The tale of edtech taking the entire Indian academic world by storm, has seen a slump. Between legal issues and ad misadventures, what’s edtech’s path to redemption?
BYJU’S, once heralded as the ‘poster boy’ of the Indian edtech industry, is making headlines for controversial corporate governance practice. A slew of issues facing BYJU’S, includes raids by the Enforcement Directorate (ED) on its office, investors walking off its board, around 12,000 job cuts, among others.
Prosus, the largest non-founder shareholder in BYJU’S, slashed the valuation of the edtech giant to $5.1 billion. The company’s 2022 valuation, stood at $22 billion.
BYJU’S isn’t the only one facing financial troubles. Unacademy losses rose by 80% and Vedantu’s losses extended to Rs 696 crore in FY22.
However, the troubles for BYJUs may have a rub off effect on the rest of the edtech industry. The series of misfortunes have dented the overall negative public image that Indian edtech had gained lately.
During a recent podcast hosted by Nithin Kamath, Unacademy CEO Gaurav Munjal said, “I can sense some negativity about the edtech sector when I interview a new employee or speak to a new investor.”
Speaking on the industry’s downfall, Sam Balsara, chairman, Madison World, says, “It was a heady combination of the exuberance of youth, too much money, mis-selling, high-pressure selling, not enough investment in the product and the confidence that nothing can go wrong. Advertising can’t sell a poor product year after year.”
In December 2021, Congress MP Karti Chidambaram raised concerns in the Lok Sabha over the predatory marketing practices employed by the edtech sector. Concerns about the category flouting advertising guidelines, have been highlighted by the Advertising Standards Council of India (ASCI) as well.
“There needs to be some sensitivity when you advertise in a category like education. In education, brands sometimes overstress on certain issues such as exam fever, teaching coding to kids,” states angel investor and business strategist Lloyd Mathias.
A survey of 32,000 edtech consumers conducted by LocalCircles, found out that 81% had faced issues with edtech platforms over the last two years. The issues centred on fee refunds, transparency in business and trust issues like false promises.
Renowned filmmaker Hansal Mehta spoke about some of these issues in detail in a tweet recently. He called out BYJU’S for trying to sell its programs to his daughter when she didn’t need them.
“As their house of cards begins to collapse, it’s time to remind ourselves that not all rags-to-riches stories are stories of honest intentions and legitimate wins,” he shares.
Mathias believes that brands in the edtech category, given the public outcry, need to recalibrate their marketing approach, moving forward. He believes that brands need to be authentic and transparent when they make promises to the students and their parents.
“In the course of the rapid growth of any category, there are bound to be few players doing things wildly. Everyone is in a hurry to bring in the next consumer. But going forward, there will be a lot more rationality, logic and reason. Most players have moved to hybrid models of operation. The correction was bound to happen, with big players suiting the new demand.”
This isn't the first time that companies in the edtech space have found themselves under consumer scrutiny. However, one would expect the brand to be vocal about its position. Yet, it hasn't been the case for edtech companies. They prefer silence in the face of adversity.
Tarunjeet Rattan, managing partner, Nucleus PR, observes, “Going by public reports put up by customers and employees on various social media platforms and reported in the media, the brand could have done more to address them. Instead of spending money on international stars, hire people to address and sort customer and employee grievances. It could have been that simple, but most decided to ignore it and be high-handed about it.”
She's of the opinion that brands in the edtech space, face more public backlash because they’re dealing with children and their parents. She also highlights that mass layoffs, like the ones witnessed in the industry, could have been handled better.
Given the nature of the edtech business, the high number of people losing jobs, also hurts public sentiment. This leads to a more sceptical outlook towards the stability of the business. Hence, people refrain from investing in it.
Also, expensive brand campaigns fail to generate anticipated traction. The reason for this is, companies are spending on expensive campaigns, while simultaneously firing employees.
“Leverage PR to define and take control of your story through owned media. Hire specialists to dig you out of this hole with precision and speed. Work with experienced external partners and professionals, who can add to your overall goal at this point. And yes, pay them!” Rattan recommends.
Komal Lath, who is the founder of Tute Consult, a communications agency points out that the big players in edtech fumbled their consumer trust due to lack of goodwill.
"Irrespective of the size - big or small - education as a sector demands a gargantuan amount of trust, not just from consumers but from stakeholders as well. From a communication perspective, there was a trust and goodwill deficit with a majority of the players in the EdTech sector. Most of them were seen driving a very capitalistic outlook with a massive thrust on marketing efforts to draw eyeballs and outshout one another at all costs," she says.
With the entire category facing a foreseeable consumer distrust, Lath opines that the best recourse for the major brands in the category is to employ goodwill efforts to boost consumer confidence. " For a sizable Indian parent ecosystem, a good education is a pathway to financial and societal success for their children. With that in mind, aggressive brand marketing to drive awareness needed to be balanced with a humane brand narrative."
On a road to redemption, Lath suggests, the edtech players need to come out clean with their propositions and be willing to face media instead of treating the controversies with silence. "All is not lost. On a war-footing basis one needs to come out clean with factual information to douse the fire at hand. Follow it up with brand heads addressing media and be available and answerable, while simultaneously dialing down the paid media efforts. These are the times when you don't want a top-of-mind recall. Lastly, deliver on business and come back stronger than ever."