . For most of its 19 years since inception, the Chennai-based provider of business software has been reeling in losses – except for the past two years.

The turnaround has been sharper in the past two quarters (October to December 2010 and January-March 2011) during which customer acquisition has spurted four times to around 40 a quarter. The trigger? “Besides changing our business software product to target small and medium businesses (SMBs), we changed our marketing strategy. We looked at social media,” says Ramamoorthy. The move helped Ramco talk directly with CFOs and owners of SMBs in sectors like auto , leather and textiles.

A digital agency was roped in to devise social media marketing strategies; bloggers actively talked about the product; Ramco began using professional networking giant LinkedIn and social networking Goliath Facebook. Result? The customers that came from social media interactions include Chennai based RTE Brakes, and Thorn Lighting, Ahmedabad based Ashtech Infotech and United Arab Emirates based Berber Cements. Says Jessie Paul, CEO, Paul Writer, a marketing advisory firm that has Ramco as a client: ” About a fifth of Ramco’s leads came from social media, like LinkedIn and SlideShare.” Ramco used SlideShare, the world’s largest community for sharing presentations, to allow potential customers to see a demo of the product. Across India Inc, the social media chatter is now taken far more seriously and the platform as a must-have tool in the marketing arsenal of companies big and small.

From Bharti Airtel, PepsiCo India and IBM to little-known and quaintly-named start-ups like Moving Trumpet, 99labels.com and Hopsim, India’s world of business can’t get enough of social media. From dismissing it as the play tool and a hangout zone for the Internet Generation, companies have woken up to the power of people-to-people conversations . That these people are young and actively engage with targeted communities makes it impossible for marketers to ignore social media.

Says Subho Ray, president, Internet and Mobile Association of India (IAMAI ): “It’s the next big thing, and monetisation is happening now.” Adds Alok Mittal, managing director, Canaan India, a venture capital firm: LinkedIn and Facebook now have a business case in India. People are transacting on them.” Canaan itself has invested in two social media companies : Kabam, a social gaming company , and Zoosk a social dating company. “Both have created substantial business around them, taking revenues 0 to $100 million in 18 months. There’s opportunity to invest in such niches,” points out Mittal.

For the big boys, an investment in social media is an imperative not so much from immediate tangible gains but to stay ahead of the curve. Consider Bharti Airtel, which sees social media as a vital prong of its digital media strategy that includes Google Ads, advertising across internet and search engine optimisation. Mohit Beotra, 43, leads a 25-member team at Bharti as its head of brands & media. In the last six months about a third of the team has been working on devising strategies for social networking . That spans engaging with the community on Facebook and Twitter and chalking out integrated campaigns in which social media have a key part to play. When the Airtel brand was relaunched late last year with a new logo, the telco used Facebook to promote it with a ‘name game’ . Users were encouraged to name the new logo. Airtel received more than 150,000 entries.

What started as a casual effort to put out a message and create pages on social networking sites is serious business now. Like, for instance, Bharti’s football community on Facebook to help fans reach out to Manchester United. Bharti Airtel has a five-year arrangement with the English club that gives Airtel customers , amongst other privileges, access to ManU content on their mobiles. Facebook has helped the telecom major create buzz around the legendary soccer club. Over the past six-seven months 340,000 people signed up as members on http://www.facebook.com/ airtelsoccer, 180,000 of who are Airtel subscribers. Fans can video chat with players, buy ManU merchandise or simply know about the soccer team – and about Bharti. “Social networking is effective because people interact with the brand without (the brand having ) an agenda,” says Beotra.

Next step: An annual partnership with professional networking major LinkedIn that will be signed in mid-July . German automaker Volkswagen India got more than 2,700 recommendations after it started a targeted campaign on LinkedIn’s user aware pages in November 2010. Says Lutz Kothe, head of marketing, Volkswagen India: ” We used LinkedIn to build brand affinity and generate word of mouth, which continues to be a major selling argument in India.” It engaged two marketing and branding firms to execute social media strategies. Another German major Grohe is targeting customers for its upscale bathroom fittings on Facebook. Says Mathew Job, vice-president & managing director, Grohe India: “We have created Facebook fan pages for architects, designers, key influencers and consumers .” On Facebook, Shower with Grohe’ has 18,000 followers.

Attracting Eyeballs And Ads

Companies like Volkswagen and Grohe that are relatively new to India are keen to shorten the learning curve. Making that task easier is the country’s internet user population of 100 million-third largest globally (after China and the US). In a March 2011 report , digital business researcher com-Score said social networking sites reach 84% of the web audience in India and take up 21% of all time spent online . Of the $250 million online ad spend in 2010, about 11% went to social media, up from almost zilch prior to that; in the current year IAMAI estimates social media will corner 18% of the ad spends. By 2015, online ad spends will be about $1 billion and more than half of this could be on social media.

Facebook and Twitter lead the social networking user base with 25 million and 12 million users respectively while LinkedIn, practically unchallenged in the professional networking space, boasts of 9 million users. These three have emerged leaders from over 200 global social networking start-ups . Till 2002 the internet was all about people to website relationships. Until Friendster, the world’s first social networking site, woke up to people-topeople conversations. Friendster isn’t top of mind today, and copycats like MySpace, Hi5, Orkut, Delicious have fallen by the wayside. Digital market researcher ComScore’s latest data shows that Facebook has overtaken Orkut , Google’s social networking site.

