"A ten-minute drive through the city is enough to get feel of the money that is being pumped into the market.Unfortunately in Delhi, billboards have been banned and hence, dotcoms have to satisfy themselves with kiosks."

- Suhel Seth, chief executive officer, Equus Advertising.

"Indians still think that Net is e-mail. Consumers need to know about other applications of the Net."

- Neeraj Roy, CEO, Hungama.com, commenting on his unconventional promotional methods.

In late 1999, Delhi's autorikshaws started sporting dotcom bumper stickers. During the same time, Mumbai's skyline was changing with dotcom hoardings. Full-page ads of the dotcoms could be seen in almost every leading newspaper. From print, to electronic and outdoor media, the dotcom companies flooded the market with high budget ads, contests, and interactive campaigns. During 1999-2000, Indiainfo1 spent Rs 44 million every month on advertisements in print and electronic media. Satyam Online planned to spend around Rs 200 million by the end of 2000. In early 2000, Indya.com released a front-page ad campaign in The Sunday Times of India, in Delhi. According to market sources, the advertisement cost more than Rs 30 million.

During October 1999-January 2000, about Rs 500 million was spent on advertising by the dotcom companies (Refer Table 1 for the break-up). Analysts felt that in the next six months, another Rs 500 million would be spent.

Table I
Ad Spends by Dotcoms during Oct 1999-Jan 2000

Source: Businessworld, March 20, 2000.

While the average retailer spent about 5-8% of its total revenue on advertising and the average manufacturer 15-18%, dotcoms were spending more than 25% of its revenues on promotions. Analysts felt that the huge amount spent on advertising was to make a mark in the people’s minds. Commented Suman Srivastava, Director, Euro-RSCG, “What most net companies have been doing so far is concentrating on traffic: their advertising has been geared towards generating trials.”

In the early days of the Net revolution, there was a rush to get online. Most companies established their presence through corporate websites. Companies used the Net as a new low-cost channel, with unlimited reach. Corporate websites used the Net primarily to extend their reach and attract customers to their products.

Customers had more information and more choices than ever before. As websites grew in number, it became difficult for customers to search for sites of their choice. Search engines thus emerged and became key players directing millions of surfers to various sites. Web commuters found a unique value addition as they could go and search for any product or service from any part of the world by just clicking the mouse.

The phenomenal growth of search engines was accompanied by unprecedented choices opening up for the customer. This growth led to the transformation of search directories into portals. The competition was redefined. Instead of competing on width offered by horizontal portals, players were forced to compete on depth. While reach was taken for granted, the richness of content, the way one presented one’s products and provided information and strong community features like chat rooms, discussion groups emails etc. became the recipe for success.

This led to the emergence of vortals or "vertical" industry portals and "segment" portals. Vertical portals were sites devoted to a single industry or function: for example insurance content sites, personal financial services sites and sites that attracted consumers to buy health or auto insurance. In each case, the revenue model was primarily based on advertising, with some transaction revenue from online sales (Refer Exhibit I for different business models). Segment portals were subsites of the horizontal portals; an example was Yahoo! Finance, a finance site of Yahoo!. Such portals offered focused searching capabilities to Internet users interested only in a single range of products..

By the late 1990s, there were hundreds of dotcoms in India each vying for the surfer. There was a difference between the ads of FMCGs and the dotcoms. While FMCGs were branded to ‘Come and check my site out first!’ And the branding of dotcoms seemed to be difficult as everyone was trying to do the same. Most of the dotcoms seemed to have the necessary technology and the financial muscle (Refer Table II for ad spends of major dotcoms). What seemed to be needed most was differentiation. To achieve this, the dotcom companies depended heavily on advertisements.

Table II
AD Spend by Portals in 1999

Source: Business Today, June 7, 2000.

The print media seemed to have made the most of the dotcom boom as huge amounts were pumped into advertising. According to a report, Rs 12 billion was spent on print media advertising during 1998-99. Shunu Sen, Director, ORGMARG, said, “Since the Internet is still nascent in India and e-commerce through conventional media. Once they get the traffic, they will focus their advertising budget on the Net itself. But till then it will be boom time of the traditional media.” On the other hand, only companies with good financial stability were using the electronic media for advertising. Besides the cost, it worked only if a certain level of brand awareness already existed. Some dotcoms also opted for contests and other promotional campaigns.

Many analysts wondered if all this frenzy made sense. Some described the dotcom advertising as 'mediocre'. Others felt that most of it was “Hello! I am a dotcom” kind of advertising. Some of ad lines were: “Free E-Mail” (Zeenext): “India's most happening chat site” (123 India.com), “Its all about money, honey” (5paisa.com). Commented David Appasamy, General Manager, Satyam Online, “Some dot.com advertising has been focused and some less so.”

Some advertisements had a packaged communication strategy, with a focus on brand differentiation. For instance, a popular South Asian community portal, chaitime.com launched a campaign named “chai peeke bol” (have tea and speak) in May 1999. It was a 6 x 8 feet virtual wall, which allowed students from six cities in India to flash their messages on chaitime.com. There was a grand prize for the college that flashed the maximum number of messages, and customized T-shirts, free head messages, tattoos etc, for all those who registered on the site. Analysts felt that this was an event, which was difficult to manage. However, Dr. Jayesh Vaidya, Managing Director, chaitime.com justified it saying, “We do not offer any physical product. This is the only way users can relate to us in the physical world.”

In metros like Delhi and Mumbai, outdoor advertising like banners, kiosks and bill boards were used more widely. In Delhi, since billboards were banned, the money was put on kiosks and bus shelters. In Mumbai, dotcom companies’ hoardings were more than those put up by the brick and mortar companies. For every brick and mortar hoarding, there were four to five hoardings from dotcom companies. Prior to the mushrooming of dotcoms in India, this space was used by the FMCG companies. A senior executive at indya.com explained.” Outdoor advertising is cheaper than conventional media and it has good reach because the billboard always screams out.”

