Sidharth Rao, CEO & Co-founder, Webchutney

Sidharth Rao has been the idea lab, guiding force, evangelist of Webchutney for the last six years since the company’s inception in 1999 after he quit college at 19 to start the agency. He is 27 and has been a self-educated entrepreneur who started an interactive agency at a very volatile time in the Indian digital space. He survived the dotcom bust to have led the agency as one of India’s leading interactive consultancies today. From a two-person start-up, Webchutney is now spread across three cities and has a 75-strong team and offers a range of services across the Internet universe.

In a freewheeling conversation with Asit Ranjan Mishra, Rao talks about Webchutney’s success, the challenges of the Internet medium, viral marketing and online video advertisement, among others.

Q. What kind of brands do you think fit into the viral marketing strategy? Most consumer brands that have a clear proposition, most of the B2C companies make a perfect fit.

Q. When did you get the feeling that you were here to stay? Sudesh and I were very sure that we didn’t want to go back to the agency job anymore. So, we completely removed that option of going back. Yes, initially it was slightly discouraging to see the industry undergoing a downturn, but we were very, very sure about the future of this medium. There were enough reasons for users to keep coming in. It was just a matter of time when marketers would follow suit.

Q. But with the Internet becoming part of the mixed strategy of marketers, don’t you think offline agencies with Internet arms could provide them a better buy or you think marketers are intelligent enough to understand that Internet is a different ball game?

Yes, definitely it is. In an ideal world, if the advertising agencies caught up well on the interactive front, then yes, there is efficiency for the marketers. But have they bought it really well, no. You should really look at it from an advertising agency’s perspective. They classically talk to the marketing team of the company and they come from that perspective. Whereas when you look at the Internet and what Webchutney has to offer we actually end up impacting most departments in an organisation. Do we have products and services for the HR business, yes, we do have. Are we working with the corporate communication departments of companies today, yes, we are. Are we working with marketers, yes, we are. The interactive strategy for a brand, therefore, becomes very different for an interactive strategy for an organisation, that is why there is a roadblock for advertising agencies as they are completely habituated in talking with the marketers.

I will give you an example, one of the largest banks in India today faces the challenge with the emergence of social media, basically people posting their opinions on blogs, message boards and consumer opinion sites like Mouthshut.com. When you search for that particular brand on Google, you will see huge number of results about their bank service, their products, customer experience with their customer service department, etc. – is it the concern of a classic marketing guy, not really. It will actually be the guy who handles customer relationship in the organisation. Are the advertising agencies currently talking to that guy? I don’t think so. The focus of the advertising agencies is much on the classic communication and brand, whereas the Internet can impact it in a much bigger way.

Q. But don’t you thing the space is too vast to monitor and especially influence the bloggers, or whatever you call them? And then they are also very averse to the very idea of being influenced. See, we don’t mean influencing the bloggers in the traditional way. Consumers become averse to a particular brand due to some bad experience or the other. Suppose our client, a bank, has screwed up somewhere in the handling of the customer, and every customer serving organisation has those challenges, the idea is to tell the client to resolve that problem, and once you have done that actually you end up projecting an impression of a company which has years to the ground and that delights the guy who was got completed agonised just a day before and that actually influences. Webchutney actually tries to resolve the issue, which could have otherwise gone unnoticed in the current scheme of things for a very long time.

Q. Webchutney seems to have mastered the art of viral marketing. But don’t you think there is a limit to which viral marketing could actually work for a brand? Absolutely. Viral marketing it not meant for all brands. You can’t do the same thing over and over again. The lesser known fact is that for every one successful viral marketing you produce, there is one that bombs. So, I don’t shy away from saying that 50 per cent of our viral marketing has bombed. There are so many viral marketing campaigns that you’ve never heard of because they never got viral enough. Virals can also not be adhoc, just for the sake of doing it. Viral may not be necessarily executed the way Webchutney executes them. The best virals are email jokes and forwards, the challenge, of course, is to integrate the brand message within that.

Q. But don’t you think at some stage viral marketing is too risky a proposition as it may go out of the hand of both the brand and the agency that has created it? Yes, to a great extent viral strategy is not a well thought out one, but it should be. I think no one has whipped it that badly and it is just a matter of time that somebody gets the backlash. Getting a brand to be really loved by a consumer is an ideal thing, but viral marketing is like any other marketing strategy vulnerable to being misfired. Had that happened yet, not to my knowledge. Can that happen, absolutely yes.

