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Hyperlocal e-commerce platform Magicpin expects an annual revenue rate of $100 million by the end of this year, founder Anshoo Sharma told Storyboard18. According to Sharma, Magicpin's run rate has increased by 100% to $60 million in 2023 from $30 million in 2022. The company's annual run rate was $15 million in 2021. The delivery firm has planned to expand its operation to tier-1 cities and states' capitals. Sharma said that Delhi and Bengaluru are the company's big players at the moment but the startup is also present in Pune, Hyderabad, Mumbai, Pune, Chennai, and Kolkata.

On ONDC, Sharma said that the government-backed network has been one of the "key ingredients" to its growth. Magicpin, one of the largest restaurant aggregators, joined Open Network for Digital Commerce (ONDC) in March 2023. The Gurugram-based startup is one of the leading seller apps on ONDC. Its food tech vertical competes with food delivery apps like Swiggy and Zomato.

Notably, ONDC has captured 3 percent of the food order volumes managed by Swiggy and Zomato. On the other hand, Sharma estimated that Magicpin may have a 10% market share in key markets like Delhi or Bengaluru as compared to Zomato (market share between 50-55%) and Swiggy (40-45% of market share). "In about 1.5 years we have double-digit market share in major cities," he said. 


Zomato has 15.4% stakes in Magicpin as per the Tracxn data. Lightspeed Venture Partners has remained the largest stakeholder with 32.8% shares post-allotment. Magicpin is planning to onboard over 1 lakh new restaurants and cloud kitchens on ONDC by the second quarter of FY25. 

"Through ONDC, we are deeply working with Ola which has a large fleet of delivery, comprising electric vehicles (EVs), and that gives us the advantage to be more cost-efficient". "We have around 2.5 lakh merchants in the ONDC network," Sharma added.

Calling Magicpin an "anti-burn organization, the startup's founder said that he is frugal in spending on marketing and advertisement. "We mostly burn our cash on merchants", Sharma added. "Our acquisition cost is low. Initially, we spend around Rs 10,000 to Rs 20,000 on a merchant, which includes putting signage at their store, helmets for the rider, etc. Besides, other expenses include discounts on initial commission, spending on influencers for marketing for merchants among others."

Sharma said that his primary goal is to grow the business and generate cash. As per the data by Tracxn, Magicpin's valuation was $323 million as of January 2022. The company's annual revenue was Rs 315 crore ($39.2 million) as of March 31, 2023.


Zomato-backed Magicpin eyes $100 million annual run rate by year-end: Founder Anshoo Sharma

In a move to encourage more startup investments in the country, Finance Minister Nirmala Sitharaman announced on July 23 that the angel tax will be abolished for all classes of investors in the Budget 2024. Additionally, the Union government will establish a Rs 1,000 crore venture capital fund to boost space startups. The minister mentioned that the Indian space economy will expand fivefold over the next decade but did not elaborate on which entity would set up the fund or how the funds would be invested.

"The announcement of the removal of the Angel Tax for all classes of investors is a huge reform. This is essential for startups to remain in India and grow from here. This is a major step forward for Indian startups and a watershed moment in the Indian startup story," said Siddarth Pai, Managing Partner, 3One4 Capital.

"A tax on capital is antithetical to capital formation and has long been used to harass startups and investors. Given the mandatory dematting of securities, Section 68, and the disclosure of unlisted investments in tax returns, the transparency gap that the Angel Tax was created to address has been plugged. It took 12 years, but the startup industry can now heave a sigh of relief that the dreaded angel tax has been removed," he added.

Manoj Agarwal, Managing Partner of Seafund, said, "As a deep tech-focused VC fund, the Finance Minister's announcement of a Rs 1000 crore space economy VC fund and an R&D fund of Rs 1 lakh crore will act as a strong catalyst for startups in deep tech and space tech. This Budget has addressed several longstanding demands of the industry. Rationalizing LTCG to 12.5% for all financial and non-financial assets is also a step towards bringing parity between listed and unlisted companies."

Agarwal further stated, "However, the biggest takeaway from the Budget is the removal of the angel tax. This will ease the process of raising funds for early-stage founders and will encourage more early-stage investors and angels to consider startup investing as a fruitful asset class. In our view, this single announcement is a small step towards making angel investment accessible for people with investment capital that currently goes to markets and mutual funds."

Anil Joshi, Managing Partner, Unicorn India Ventures, “The 1000 Cr fund of funds for space tech is testimonial to India’s capability in coming up with breakthrough solutions at low cost. This will certainly help space tech companies to look for much needed early stage capital to get started. This will certainly help mobilise over Rs 4000 Cr, great move.” 

Joshit said, “Angel Tax abolishment was long pending, glad that Hon. FM has heard industry voices and has finally abolished it. This will certainly help in expansion of angel investment in India and will take away a lot of burden from the minds of everyone on tax notice for tax paid investment. This will also free up a lot of domestic capital and improve the funding sentiment in a strong way.” 

Last year, a change in the angel tax provision introduced in the Union Budget raised concerns about startup investments in the country by foreign investors. This was because an exemption for money raised from foreign investors under the so-called angel tax regime was removed in the Finance Bill, 2023.


Finance Minister abolishes angel tax to boost startup investments

As a serial entrepreneur and investor entrenched in the Indian startup ecosystem, I've witnessed exhilarating growth phases juxtaposed with periods of chilling correction. 