The downward spiral of erstwhile popular social networking sites continues even as Facebook and LinkedIn add new members. In the technology world, it’s a familiar trajectory-don’t innovate and you die. It’s been brutal in social media as fads have come and gone. Yet the new leaders have built an enviable user base that looks difficult to dislodge (see Linked in and on the Same Page). India does not need to have its own networking sites-it just has to piggyback on the existing global ones. ” India Inc cannot ignore them. The shift to social media, using it for campaigns, feedback or talent search will accelerate even as the internet user base in India expands,” expalains Nitin Khanapurkar , executive director, advisory services, KPMG.

Savior For Start-Ups

Jessie Paul says: “The interesting part is social networking gives start-ups a platform to take on the big boys. It helps them to start without an ad budget .” To be sure, large companies have deep pockets to do multimedia campaigns . On the other hand even a 30-second TV ad spot can burn a hole in a start-up’s tight pocket. Social networking may be just what the marketing guru ordered for them. Take the case of taxi-top advertising firm Moving Trumpet, started in November 2009 by three fresh graduates in Mumbai. The trio targeted Mumbai’s taxis as an advertising platform for large companies. They had no marketing budget.

Then, 26-year-old Gautan Dhirani, head of marketing of Moving Trumpet, devised a plan to write to companies on their portals . All sites have a ‘contact us’ or ‘send info’ window to interact with them and we were hopeful for a response ,” says Dhirani. After three months of toil and more than 70 web contacts got them just three replies, the trio got fed up and instead solicited business on LinkedIn. Says Dhirani: ” I was directly able to connect with marketing heads, brand managers, media buyers and account directors; that helped our business take wing.” Moving Trumpet makes about Rs 8 lakh a month and has done taxi-top campaigns for Bharti, Reliance Communications , and Madison Media amongst others.

Over the next fortnight , it will take the business model into all metro cities. Another start-up , 99labels.com, which attracted $3 million in funding from internet company Info Edge , has found Facebook the ideal platform to reach out to buyers interested in picking up deep-discount stuff, from Tshirts to shoes. The e-commerce portal sells excess stock from retailers like Diesel, D&G , Adidas, Nike and Puma and has more than 100,000 followers on Facebook. 99labels buys the discounted merchandise and ships from its own warehouse. Says Ishita Swarup, co-founder & CEO, 99labels: “We are a regular ecommerce site, but didn’t get the traffic till we logged on to social networking.” 99labels advertised on Yahoo and Rediff but got the best response from its Facebook presence. The portal is on Twitter as well, but is not sure how to use the micro-blogging site to sell merchandise .

Twitter is good for feedback, not for selling. The engagement is limited ,” she adds. Swarup had sold her previous company Orion Dialog, a domestic call center to Essar Group’s Aegis BPO in 2006 and co-founded 99labels .com in 2010. In many instances it’s David meets Goliath in the online social arena. Hopsim, a provider of pre-paid SIM cards to travellers, launched its services on LinkedIn. Hopsim, in the same space as Matrix Cellular, but without the latter’s deep pockets. Similarly Perfios Software Solutions, a provider of software to manage financial portfolios, is in the same space as global majors like the $3 billion Intuit . The three-year old privately funded company with 140,000 users credits its growth to LinkedIn, Facebook and Twitter, which helped in signing on new customers, sending out messages with company-related information and getting feedback. Says V R Govindarajan, director, Perfios Software Solutions: My company wouldn’t have existed without social media. We didn’t have the money to create the reach on traditional media.”

The Downside

For start-ups , social media is a great launch pad. But once businesses gain scale and size, just Facebook and LinkedIn won’t be enough. Says Paul: “For mass marketing or taking a product national you have to use traditional media as well.” Adds Bharti’s Beotra: The rise of social media as a marketing tool is phenomenal and companies have to use it with care. It’s on the rise, but at present the power of the 30-second TV spot cannot be ignored.”

Even hiring on LinkedIn has its limitations . Says Brijesh Agarwal, COO, IndiaMART , a B2B marketplace: “You can’t do mass hiring on LinkedIn. Also, for junior to mid-level hiring we have found traditional media more effective .” As for Twitter, its text-only micro-messaging limit can serve at best a quick feedback platform. Sachin Bansal , co-founder and CEO, Flipkart.com , an online shopping portal, says: “People don’t get on Facebook and Twitter to transact business.” Yet, he does add that “businesses can’t ignore the buzz that can translate into business, hence the appeal.” Another potential danger is that users can make statements – substantiated or otherwise – that can hurt a brand. Cafe Coffee Day (CCD) in Chennai and more recently Vodafone India have been hit by the backlash of social media backlash. CCD’s apparent attempt to evict customers who just hung around without ordering found its way onto Twitter, forcing the management to apologize.

Vodafone’s image took a beating after it sent a legal note to one of its customers who complained about his experience with one of the telecom company’s call center agents. Says Govindarajan of Perfios: “Bad things can spread fast. On the upside it makes you disciplined.” Social media is a double-edged sword that India Inc can’t ignore.

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