A new boutique seems to have a better collection than established brands in the apparel & lifestyle industry. If only buyers knew about the new store.
Lakhs of rupees spent on online advertising are a waste if one doesn't reach out to actual buyers. Do banner-ads on websites, paid advertisements in search engines and ad-posts pushed to uninterested, unfocused surfers through social networks really bring back more than the amount spent? If you aren't sure, here's an innovation to ensure your bet doesn't go haywire.
Tookitaki (hide and seek in Bengali), which terms itself an ad technology company, was the result of founder Abhishek Chatterjee and co-founder Jeeta Bandopadhyay's confidence that a combination of applied mathematics and focused marketing could fetch better returns. The venture claims to have devised methods to build ad campaigns that locate online buyers with precision and accuracy. While your ads would appear on social networks and as suggestions in search results, chances are your new store would be eagerly browsed by a netizen, rather than being clicked close, blocked or rated spam.
What's actually happening?
The venture aims at higher returns on the expenditure incurred in online advertising. "Social interest doesn't mean intent," says Chatterjee. Simply put, a person clicking on online advertisements might not be doing so with an intention of buying.
The Tookitaki team has devised an algorithm that 'listens' to billions of signals from social media platforms such as Facebook and Twitter, as well as from other websites. This happens in 'real time', which means the signals are picked up as people transact - buy, sell or comment in the public domain.
As such activity is monitored, the computer programme starts learning more about demand for specific products; it also discovers buyers. Tookitaki systems also learn which social and web networks are most active at a particular point in time. Based on this, Tookitaki routes specific advertisements to different online platforms. "We are also in the process of tying up with Google and Facebook," says Chatterjee. An advertiser has to say "I wish to spend this much money…intend to generate this much revenue and this is my campaign objective". The advertising can be carried out for as little as Rs 1 lakh a month. It could go up to Rs 10 lakh a month. You get reports every two to three days, he adds.
"Last December, we were valued at about Rs 1.25 crore. Our current valuation is about Rs 4.5 crore," says Chatterjee. With growth come challenges - revenue targets and competition. On revenue growth, he said, "We are recording 25-50 per cent month-on-month growth." In the next three to six months, Tookitaki aims to record revenue of Rs 25-30 lakh a month. It expects to achieve a turnover of about Rs 50 lakh a month, with a profit margin of 15 per cent.
With five members in place, the team now wants to grow further, ideally to an eight- to nine-member unit.
Business you don't learn at school
With a bachelor's degree in computer engineering and a master's in computational biology, Chatterjee is well versed with the web, having worked with Double Click (Google) and JPMorgan. Though a course at a business school was what Chatterjee had in mind, a plunge into business, back in India, was more exciting. For Bandopadhyay, the company's chief marketing officer who had an integrated marketing and communications degree, the risk and thrill of building something from scratch was immense.
In July, 2012, Chatterjee and Bandopadhyay cracked a competition of ideas and were selected for a 15-day programme at the Centre for Innovation Incubation and Entrepreneurship (CIIE), Indian Institute of Management-Ahmedabad (IIM-A). This secured the team Rs 5 lakh. The team went on to find a place in iAccelerator, a three-month residential programme (at the same centre) for entrepreneurs interested in the internet and mobile domain. An incubation fund by a syndicate of investors and CIIE fetched an additional Rs 12.5 lakh. Even before completing the programme, the team had already found a number of takers.
Money for the venture
At StartupRoots, a Nasscom event held in Bangalore, Tookitaki raised Rs 1 crore from angel investors. Search for seed capital brought about various investors, including Blume Ventures, The India Internet Group and Harvard Angels.
For Chatterjee and Bandopadhyay, hometown Kolkata was a natural choice to start from. For expanding the business, Tookitaki plans a shift to Bangalore. A sales office in New York is also under consideration.
"Advertising on social platforms is still in its early days; it has large market size. Tookitaki is designing algorithms to optimise advertising performance on these platforms," says Rahul Garg, head of ad exchange SEA and India @ Google and an angel investor in Tookitaki, in his personal capacity. But how strong is the business model Tookitaki is exploring? "Advertising on social platforms accounts for 5-10 per cent of the online market spend globally. A few companies such as Optimal & Nanigans are trying to solve a similar problem in the US, and these are well funded," he adds.
How viable is the business?
Unlike in the US, ad technology is still in a "nascent phase" in India, feels Anirudh Suri, managing director, India Internet Group (Advisors). A key reason is the Indian online advertising market stands at about a hundredth of the market in the US. "Some large ad technology companies have already come out of India. These include InMobi, Komli and Vserv. We expect players such as Tookitaki would be the leaders of this evolution in India," Suri adds.
"The Tookitaki platform allows advertisers to achieve lower CPCs (cost per click) and higher CTRs (click through rates); this means the company can secure higher returns for their online ad spends, Suri says. For companies that intend to spend on reaching out to online customers, adopting an ad technology platform could yield better returns and help locate the right segment of buyers.
The venture has already acquired a number of clients. The list includes DoneByNone, Bedbathmore and CouponRani. "Tookitaki provides unique ROIs (returns on investment) in FB (Facebook) advertising. Twenty per cent of our spend is managed by them. They have a unique audience discovery platform that helps us target customers better," says Ravi Trivedi, partner, Srijan Capital, which runs CouponRani's digital marketing efforts.
"Our target audience is a voracious consumer of social media; we just couldn't be absent where they are active. Tookitaki's advertising aligns with our needs. They run a major percentage of our Facebook advertising," says Karan Bhatia, head (customer acquisition & growth), DoneByNone. "Tookitaki's proprietary systems and its knowledge of social audience give it an edge over vanilla social campaigns…they are a young, hungry lot; they understand business objectives."
Other ventures, too, offer 'social targeting' and 'campaign optimisation' solutions. So, Tookitaki is working hard to present its patent-pending algorithm-based service.
"Start-ups face different constraints at each stage. For very early-stage start-ups, strengthening the business model, devising products and user acquisition strategies and securing investment are very critical," says Tanvi Rangwala, director, iAccelerator & ICT initiatives, CIIE, IIM-A.
CLIENT SEGMENTS ON THE RADAR
- Lifestyle & apparel and handicrafts in (e-commerce)
- Coupons and deals
- Gaming, online gaming
- Online gifting
- Consumer electronics & gadgets
Behavioural economics is picking up across the world. It's only natural that our data analytics becomes stronger to harness the power of social conversations. Deriving meaningful and relevant TG and designing communication and making media spends relevant is a beautiful thought. Very few companies have been able to crack this; Tookitaki is one of the elite in social data analysis. The platform has been tried and tested by a few key clients in India and is ready for take-off.
The way forward would be more to do with behavioural targeting, rather than 'spray and pray' on the internet medium. We can't blindly spend money on assumptions anymore-assumptions that a user would possibly be interested in our communication. Rather, tracking mechanisms have become so robust that we could make the communication relevant and useful. Yet, these retain privacy. This justifies the online media spends; both the client and the media agency would be laughing their ways to the banks!
Tookitaki is specialised and has a few proprietary patent pending algorithms that could redefine the way brands spend their money online. It's a small step for a great leap with the social medium!
Ramanan Subramani, Vice-president (digital strategy), Ogilvy & Mather