While funding continues to pour into Indian startups, to the tune of $39 Bn in 2023 according to the All India Private Equity Report 2023, whispers of a global slowdown and declining investor appetite are becoming a crescendo. 

In fact, startup funding worldwide plummeted in 2023, with total investments reaching just $285 billion. This represents a significant 38% drop compared to the previous year, when the global investment figure stood at $462 billion.

This begs the crucial question - how can young, ambitious startups navigate this evolving landscape and ensure their survival?

The Funding Frenzy and its Fissures

India's startup ecosystem has enjoyed a meteoric rise, fueled by easy access to capital. This has led to a proliferation of ventures, with competition reaching a fever pitch in several sectors. 

However, a closer look reveals a concerning trend - a vast majority of the capital is concentrated in a select few sectors and marquee startups. According to a report by Inc42, over 70% of the funding deployed in 2023 went to only 100 deals, leaving a vast swathe of early-stage startups struggling to secure funding.

Globally, the hangover from 2021's funding frenzy continues to plague venture markets. Two years into the slowdown, the aftershocks of the 2021 boom are still being felt. The tech stock bloodbath and a stalled IPO market since early 2022 have thrown cold water on investor enthusiasm. Once-lofty valuations assigned in the 2021 gold rush proved unsustainable. Promising startups are now facing funding rounds that fail to meet, or even fall short of, their previous valuations.

Yes, growth is imperative, but, with a frugal lens…

In this environment, blind reliance on investor liberality is a recipe for disaster. Startups must prioritize sustainable, capital-efficient growth. Here are some key survival strategies:

1.	Laser focus on unit economics: Obsession with vanity metrics like GMV must give way to a laser focus on unit economics - customer acquisition cost, customer lifetime value, and contribution margin. Every rupee spent must deliver a demonstrably positive return.

2.	Relentless optimization: Ruthlessly optimize every aspect of your business - marketing spends, logistics, and supply chains. Embrace data-driven decision making to identify and eliminate inefficiencies.

3.	Building a moat around your market niche: Don't be a copycat. Identify a white space in the market and build a defensible moat around it. This could be through superior product differentiation, a strong brand narrative, or a hyper-local focus that larger players struggle to replicate.

4.	Bootstrapping is back in vogue: The days of easy money are perhaps over. Embrace bootstrapping - the art of growing organically using internally generated revenue. Explore alternative funding mechanisms like debt financing or revenue-based financing.

5.	Data-driven survival in a funding winter: The golden age of easy capital is over. In this new funding winter, missteps carry a heavy price tag. Survival hinges on adapting your business strategy to the new reality. Here's where data becomes your most valuable asset. Startups often collect a wealth of data, but it's only half the battle. 

The key lies in leveraging this data for informed decision-making. Data-driven insights can help you eliminate waste, identify and eliminate unnecessary spending, preventing avoidable costs that drain your cash flow. It can also allow you to optimize your cash engine by analyzing data to identify the most efficient channels for generating revenue and focus resources on those areas.

Understanding The Importance of Prudent Cash Flow Management

Cash is king, especially in a downturn. Extend your runway by meticulously managing cash flow. Defer non-essential expenses, negotiate longer payment terms with vendors, and explore innovative ways to collect payments from customers faster. Remember, even a seemingly healthy startup can go belly up if it runs out of cash.

Power of People and Purpose

In a climate of uncertainty, the human factor takes center stage. Build a strong, passionate team that believes in your vision. Invest in skilling and development to ensure your team is equipped to navigate challenging times. Remember, a purpose-driven company with a strong culture will attract and retain top talent, even when purse strings tighten.

The Indian startup ecosystem is at a crossroads. By adopting these survival strategies, young startups can emerge stronger from this period of correction. Remember, successful navigation through choppy waters is what separates the pretenders from the true contenders. Embrace frugality, prioritize growth with a keen eye on unit economics, and build a resilient team that thrives in the face of adversity. This is what will separate the fleeting trends from the enduring success stories of tomorrow.

The author of the article is Dr. Somdutta Singh, First-Generation Serial Entrepreneur, Founder & CEO Assiduus Global Inc., LP Angel Investor and Ex-Member Niti Aayog. Views expressed are personal.

Weathering the storm - Survival strategies for startups in a cooling investment climate

In the modern workplace, the presence of Generation Z employees alongside seasoned professionals poses unique challenges for managers. Recently, Shantanu Deshpande, the 37 year old Founder and CEO of Bombay Shaving Company took to LinkedIn to shed light on common mistakes and valuable insights into managing and nurturing Gen Z in the workplace. He also pointed out that to bridge the gap between these generations, it's important to recognize and cater to the unique needs and viewpoints of Gen Z individuals. 

The founder highlights a common mistake made by managers, including Deshpande himself, which involves imposing their value system on Gen Z employees. This often leads to inaccurate assessments based on traditional paradigms like punctuality or job loyalty, neglecting the unique situations and challenges faced by Gen Z individuals. He also noted that while they are often perceived as flippant and entitled, further interaction with Gen Z and study have revealed the significant challenges they face, highlighting the uniqueness of their needs. 

He identifies four key factors that have shaped the identities of Gen Z individuals: 

1] Gen Z individuals often come from successful families, which can make them feel inadequate and constantly seek validation. 