Q. You are also into search marketing. So, which business is bigger within your own company, search marketing or interactive agency business? We are arguably one of the largest search marketing agencies in the country, if not the largest. We club search in media as search is finally media under the banner of performance marketing. Forty per cent of our revenue, I am not talking about billing, comes from media today. Another 40 per cent comes from the creative services and web designing. The rest 20 per cent comes from other services like alternate marketing – viral, social media analysis, etc. We also have a knowledge management practice for a few companies.

Q. You have one investor, Russian Hills Venture. How much investment it has made in your company? Not too much actually. It happened way back in 2000. We ended up not using that investment very effectively. Since then both the investor and we have grown very fast organically. The knowledge the investor has is actually vast for us to tap.

Q. Aren’t you looking for any fresh investment when VCs are floating around everywhere? The funny part is there is so much of momentum within the industry itself that our growth has become self-driven. Our headcount has become 75 and we will be around 100 by March 2007. We don’t need any funding as such for that. Recently, we started an office in Kuala Lumpur. We want to look at Singapore and specifically the US for development projects. As and when our new business plan unfolds, there will be requirement of funding. But somewhere what we have definitely learnt is that it is not the right time in the interactive space to consolidate in a big way.

Q. What changes do you want to happen when it comes to video streaming of advertisements? I guess some of the agencies need to handhold a couple of marketers or couple of clients need to make a compelling case working with the right agencies and get the content of the video stream right to be able to excite others. But the problem is that MSN or NDTV are classic publishers and they have some inventory to sell. And most of the companies that are buying this media are only media buying agencies. With the risk of sounding arrogant, I don’t think they have the necessary expertise to understand the consumer content. Companies come and tell agencies to put their ad on YouTube. But it does not work that way. One needs to understand the YouTube audience and try and do something that will excite them to forward it to others.

Q. But there is a section of online publishers who think that online ads should not be sold on the clickthrough basis rather on a timeband basis, like on television. In fact, that is the idea behind Desktop TV. Do you think marketers will really buy into this idea? I am a complete disbeliever in this model. I don’t think it works that way, neither do I think it should be looked at that way. It is an intelligent idea of making it very simple for marketers because they are habituated with the concept of timeband and primetime, etc. but it completely destroys the fact that the Internet is the most measurable medium. At the end of the day, Internet is the only medium that lets you pay for view. The classic model is CPM, there could not be a better model for the Internet than that. Timeband is a very poor model for the Internet.

Q. Now, let’s talk about you. You are only 27 and heading a successful interactive agency. How do people react when they know your age? In your business, you must be interacting with people almost double your age. Do they look at you as a kid? This is funny actually. I look much older. So, people are surprised only when they find out my age. It used to surprise people more a couple of years ago. But most people don’t realise I have been in this business for eight years. People are quite surprised on the success of Webchutney. But my stand is that if you can’t get it right in eight years, then you must be a real fool.

Q. But do you think your age somehow has been an advantage to better understand this medium, which is driven by an audience of your age? Yes, because the way I look at the Internet is not necessarily only from the business angle. For me it organises my life, for me it is a lot of exciting content that I want to read, I am first a consumer. Since the Internet is our generation thing, it keeps me interested. So there it makes a perfect fit. You also see in Webchutney, the average age is 25. There are only three people who are over 30 years old. And that helps. If something is a phenomena on the Internet, then it is first understood here.

Q. So, your main concern is that it is not interactive. Anything on Internet has to be interactive. Right? Or immersing, very, very engaging.

Q. How did the idea of WebChutney strike you when you were just 19? Sudesh, the other founder and National Creative Head, and I met at Grey where I was a copy writer. Sudesh was the art director. We wanted to start a designing firm. It just happened that I got an opportunity to work with an Internet company NetAcross. In just 2-3 months’ time, I got very interested in the Internet, which was obviously overhyped at that time. But there were not many Internet agencies and Internet was more about technology then. In fact, in our early days we realised that we are selling to CTOs, not to marketing managers or brand mangers. But we were very sure that it would change. Sudesh and I started with the idea of actually focussing on Internet design and communication on the Internet and over a period of time, we tided over from being purely a technology playground to a communication playground.

Q. During your early years, it was the time of dotcom bust. Several big Internet companies bit the dust. Did it not worry you? I still remember the first day when we started working from a small office in Malviya Nagar (Delhi), it was the day of Nasdaq meltdown. Honestly speaking, when both of us started off, we did not have any business plan as such. We were two young kids at that time. Yes, the whole industry underwent a downturn. But it really really affected us because we were too small. I don’t remember taking money for the first two years and same goes with Sudesh.

