Pay only if you can see the results

By , agencyfaqs!, Mumbai | In Digital | March 19, 2008
The Lintas Media Group and Pinstorm have formed an alliance under which they will offer the 'pay for performance' service to all their clients

The Lintas & #BANNER1 & # Media Group and Pinstorm have come together in an innovative 'performance alliance' to change the digital advertising scene in the country. The performance alliance has been formed to bring in a revolutionary way of looking at advertising on emerging media - the mobile and the Internet. It is a non-exclusive, non-equity partnership, wherein two parties with a common vision and expertise have joined hands.

Lynn de Souza

Mahesh Murthy
"We don't think just buying a digital agency will contribute to our client's success," says Lynn de Souza, director, Lintas Media Group, when asked why there isn't any equity or stake involved in the alliance. She believes the future is no longer about control, it's about collaboration. The logic is: What is the point of a buyout if the client is not benefiting in any way?

"Many big agencies have expressed interest in buying us out, but we aren't inclined towards that," confesses Mahesh Murthy, founder, Pinstorm. "This alliance with Lintas will provide a new performance based model to the Rs 16,000 crore Indian advertising industry."

De Souza says that the advertisers' days of worry are over. "For too long, clients worried that their agencies and publishers were simply recommending higher media spends because that's how they earn more," she says. That is now set to change.

With the alliance, the duo hopes to legitimise a new form of advertising, which is based neither on the commission system nor on the retainer system, and will bring in efficiency and transparency in digital advertising. The alliance will put in practice a formula popularised by Google, Yahoo and, more lately, Pinstorm, called 'pay for performance'. Under this system, the agency pays for the media and creative from its own pocket and advertisers pay only if their target has been achieved, which could be getting a certain number of page views, leads, registrations or sales. Reportedly, 99.5 per cent of Google's advertising revenue comes from pay per click. While the risk is high, Murthy says the returns are rewarding.

The overall advertising spends have gone up from Rs 14,000 crore in 2005 to Rs 17,000 in 2008, while spends on digital have been increasing rapidly from Rs 70 crore in 2005 to Rs 1,000 crore this year, making it the fastest growing medium. This, Murthy explains, is because the digital medium lets advertisers pay for actual advertising performance. The coming together of the Lintas Media Group and Pinstorm will facilitate accountability, transparency and trust on the digital medium.

Murthy and De Souza are of the opinion that much more can be done in this space, considering there are 55 million Internet users and 200 million mobile users in the country, an audience larger than that garnered by television, and given that it's easier to track performance here than on other media. The alliance hopes to drive an incremental Rs 100 crore of revenue this year from new advertisers and also increase spends by existing advertisers. All existing Lintas Media Group clients, such as Idea, Maruti Suzuki, ITC and UTI, will benefit from the alliance first. Lintas and Pinstorm will pitch for clients together. Pinstorm will also provide Lintas' media expertise to some of its own clients.

What can one expect the alliance to do in the next one year? Digital advertising spends will escalate to more than 7 per cent within a year from the current 3-4 per cent. Digital advertising will be a part of every marketer's plan and pay for performance will become a virus. The two parties will begin operations in Mumbai, Delhi and Bangalore and then move to other places. After digital, the partnership will be extended to other traditional media platforms such as broadcast, print and outdoor.