2] Early exposure to social media among Gen Z individuals leads to comparisons and fears of missing out, which fuel anxiety and insecurity. “Social media exposure from the very beginning. Deep fear of rejection. Always feel other people are living better lives, and have better jobs. It's debilitating”, Deshpande wrote. 

3] Gen Z individuals have encountered major global challenges, including the COVID-19 pandemic and climate change, which have influenced their outlook on the world and mental well-being.

4] Gen Z individuals are less inclined towards dating and sexual activity, often preferring arranged marriages due to fear of rejection.

<a href="https://www.storyboard18.com/brand-makers/shantanu-deshpande-public-memory-is-fickle-public-love-is-permanent-8474.htm">Read more: Shantanu Deshpande: Public memory is fickle. Public love is permanent</a>

As a founder, Deshpande offers practical advice for effectively guiding and assisting Gen Z employees to managers. 

1] Deshpande recommends beginning with kindness and personal involvement. He advises understanding that Gen Z employees might need more than just career development support. Managers should offer mentorship and reassurance to meet their specific needs. “ Be kind and personally involved. They may need a little 'parenting' at the workplace. They may lean on you for more than just skill and career building. They bring home to work and take work home more than we do. And I find that awesome actually”, he wrote. 

2) The founder suggests that managers should prioritise recognition and fairness because Gen Z values love, acknowledgment, and fairness at work more than monetary rewards. Giving praise and acknowledgment for their work can build loyalty and commitment.

<a href="https://www.storyboard18.com/brand-makers/shantanu-deshpande-warns-dont-take-entrepreneurship-advice-from-non-founders-online-heres-why-9985.htm">Read More: Shantanu Deshpande warns: Don’t take entrepreneurship advice from non-founders online. Here’s why</a>

3] Deshpande states that fostering open communication is crucial. Managers should encourage Gen Z employees to express themselves and listen actively to their viewpoints. Their unique insights can offer valuable perspectives on evolving consumer trends and societal shifts. “Give them freedom to express and listen to them. There's so much to learn about how our consumers and the world is evolving from the way Gen Z thinks”, he wrote. 

Deshpande also emphasised the importance of navigating generational differences with an open mind and a curious approach. By being less judgmental, we can avoid negative consequences and foster a better workplace environment.

<a href="https://www.storyboard18.com/quantum-brief/shantanu-deshpande-calls-out-the-absurdity-of-a-dude-selling-zero-marketing-costs-workshops-20176.htm">Read more: Shantanu Deshpande calls out the absurdity of a “dude” selling “zero marketing costs” workshops</a>

Shantanu Deshpande of Bombay Shaving Company says don't judge Gen Z as 'flippant and entitled'

By Mansi Verma

Venture capital (VC) funding to Indian startups hit a six-year low in November, with little signs of a thaw in the prolonged funding winter.

Indian startups recorded only $223 million in 35 deals in November, a fall of about 66 percent from $655 million in 52 deals in the previous month, data shared by Venture Intelligence on December 1 shows.

The only time the funding sank lower for the Indian startups was in January 2017 at $207 million in 43 deals.

“November and December generally receive lower funding with the year coming to an end and the festive season. VCs are not doing newer rounds and mostly looking at closing pending ones. This along with caution among investors is pulling the numbers down,” Mitesh Shah, founder of VC firm IPV, told Moneycontrol.

While investors are open to evaluating startups, Shah added that investors had become more selective and were not running after numbers. “Now people are weighing all the options before committing to anything,” he said.

The month also recorded a massive year-on-year decline of 78.2 percent from $1.02 billion in 62 deals in November of 2022.

Startups shifting gears

The impact is apparent on the overall funding for 2023. Indian startups recorded about $7.05 billion in funding till November, down 71 percent from $24.36 billion in 2022.

Venture capital firms also slowed down on closing rounds with the number of deals down to half at 544 in the first 11 months of 2023 from over 1,226 in the whole of 2022.

This comes at a time when investors have shifted focus from high-growth ventures to profitable startups, prolonging the funding winter.

It was in FY23 that startups shifted gears to focus on profitability. The firms, which were on a growth spree in 2021, laid off staff and trimmed marketing and advertising budgets to cut costs.

From 2022 to date, approximately 100 startups have let go nearly 32,000 employees, Moneycontrol's layoff tracker shows.

Stage-wise funding

According to the reported numbers in FY23, companies including upGrad, Eruditus, Practo, LEAD, and Moglix, trimmed their losses. These developments, however, are yet to make an impact on the late-stage funding rounds.

Late-stage funding rounds again disappeared from the ecosystem in the last two months, following a noticeable resurgence in August and September.

In 2023, startups recorded only 45 deals with a total funding of $1.9 billion, down from 77 deals with a funding of $6.8 billion in the previous year.

While early-stage rounds have also been few and far, recording only $1.14 billion in funding in 316 deals, the top deals in November ranged only from seed to series B, indicating greenshoots for early-stage funding.

Investors, however, expect better deal flow in 2024 and a comeback for late-stage deals in the later half of the year.

“I believe the numbers are trailing the actual sentiment. There is a lot more positivity and excitement going into the final calendar month of 2023,” Anirudh Damani, Managing Partner, Artha Venture Fund told Moneycontrol.

With equity markets at record highs, Damani said, the recovery in the private markets was around the corner.

“I expect a fantastic year for investing in 2024, both for investors and founders. The funnel has restarted, the move up the funnell will be later next year. So, I expect a flurry of activity in the next two quarters, especially post the 2024 elections,” Damani said.

