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Mahesh Murthy: Maverick Marketeer

FOUNDER and chief executive officer of Pinstorm, the world’s first pay-for-performance digital marketing firm, Mahesh Murthy has made his own rules for success.

Murthy, 43, has worked with some of the leading multinational ad agencies - Grey in India and Ogilvy in Hong Kong, spearheading campaigns for HP, Nike, Coca Cola and The Economist. He wrote and directed a spot for MTV voted “Asia’s best commercial of the decade”.

He helped launch the first commercial version of Yahoo! in 1995 and the Earth’s Biggest Bookstore campaign for Amazon.com in 1997. Murthy also consulted with Star TV, launching its youth vehicle, Channel V, and creating a net and TV presence for it.

He played the Donald Trump-equivalent role in Business Baazigar, an Indian game show similar to The Apprentice, involving entrepreneurs and business plans. In 2006, Mahesh helped set up Seedfund, an early-stage venture capital fund in India. Pinstorm, headquartered at Mumbai, has more than 120 staff.

Mahesh spoke recently with Khaleej Times. Following are excerpts from the interview:

How did the idea for Pinstorm occur to you?

I love advertising. I’ve been in the business since 1984 - but over time I saw advertising break up and go two separate ways… into a brokerage business and a consulting business. If I was to use a financial analogy – rather than run a hedge fund or a portfolio, it meant that you had to pay one man a flat fee for advice and another to simply trade the shares. This almost never works for you in finance – and it certainly doesn’t work for you in advertising.

After 15 years in this business, I knew I loved it, but I realised that because you never got paid for your good work, you could never get rich. I looked around me — there were no advertising billionaires — and not too many millionaires either. And there were no ad firms in the Fortune 500. The work was great – but (not) the business… So I got out and moved over to the marketing side of things, invested in startups and such, till I saw the rise of something interesting.

Google was the medium that first opened my eyes to a curious form of advertising. On Google, you didn’t pay for your ad – or sponsored link – to appear. You paid only if the consumer responded to it and clicked on it. When I thought about it I figured that this was perhaps the kind of advertising I was waiting for – pay-for-performance.

So I started Pinstorm in 2004 in a 550 square foot office with one person, and we proudly declared ourselves the first pay-for-performance advertising firm in the world. We did something truly crazy – we didn’t charge a retainer, we didn’t charge for creative, we didn’t charge a media commission – in fact, we paid for media from our own pockets – but we put it all together – and charged the clients on the basis of the results our campaigns delivered.

What was the initial response to this model of advertising?

Our clients were curious at first. When they saw results coming in, they were excited – and our business grew as theirs grew. In fact, once we moved them to this model, they didn’t question us on the creatives or the media plans – but only on the results. And happy clients talk to other clients.

From then till a few months ago, in the first 5 years, we never had to actually make a cold call to pitch a client in India – we were invited every time by word of mouth – that was the power of the concept we had.

But of course, pay-for-performance was not the only problem we wanted to solve in advertising. Another big issue is that ad agencies say they’ll build consistent global brands — and they do so for everybody, except themselves. A McDonalds and a Pepsi are the same around the world – but a JWT and Bates are different in every city they are in. So I was clear that we had to change the way strategy and ads are created.

We learned from Infosys and Wipro here — building a strong, centralised creative and media team in India that worked on all brands around the world. It allowed us to offer a consistent quality of creative and results to all our clients globally.

Again, nobody else in the world has done this –and we think it’ll have great benefits for us in the long run.

The third thing we tried was to be global from as early as possible. Most Indian and UAE agencies stay local — we set up offices in Singapore, Kuala Lumpur, Beijing, San Francisco, Delhi, Zurich and Bangalore – all on our own steam, all with no (venture capital) investors, and all with no foreign big brother. It’s started paying off. We now handle a few clients globally already — and we hope to grow this side of our business over the next few years a lot.

Who are your biggest competitors today?

We have a few types of competition. After we started offering performance advertising, we’ve perhaps helped change the market in India – today over 65 per cent of the digital ad market in India is performance-driven and we’re the leading player…. Many independent digital agencies had to change their models to match our offering. So there are a couple of smaller performance ad firms who copy our every move. We keep a close eye on them.

That apart, we have the digital arms of the big ad agencies. We’re not so worried about them, because they don’t have the flexibility, the technology and the approach we have to delivering results to the client – but they’re good at client service. So we have to match their service levels to be able to win clients away from them.

The third, the category I always worry about- is the small and hungry ones. These are the tiny startups which are motivated to take us on, like we were once motivated to take on the WPPs of the world. I’m always afraid that we’ve become the large firm that smaller firms like us used to once take potshots at.

Does Pinstor, have any plans for expansion, especially in the Middle East?

Pinstorm’s premise is to manage global brands with consistence and through pay-for-performance. To support this, we will soon need an EMEA office, and hence the Middle East is certainly on our radar.