In a bid to test a relatively new model of partnership, Lintas Media Group and Pinstorm have entered into a non-equity partnership. Referring to the partnership as ‘Performance Alliance’, the agencies are using a pay-per-performance model and would initially cater to all digital initiatives of Lintas Media Group’s clients. The initiative would be introduced as a full service offering to other clients at a later stage.
Lintas Media Group’s Lynn de Souza said, “We don’t think that just buying a digital agency will contribute to our client’s success. What attracted us to Pinstorm was their pure adherence to pay-for-performance – a vastly different model to the commission and retainer structures that Indian clients are used to. We think this model can go a long way in bringing accountability and transparency to investments in advertising.”
“I hope that we can go forward in the coming years to bring this model to other mediums too. We have started working with Pinstorm from March 1, 2008, and seven clients have already shown keen interest in this initiative,” she added.
Mahesh Murthy, Founder, Pinstorm, observed, “Around the world, media costs are going up and clients are cutting commissions and retainers because they aren’t able to see how their advertising is performing. At Pinstorm, we make it simple by asking a client to only pay for the prospects or results we deliver.”
Commenting on the alliance, Murthy said, “Our alliance with Lintas comes from our joint belief that the Rs 16,000 crore Indian advertising industry needs a new model. We believe that by working together we can bring pay-for-performance advertising into the mainstream of advertiser choices.”
The alliance estimates that they would be able to drive an incremental Rs 100 crore of advertising to move over from traditional models to a performance-driven model in the next 12 months. “Digital advertising accounted for just 4 per cent of spends in India last year. With this alliance and other efforts, we believe that investments in digital advertising would cross the Rs 1,000-crore mark in India this year – which is almost a 100 per cent growth over last year,” noted Murthy.
“An industry only grows when there is pay-for-performance. For too long clients have worried that their agencies and publishers are simply recommending higher media spends because that’s how they will earn more. That era will soon end. Our work with Pinstorm is to collaborate on clients to give performance-driven options initially across digital media – but we hope over time to grow the same basis to traditional media like broadcast, print and outdoors, too,” said de Souza.
Replying to a question on the non-existence of pay-per-performance models for other mediums, she observed that there were no proper matrix for performance tracking in mediums like television, radio and print.
The pay-for-performance model was pioneered by Google and Yahoo!, and in this model, where the agency pays for the media and the creative – and the advertisers just pay for results. The Lintas-Pinstorm alliance will first come into effect on Lintas’ roster of clients and soon expand to other businesses. The alliance is effective immediately and in place across all advertisers in India.
Pinstorm is an independent digital advertising firm in South East Asia, with offices in Mumbai, Delhi, Singapore, Kuala Lumpur, Beijing and Santa Clara in Silicon Valley.