Among the most active VCs, Peak XV Partners (formerly Sequoia India) led with 39 deals followed closely by Blume Ventures and Accel India with 26 and 20 deals. After the top three, Rainmatter Capital and Nexus Venture Partners followed with investments in 16 and 13 companies this year.

VC funding in Indian startups sinks to a 6-year low in November

In 2021, when Aditi Anand, a marketing professional, switched jobs and was looking for ways to break the ice and connect with her co-workers in a work-from-home world, she chose LinkedIn. She got active on the network designed for working professionals to express her thoughts on working remotely, write about trends that caught her attention and gather views on what the marketing community was really thinking at large. 

From 1,500 followers to more than 27,000 followers now, Anand was picked as one of the LinkedIn Top Voices of 2022. “I got appreciation from former co-workers, colleagues who I never met in my new job, peers and others from my network. I wouldn’t have got the exposure I have if I wasn’t on a platform like LinkedIn,” admits Anand. She adds that as a marketer who has worked with some of the top consumer brands like Coca-Cola, Airtel, Nokia and Flipkart, posting and daily engagement on LinkedIn has helped her simplify her creative process. It has helped her express her points of view during brainstorming sessions with much more confidence and clarity. Anand has also been getting speaking opportunities at industry events and jury invitations for advertising award shows.

Move over, influencers of yore. Anand is one among many who found LinkedIn to be a means to express themselves. The network may have been launched in 2003 as a way to connect jobseekers with recruiters, and to widen professional networks. It has 830 million users globally who generate about 8 million posts and comments every day. 

But over the last few years, LinkedIn has changed its algorithm, introducing newsfeed-like features. This has not gone down well with everybody, with some saying it is trying to be like other social platforms rather than a professional platform. 

“LinkedIn is slowly becoming like Instagram where you see videos of people dancing in suits, workation photos and creatives on leadership lessons that no one in particular is seeking,” says the chief marketing officer (CMO) of a multinational company on condition of anonymity. 

The trends are similar on microblogging site Twitter. The increasing habit of “oversharing” has led to many in corporate India and adland to open up and enhance their personal brands. But is it all getting too much? Is the pursuit to build personal brands and the race for clout clouding platforms? 

Building personal brands

Today, a set of creators who are hyperactive and catching a lot of attention on platforms like LinkedIn, Twitter, YouTube and Instagram happen to be entrepreneurs. In fact, this year image consultants and influencer management agencies are actively getting requests from CXOs, startup founders and even digital marketing agency chiefs to handle their personal accounts on social media and digital platforms.

These companies get paid anywhere from Rs 10,000 to Rs 2 lakh to manage these personal profiles. This includes creating content banks, pushing promoted posts to garner more followers and crisis management, if required.

Viraj Sheth, CEO and co-founder of Monk Entertainment, says entrepreneurs, especially the younger ones, have a different unabashed kind of energy. 

“They’re not low-key, they’re not building in stealth. They don’t want to hide things or keep anything discreet. They want to be open about their progress and failures. They want to share their updates with their community. They understand the importance of having reach and followers on social media. Even if the founder has 5,000 followers on a social media platform, that’s 5000 people he can introduce his product or service to. That’s 5,000 less people he has to spend his marketing money on,” he says.

Bharat Chugh, former Judge and advocate Supreme Court of India, has similar views: “An employee influencer is not the average social media influencer on Instagram. They are employees who are also brand advocates. The soft brand influencing by the employees themselves is common and effective online. Employee influencers bring a personal touch. They attract like-minded individuals who are interested in either the product/service or employment in the company they work for. Consumers also trust brands and companies who use their own employees as advocates.”

However, they do have a different set of rules to follow, a checklist they have to go through before hitting that publish button.

Perils of being vocal

Recently, a creative director of an advertising agency called out the founder of a Mumbai-based digital creative shop on LinkedIn for claiming a famous philosopher’s quote as his own. The founder quietly took the post down and moved on to his next content piece on creativity, advertising and everything in between.
 
“It’s ironic that some professionals who give creative advice to brands have plagiarised content on their timelines. All of this just for likes and shares,” says the creative head.

A marketing head of a tech startup has of late been seeing promoted posts without any disclaimer from a former colleague, who now leads a homegrown BFSI company’s branding. 

“Building personal branding needs subtle strategies. The more aggressive you are with your content approach, the more people will stay away from engaging with you,” says the creative head quoted above. Another CMO tells Storyboard18 that several former marketers are moving to a heavy personal branding push. She observes, “It looks like they are using desperate ways to draw attention. You cannot bombard your community with weekly wisdoms and WhatsApp videos with captions that don’t make sense. Some of them have truly forgotten the basics of marketing. Be authentic. That’s about it.”

Mitesh Kothari, co-founder and CCO of independent digital agency White Rivers Media, believes personal branding is more important now than ever before. He says, “It helps build credibility and strengthens your networks, leading to client retention and more syndication opportunities. As a brand’s backbone, C-suite executives must be vocal and establish themselves as thought leaders in their niche. Understanding that your personal brand is what people say about you when you’re in the room is essential. The best thing about that is you can make them think whatever you want by actively creating any environmental perception.”