For effective marketing, dotcoms adopted promotional strategies of brick and mortar companies like conducting meals, etc. Hungama.com an entertainment site established 560 cybercafes to promote traffic to its site. A placement site jobsahead.com held job meals in Bangalore, Mumbai and Delhi where recruiters met potential employees. Baazee.com placed kiosks in high traffic areas to educate markets and consumers. Jaspreet Bindra, chief operating officer, baazee.com said, “Everything can't be done on the Web. For some things, you need off line capability.” Brainvisa.com, involved in career counseling to high school children conducted aptitude tests online for which it charged Rs 500. Additionally, it also conducted these tests in schools across the country.

There were also some dotcoms, which ignored traditional advertising and looked at innovative ways of marketing – word of mouth, referrals etc. – to increase traffic. For instance, hungama.com, completely ignored the expensive print and television media and took up viral marketing. It identified 125 hungama hangouts – pubs, clubs, and cinema halls – where it made its presence felt through promotions, schemes, and onsite advertising. Neeraj Roy, CEO hungama, said, “We wanted to be present at places where youngsters hang out.” Similarly, bharatplanet.com, a gifting site, ran a referral program wherein by introducing friends the visitors to this site earned points, which were redeemable as shopping vouchers. Through referrals alone, the site got about 600 new users a week.

Word of mouth advertising, which resulted from a loyal customer base over a period of time, was responsible for around 30% of new site traffic. Hence, dotcoms had many cash and non-cash incentives for their loyal customers. For instance, a consultancy company e-lab, gave cash incentives to the user for references forwarded to its site, sawaal.com, a search engine, gave free T-shirts to the users who sent information about the site to 20 e-mail addresses.

The companies also used other established portals for advertising. Such advertising was based on click-through rate; that is the dotcom had to pay for the traffic that reached it after clicking on the advertisement. This lowered the advertising costs and also ensured focused traffic. For instance, many new dotcoms offering gift services to the NRIs used the regional language newspaper sites like andhraprabha.com (Telugu), or dinamani.com (Tamil).

Some dotcoms even reverted back to the barter system for their advertising needs. Shares had become a new currency in the dotcom industry. Many dotcoms signed agreements with popular media players to buy advertising space and time through the issue and allotment of shares. For instance, Business Standard, a financial daily, entered into a share-and-cash agreement with Pugmarks. Under the agreement, Business Standard was to use Pugmarks’ services for hosting and maintenance of the site in exchange for providing free advertisement space and cash payments. A contests site, contests2win, also entered into an agreement, to host the URL on the partners hoarding.

Many analysts felt that the dotcom marketing methods lacked originality (Refer Exhibit II for ideas for marketing sites). One of the reasons seemed to be that the dotcoms were always in a hurry. The minimum time of more than a month required to create an ad for an FMCG product seemed to be too long in the fast-changing dotcom industry. Ashish Dhawan, Chryslis Capital, a venture capitalist said, “You can't blame them. Most advertising agencies like most lawyers or investment banks are still learning the dotcom business.” Also, not many companies had done a pre-launch research and there was no secondary knowledge available.

Analysts also felt that most dotcom entrepreneurs were using marketing methods more suited to old economy businesses. Thus, there was an over-emphasis on publicity rather than marketing. India Today’s associate editor Shankar Iyer said, “A kind of PDS approach which assumes that once there is a shopfront, shoppers will come walking in and buy In other words a distributive rather than a marketing approach which again is rather sad. Revenue will not come merely via words on hoardings.”

Analysts felt that ultimately, a well-designed user-friendly site would attract traffic. Zaveri of Indbazaar.com said, “Of all the mind-grabbers not many are really brands. Sure, the customer may visit a site once out of curiosity. But will he want to visit again? That is what really makes a brand.” During 2000-01, the global dotcom industry witnessed a slowdown and the dotcom bubble bust. In India, many dotcom companies were either shut down or sold. In the late 1990s, there were about 5000 dotcom companies in India. But only a few (about 25-30) could survive the bust (Refer Exhibit III for survivors). Lack of proper business models, huge advertising expenses, lack of professional management etc., were outlined as some of the reasons for the dotcom bust. Analysts remarked that though some companies had invested heavily on advertising, they could not generate revenues. On the other hand, some of the companies, which survived the dotcom bust, either spent very less or did not spend at all on advertising (Refer Table III)

Table III
AD Spend of the Survivors in 2000

Source: Businessworld, May 14, 2001.

To establish themselves, many portals looked at alternate revenue models. Some turned into IT services companies by selling their expertise. The dotcom industry also witnessed many acquisitions and mergers. Analysts remarked that in the near future, many of the portals might not even be recognized as dotcom companies.

1. “From print, to electronic and outdoor media, the dotcom companies flooded the market with high-budget ads, contests, and interactive campaigns.” Briefly discuss the dotcom marketing methods of the dotcom companies in India.

2. “The marketing methods of dotcoms had a kind of PDS approach which assumed that once there is a shopfront, shoppers will come in and buy. In other words a distributive rather than a marketing approach.” Explain.

3. While some dotcoms spent heavily on marketing and could not survive the dotcom bust, some others were successful even with low or no marketing expenses. How far do you think the marketing efforts of the portals companies contributed to the success and failure? 

Exhibit I
Business Models of Portals

Source: www.indiainfoline.com

Exhibit II
Ideas for Marketing Different Types of Sites

Source: India Today, July 4, 2000.

Exhibit III
Some of the Survivors of the Dotcom Bust

Source: Businessworld, May 14, 2001.