Q. So, how did the mindset of marketers change over a period of time? The early days must have been very difficult. I am amazed at the pace the industry has exploded in the last 18 months. Suddenly, online is really, really big. The year 2006 was a milestone as far as industry growth was concerned. We have grown almost 150 per cent year-on-year, but this year we have grown 400 per cent. This is because of increased client interest. There was a lot of momentum, I think, that was waiting to unfold and it happened in 2006. In the last 18 months, we have seen the emergence of e-Business manager as a designation in the marketing department of big companies.

Q. Recently also what we have seen is not marketers’ interest, but a lot of online agencies have also come up… Yes, but that’s purely following suit. Once you have users hooked to the Net and suddenly online strategy becomes a must have, then obviously new agencies are gunning to grab a share of this burgeoning market size.

Q. Offline agencies also seem to be realising the potential of the online medium. I know at least a couple of agencies that are in the process of starting their online arms. Do you see here a case where too many guys are chasing too small a market, or do you think the market is expanding fast enough to accommodate everybody? To reply to that, there are some eight travel portals, all of them well-funded. Are there that many users to sustain all of them, I don’t think so. Will it consolidate somewhere, absolutely. Similarly, interactivity looks like a very lucrative business. As far as traditional advertising agencies are concerned, yes they see it as a natural extension of their business and they have to. I think the market is big enough to sustain five or six large interactive agencies. If you really look at the online media buying business, it’s a Rs 300-crore market. Add to it the ad sales and marketing of Rs 150 crore. So, we are talking about a Rs 450-crore annual billing. At present, it is so fragmented that no one controls more than 8-9 per cent of it.

Q. But do you see interactive agencies tackling such social media challenges? We currently have a practice in Webchutney to monitor, analyse and influence some of the social media content. Does that mean a company can come to us and say that can you get consumers really, really interested in our product on the Internet, no, we can’t do that. But can we monitor what is being said about a particular brand or product, can we analyse it in such a way that there are actionable ideas around about what can be done, yes, we can. And can we try and influence the negative opinion, I think yes. Webchutney would be the only interactive agency which would know on its fingertips the top 100 people who blog in India, we would have had a relationship with them in some way or the other. I hope that they would be willing to engage in a dialogue with us.

Q. But do you think there is lack of understanding among the traditional agencies about the online media space?

Most of the advertising agencies had tried to have an interactive agency in 1999-2000. but most of them floundered and shut down shop. Will that happen now? No, I don’t think so. We hope they will surely do a better job this time. Interactivity is not like where you can put a business head and 3-4 guys and have an interactive business. The Internet is far too vast to be considered that frivolous. Even we or any of the specialist players in the medium cannot say that we fully understand this medium. The Internet continuously keeps changing. It seems as if all the advertising agencies have a single-point agenda in their 2007 or 2008 plan – that they want to set up an interactive agency. But I don’t think that is the way to look at Internet. Do Indian (offline) agencies have the appetite to do something dramatically different? I don’t think so.

If you ask me who are the biggest challengers to Webchutney today, they are all independent companies like us. If you put the independent agencies together against the interactive arms of the traditional agencies, then we will be three times the agencies pieces. Interestingly also, if you look at PR, direct marketing, outdoor and other alternate media pieces, generally agencies have trailed in these areas for a very long time before actually catching up. The top agencies in India in these domains mostly are independent ones. It is also true in the case of online interactive agencies. But also to say they will catch up finally. It is not rocket science at the end of the day. But they will take a fairly long period of time. But if your question is whether we are worried to fight against them, then at least not right now.

Q. There is a lot of action on the creative advertising front. MSN-NDTV Media promoted online video advertisement, Desktop TV is being touted as the next big thing on online advertising front. But your agency does not seem to be too interested in such creatives. What is your take on online video ads? I think it is a great possibility. But my concern is how marketers are executing it currently. The possibility of streaming content over Internet, be it audio, be it video, was always there. Rich content is essential for the web, but it has to be suited for the web. Unfortunately, marketers think that they can serve their TV commercials on the Internet. I don’t think the medium has to be looked from that angle. The Internet is not the medium where content can be pushed like on television. A lot of viral marketing bombed because it just made good ads and it was not necessarily viral. You see so many good ads on television. But if you receive it on your email, would you like to forward it to your friend? I think in 99 per cent cases you won’t. And that’s the fine line between viral ads and video streaming on Internet. NDTV Media or MSN India has done a great job in introducing it, but I think they are leaving marketers clueless by not telling them how to use it effectively. Not that we are doing a great job either, we are too busy in our own things, but it has to be clearly visualised.