Having said that, there are founders who stretch the point. Not so long ago, Shantanu Deshpande, CEO of Bombay Shaving Company, sparked a furore with a post advising youngsters to work 18-hour days in the formative years of their careers. Facing a severe backlash and trolling, he first apologised to the people who disagreed with him, and logged off from LinkedIn. But he returned in a couple of days to declare that the episode created over Rs 20 crore worth of PR for the company. Deshpande thanked all the people who sent him hate. A former marketer says, “This episode is a classic case of why consumers have trust issues with influencers. You signed off a platform and returned in no time. So was this all a part of a plan?”

Planned strategy or organic, founders who represent their brand and the company’s culture also need to be conscious of what and how they communicate to their online communities.

The rulebook

There are several founders who are creators. They give a shout-out to brands that they like to support in the business community with no returns. However, many brands are targeting vocal employees and entrepreneurs whose opinions matter. Many popular marketing heads on LinkedIn that Storyboard18 spoke to indicate that they were offered brand collaborations from categories like BFSI, consumer durables, recruitment firms and others. All of them have been politely refusing the offers due to contractual issues with their employees.

Chugh says that in recent times, many companies have even launched employee influencer policies. Some of these companies have been tailoring contracts for certain employees who have enrolled in such programmes, he says. According to him, it is advisable that the social media profile of the influencer is a professional or business account. “Be that as it may, in any event, all such brand-related content by employee influencers must strictly carry a disclosure,” he adds.

As per the Advertising Standards Council of India’s influencer guidelines, all advertisements published by social media influencers or their representatives on such influencers’ accounts must carry a disclosure label that clearly identifies it as an advertisement. A disclosure is required if there is a material connection between the advertiser and the influencer. Material connection includes employment relationships.Experts believe even entrepreneurs and employee influencers should strictly follow these rules too.

“At times, employees also moonlight as influencers. In such cases, it is not advisable for the employer to control the employees’ use of their personal social media accounts. However, it may also be advisable for employment contracts (with such influencers) to clearly mention that such employer shall not undertake any activity that may harm or bring disrepute to the employer and/or the brand,” concludes Chugh.

The rise and perils of employee influencers and founder brands

In early 2022, a senior client servicing executive from a leading advertising network was mistakenly marked in an email by the finance team. It was a follow-up mail sent to a large technology company which hadn’t cleared its dues for 24 months straight. He was surprised. He couldn’t understand why the agency actively worked with the client when they were not being paid for their services.

Storyboard18 spoke to multiple agency heads who said that clients not paying on time or not paying at all is a critical issue that’s not received enough attention from stakeholders.

In another case, a big technology company hasn’t paid its creative agency for months because the company’s in troubled waters. However, the agency continues to service the client and deliver work.

Since the breakout of Covid-19, delays in compensation for work undertaken by agencies are at an all-time high. While some clients are genuinely struggling, others are using pandemic-related business pressures as an excuse to release payments late.

Agency executives that Storyboard18 spoke to indicate that, currently, the average payment cycle after raising a bill is 60-90 days. This is putting a lot of independent shops and especially digital agencies under pressure. Global digital publishers like Google and Facebook have strict measures in place for defaulters. That’s why agencies make payments to Facebook and Google from their pockets to keep business running as usual.

The delayed payment amount depends on the risk appetite of the agency. Normally there is a cut off, it could be a month’s retainer. So, about 8-10 per cent of annual retainer. The figure can range between Rs20 lakh to crores.

The problem is more acute on the creative side of the business.

Speaking about the media investments agencies, Shashi Sinha, CEO, IPG Mediabrands tells Storyboard18, “The scope of delayed payment is less on our side of the business because clients know they will not be able to run ads without paying upfront.”

Addressing the elephant in the room

Delayed payment is an affliction that no one wants to talk about, but it’s a big issue that every agency is battling, admits Naresh Gupta, co-founder and chief strategy officer of Bang In The Middle.
<blockquote>“We have become short-term liquidity providers and as an industry, we do not even seem to see this as a problem. We treat this as the cost of doing business and almost never calculate it, but it is a big cost,” Naresh Gupta, Bang In The Middle.</blockquote>
He further says agencies are at a losing end unless they ask for advance payment.

Today, film production, social media influencer activities, and technology-driven work have an element of advances, but regular retainer businesses don’t work that way. The advertising business is a relationship-driven one. Many times a campaign is worked on and released without advances, purely on a trust basis. Sometimes it works, and other times it backfires.

Some ad executives have found that new-age companies which have no track record of working with advertising agencies usually end up paying their agencies late, mainly because their systems are always in a work-in-progress mode.

With larger corporations, even if there are delays, agencies are commercially safe.

In India, late payment is largely for one reason; “the client at the front end who has to start the process of payment does not do so. I have no idea why they feel that doing the commercial conversation is not a good thing. In almost all cases of delayed payments, the reason is this: the process internally has been delayed by the ones who need to start it,” observes Gupta.

Agencies getting vendor-zoned

Arun Iyer, founder and creative partner, Spring Marketing Capital believes that the problem is also the fact that advertising agencies are getting vendor-zoned. He says, “Marketers need to treat agencies as their partners.
<blockquote>"Issues like payment delays happen only when agencies are treated like just other vendors. There needs to be mutual respect. At the end of the day, agencies are also running a business, just like brands,” Arun Iyer, Spring Marketing Capital.</blockquote>
Sai Ganesh, an independent brand consultant and former head of brand at Dunzo, agrees with Iyer, but also says that the situation is improving. “We are seeing a lot of agencies becoming brand partners and marketers are giving them the freedom and compensation they deserve. Of course, there is a huge room for marketers to respect agencies’ time and effort,” says Ganesh.

Ganesh also points to cases where agencies have refused to participate in a pitch if they aren’t paid for the time and effort they put into creating ideas and strategies. Creative agencies also know how to charge a premium service now and know how to hold their ground on fair payment.

Still clients find ways to hold back payments. The issue of delayed payments can emerge because of cash crunch and financial crises. In some cases, payments are delayed or withheld because the client isn’t “happy” with the campaign results. “To be honest, that’s absolutely unfair. However, that happens when goals are not mutually discussed and put on paper," says a creative director of a digital agency on the condition of anonymity.

Streamlining systems and support

Over the years, industry bodies have stepped in and addressed payment-related issues to provide solutions to their members. For instance, the advertising Agencies Association of India (AAAI) helps its agency members by protecting their interests.

When a client does not pay the agency for the services rendered by the AAAI member agency, the matter is referred to the Client Agency Reconciliation Committee of AAAI. AAAI seeks the views of the client on non-payment. Thereafter, a tripartite meeting of the client, agency, and the chairman of this committee is organised. This committee examines all the aspects of the issues involved and an amicable solution is arrived at.

In addition, AAAI has joint committees with IBDF (TV), IAMAI (digital), IOAA (outdoor), and AROI (radio). “If and as needed, they also step in to help us recover the outstanding from faulting clients,” says Anupriya Acharya, president, Advertising Agencies Association of India (AAAI).

While the support from industry bodies like AAAI is helpful, their members are mostly networked agencies, bigger independent agencies, and a handful of other small shops. For non-member agencies dealing with clients that default on payments or pay late is even more challenging.

Bharat Chugh, a former Judge and advocate of Supreme Court of India, says, it’s high time advertising agencies have clear contracts laid down with precision. For instance, specifying the terms of the engagement, key performance indicators and concrete ways of objectively measuring results. “In our experience of representing many ad companies, we’ve seen that this part leads to the most disputes. Especially in the digital advertising space. It should be very clear what the expectations of customers are, the targets to be met, and how data is to be validated between the parties,” he tells Storyboard18.

Chugh also says it’s important to have clear payment terms, such as dates when the invoices are to be cleared and, if there are any disputes, the same should be escalated right after the service. It should also include a payment schedule and the preferred payment method, alongside a clause containing a late payment policy.

Agencies should consider adding a provision allowing payment from clients in installments. This will ensure that delayed payments don’t interrupt cash flow, thereby creating a middle path for both the service provider and the client.

What agencies can do: Bharat Chugh, former Judge and advocate of Supreme Court of India shares five legal tips 

If the contract has an arbitration clause, an ad agency can pursue its remedies by initiating an arbitration against the customer to recover its dues.

If the agency is a Micro, Small or Medium Size Enterprise (MSME) (having registered as one) it may approach the facilitation counsel for a conciliation and, then if it fails, recovery, in the special remedy under the MSME Act.

If the agency is not an MSME and the contract (Or the invoice) does not have an arbitration clause, then the agency may have to file a civil suit seeking recovery of its amounts. The downside of a civil process is that it takes a very long time and there are many roadblocks to recovery in a traditional civil court process.

It can also - if its claims are admitted/undisputed, additionally, approach the National Company Law Tribunal, against the debtor company seeking initiation of a corporate insolvency resolution process against it. (This is usually a step that makes most companies pay up their dues. This is a remedy under the Insolvency and Bankruptcy Code).

It can also claim a remedy under Order 37 of the CPC which provides the person who wants to recover his money, the liberty to file a Summary Suit for recovering his payment dues, and Defendant is provided with only 10 days to defend the suit.

<a href="https://www.moneycontrol.com/news/trends/features/storyboard-are-advertising-agencies-getting-vendor-zoned-7598801.html/amp">Also read: Are advertising agencies getting ‘vendorzoned’?</a>

Late payers and defaulters: Why clients don’t pay their ad agencies on time

Meme marketing is becoming the latest tool in companies’ digital marketing arsenal. More companies are devoting a bigger portion of their budget than ever before towards meme marketing, and specialised companies are stepping in to help them go viral.

But why memes? “That is the language that Netizens understand. People don’t want to be preached to. Memes subtly integrate brand messaging into conversation,” says Aditya Sobti, creative lead at Schbang, a creative and digital transformation agency. “Customers don’t know their time has been taken (by a brand).”

Take the case of the recent trailer for the movie Brahmastra, starring Ranbir Kapoor, Alia Bhatt and Amitabh Bachchan, among others. A dialogue said by Kapoor’s character Shiva in the trailer – ‘Kuch rishta hai mera aag se (I have a strange connection with fire)’ – quickly became a meme. Several brands like Tinder, Dunzo, Zepto and Voot were quick to catch on, and posted their own variations of the meme.

“Memes are a part of our day-to-day lives,” says Saksham Jadon, founder of Youngun, a meme marketing agency that was started in 2019. “And brands want to be part of internet conversations.”

Youngun handles clients such as Netflix, PepsiCo, Swiggy and Cred.

A short history of meme marketing

According to Sobti from Schbang, the meme marketing trend in India was started around 2018 by brands like Zomato and Swiggy, both of which are in the food-delivery space.

Many startups typically didn’t have much money to spend on recurring campaigns that are heavy on print ads and TV commercials, which are typically expensive.

Instead, they relied on a more irreverent – and practically free – marketing style which involves catching on to the latest trending topics online and putting the brand’s spin on it. And this often involved memes.

An analysis of Google Trends indicates that the search term ‘meme’ had been slowly gaining in popularity in India since around 2013. When compared to the worldwide trend, growth in India was slow.

The real spike happened during the pandemic-induced lockdowns in March 2020, when millions of people all across the world were stuck at home, with little other than their phones and laptops in the way of entertainment. While worldwide interest in memes grew at that time, India’s growth was much faster, and stabilised at about 75% of those levels since then.

Startups and their marketing teams were quick to catch on. The ability to make memes is even a part of the job description for a social media role at a startup. Fintech unicorn Slice even has a ‘Chief Meme Officer’.

The method to the viral madness

Brands that don’t have their own meme makers go to agencies like Jadon. “We’ve cracked how to make it so organic that even news publishers will pick it up. We make sure it’s worth people’s time.”

For instance, Youngun handled the meme marketing for the recent ‘Ranveer vs Wild with Bear Grylls’ web episode, featuring actor Ranveer Singh. The trailer sparked a meme fest, and ended up getting covered by several news outlets.

Brands are also exploring user-generated memes, but with a caveat.

Meme Chat, a meme community social media app started in 2019, enables brands to take this route. Kyle Fernandes, 24-year-old co-founder and CEO of Meme Chat, explains how the process works, “A brand sponsors a meme template. Our users generate thousands of memes, which are curated by moderators. The best ones are shows to the brand. If a user’s meme gets selected by the brand, they get paid Rs.5-10.”

The chosen memes are propagated across meme pages on Facebook and Instagram. Meme Chat said it owns 100 meme pages with a total following of 60mn and has tie-ups with another 300 that have a following of 540mn, meaning it can tap a collective following of 600mn.

[caption id="attachment_1307" align="aligncenter" width="700"]<img class="size-full wp-image-1307" src="https://images.storyboard18.com/storyboard18/Kuch-viral-bana-do-yaar.jpg" alt="Kuch viral bana do yaar" width="700" height="1200" /> Kuch viral bana do yaar[/caption]

Meme Chat has done campaigns for companies such as Britannia, Moj (owned by ShareChat) and films like Jugjugg Jeeyo. Last year, the company raised $1mn in a funding round led by BeeNext, a Singapore-based venture capital firm.

OTT platforms are the biggest clients for meme marketing agencies, followed by e-commerce and digital startups.

Sometimes, memes can also be "seeded" via influencers and content creators – they either repost these memes, or make their own versions of them. And when multiple brands are handled by a single agency, the agencies ensure the brands end up participating in each other's meme trends online, seemingly organically.

Larger, more traditional companies are slow to the uptake, says Sobti. Lawsuits arising from copyright infringement are the main concern, even though lawsuits like these are rare.

Way back in 2015, Getty Images asked GetDigital, a German blog, to pay licensing fees for using a picture of a penguin from their image database to create what would become a widely popular meme called ‘Socially Awkward Penguin’.Getty said they were trying to protect the livelihoods of photographers who click such photos. GetDigital was also asked to keep quiet about it. They didn’t.

In a later report by Huffpost, Getty said they had pursued similar action against several such blogs who used images in this manner.

“Companies like Jio and Britannia have a lot to lose,” says Sobti. “It’s been tough to convince them, (but) slowly and steadily, brands are warming up to the opportunity – they know they will lose out on social media reach otherwise.”

Britannia recently launched a meme campaign for the launch of a new biscuit. The campaign was managed by Schbang and Meme Chat.

A numbers game

Meme marketing companies can change anywhere between Rs.2 lakh to Rs.3 crore, depending on the duration of the project.

Memes are now becoming a bigger part of companies’ marketing budgets. Snehil Khanor, CEO of Indian dating app TrulyMadly says that meme marketing now makes up 30-40% of his content marketing budget, up from 7-10% when they first started meme marketing about two and half years ago.

“We see very good engagement for memes versus other posts. Users are able to relate to it – it doesn’t seem like advertising,” says Khanor. Video memes are now becoming more popular versus static ones, says Khanor.

What constitutes virality? It depends on who you ask. Fernandes says that it would have to be about 10 million in reach and engagement numbers would constitute virality. Jadon says that it’s viral when news publishers organically pick up stories on memes, or the meme makes it to the meme review video of an influencer like Tanmay Bhat.

But sometimes, it’s hard to tell what’s organic and what’s not.

For instance, a recent meme that went viral was a screenshot of a WhatsApp conversation between a college student and his dad. Storyboard18 spoke to the original poster of the meme, 23-year-old engineering student Jitu Malani from Ajmer. Malani, who posts memes on his Twitter page, said he had no idea that this screenshot would go viral. Malani said he was approached by a few news outlets after the meme went viral, although not by the brand itself.

While the meme appears not to have been posted by the brand, the story was picked up by several news organisations. Jadon put up a LinkedIn post with screenshots of the coverage, with the caption ‘Remember this viral meme? Work by Youngun – a Meme Marketing agency for Swiggy’.

Similarly, yet another viral post by Swiggy shows signs of the blurring lines between brand-led and organic viral content.

In this case, it was a video of a man on a horse carrying a Swiggy delivery box. Three days later, the brand put out a tongue-in-cheek notice saying it had taken note of the viral video, and announced a reward for whoever identified the horseman. The day after that, the app’s delivery status section had a modification which showed a man on a horse, instead of the usual bike.

A week after the meme went viral, the company put out another letter, saying it had identified the horseman, as well as the person who shot the video.

Sobti says that, typically, changes to an app take weeks to plan and execute. He added that this particular meme was considered a well-executed campaign in marketing circles because of how organic it looked.

In response to questions about the story, Swiggy sent links to the notices it posted on its official Instagram page (described above).

Sobti says there’s no harm in marketers trying their best to make memes look as organic as they can.

The audience has a few laughs, and the brand wins too.

[caption id="attachment_1306" align="aligncenter" width="700"]<img class="size-full wp-image-1306" src="https://images.storyboard18.com/storyboard18/Manufacturing-Memes-How-meme-marketing-works.jpg" alt="Manufacturing Memes - How Meme marketing works" width="700" height="700" /> Manufacturing Memes - How Meme marketing works[/caption]

Engineering the viral: The science behind meme marketing

Former HUL marketing executive Shashank Mehta founded The Whole Truth in 2019 to offer healthier alternatives in packaged foods. As a consumer, Mehta, who has been through multiple weight-loss cycles in life, realised the big food brands often tell “convenient half-truths”. To solve that problem he not only launched a company that could fill that need gap but also decided to feature in the brand’s advertising.

Recently, The Whole Truth roped in comedian Rohan Joshi to create a series of videos. In the “educational mini-series”, Joshi plays the role of ‘Healthy Food’ and Mehta plays ‘The Whole Truth’, and they go on to have a conversation that highlights the “hidden chemicals” in packaged foods. In another episode, we see the many ways food is made to look irresistible in ads. For instance, the milk in the cereal bowl is actually glue and the golden honey drizzled on pancakes in ads and in product photos is engine oil.

Mehta tells Storyboard18, when he creates and features in content for his brand, he thinks “consumers can feel the honesty.” They see through paid endorsements like influencer or celebrity-laden ads, which are often forced, Mehta believes.

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<blockquote>Shashank Mehta says, "If a brand is born out of a personal struggle or passion, then the founder can make a powerful difference in the brand’s marketing strategy.” </blockquote>

Community builders

Entrepreneurs Sujata and Taniya Biswas quit their corporate jobs to sell sarees. Growing up, the duo loved looking at their grandmother’s and mother’s saree collections. It took them to “a happy place”. The Biswas sisters started the fashion brand Suta with a mission to make a new generation of women fall in love with sarees and wear sarees every day and not just for special occasions.

Initially, Taniya modeled the sarees, taking her photos in natural light with no editing, because they had a tight marketing budget. The photos were cropped in a way that one could only see the model’s body draped in a saree. On Instagram, these headless photos caught people’s attention. Since then the duo has been featuring in the brand’s reels, stills and all other brand communication. They say with this strategy, they have been able to create a community that not just wants to know more about the brand but also about the founders.

The Biswas sisters tell Storyboard18, as creators, their strategy is to keep “content fluid”. They are also often seen promoting other founders and their brands through live sessions, giveaways and fundraisers.

“Consumers often ask how we are okay promoting competitions’ brands. Honestly, especially in the category we operate in, we are like one close knit community. 

Trust infusers

Vaibhav Sisinty calls himself “a growth hacker by profession and an entrepreneur from heart.” For two years he had been building his startup Growth School in stealth mode. Earlier this year, Sisinty raised a seed round from Sequoia Capital, Owl Ventures and angel investors. He started when he was 18, and took on several jobs, including working as a marketing manager at Uber.

Through Growth School, Sisinty wants to help learners meet professionals and influencers who have become leaders in their particular industry and help them upskill. From courses on UI, UX, social media marketing, freelance businesses, NFTs, crypto investments, D2C businesses and more, Growth School is going beyond textbook tutoring. Sisinty himself creates content to bring learners together for his masterclasses and mini courses on LinkedIn and Instagram.

<blockquote class="twitter-tweet">Btw this is how we unveiled the big news to the team :P PS: All the actors in the video are GrowthSchool employees. <a href="https://t.co/1zDwrZgeQS">pic.twitter.com/1zDwrZgeQS</a>&mdash; Vaibhav Sisinty (@VaibhavSisinty) <a href="https://twitter.com/VaibhavSisinty/status/1486669841809297412?ref_src=twsrc%5Etfw">January 27, 2022</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>

He says, “As a founder, it’s natural for me to think about content because people believe in people.”

Though being the brand face of your company is always a good idea, Sisinty, thinks “the brand shouldn’t revolve around the founder.” But, in the beginning, it helps in bringing the right talent on board and building trust which is every brand’s ultimate goal.

For new and small brands, especially in the crowded D2C space, using founders in advertising and marketing communications is a great way to build credibility and trust. It’s also cheaper, of course. For brands that have tight or no ad budgets to speak of, deploying founders as the face and voice of the brand is a sound and economical move.

But sometimes it’s not about creativity, frugality, budgets or brand life-stage.

In December last year, Mahashay Dharampal Gulati passed away at the age of 97. He built a Rs 2,500-crore brand, an empire of spice. Most of India, however, knew him as “MDH uncle”. Because for years the smiling face of Gulati, who always sported a white sherwani, red turban and pearl necklace, appeared in practically every ad for the spice brand. He was the one and only 'Masala King'.

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