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by Kalpana Pathak

Education institutes are using a new technique—search engine marketing (SEM)—to spread awareness about their programmes and to create a niche for themselves in the students’ minds.

SEM is the technique of placing any website in the first few pages of an Internet search engine after a strategically defined set of keywords are typed-in.

SEM leads to an increase in hits by the targeted traffic to any website, thus resulting in greater visibility.

In the past, the Indian Institute of Management Ahmedabad used the SEM technique to market its Post Graduate Programme for Executives (PGPEX) programme, the Xavier Institute of Management (XIM) Bhubaneshwar also used SEM to generate interest in one of its online programmes last year.

Other major SEM users in India are Amity University, Rai University, IMS coaching centre, Career Launcher and Whistling Woods International. In general, Indian institutes are just waking up to SEM. International players have been using SEM for quite a while now.

In India, of the top 50 education institutes, 10 spend on using SEM. Abroad, virtually every university uses this technique.

For instance, U21 Global, one of the largest online universities in Asia uses the SEM company, Pinstorm to reach out to students in India and the rest of the world. Pinstorm’s other major clients are Whizlabs, INSEAD, National University of Singapore and Thomson Education.

“A lot of international universities are targeting Indian students. U21 Global is a huge player in this area for which we do work in 11 countries. Career Launcher is also one of the major advertisers through the web,” says Pinstorm founder Mahesh Murthy.

“SEM helps the advertiser capture targeted traffic and offers a much better return on investment compared to other ad campaigns ,” says Suresh Reddy, founder Ybrant Technologies.

Ybrant technologies has partnered Integrate Media in Mumbai to enter the Indian SEM market.

So, with the Internet enabling marketeers reach a wider range of students, online presence has become a must for the institutes. “Today, the entire decision making process on where and what to study, starts online. Not only students, but parents also search on the net for higher education options,” says Murthy.

Beside contributing towards brand-building exercises, SEM gives the institutes an option to publicise their non-performing or lesser known programmes through SEM. IIM-A, for instance, advertised its Post Graduate programme for executives (PGPEX) programme using SEM. The programme has now become a popular one among working executives.

An advantage of SEM to international institutes, however, is that they do not need a physical presence in India.

The cost of SEM varies from course to course and is different for bulk advertising (read a bouquet of courses). XIM-B for instance, paid around Rs 4 lakh to advertise for one of its courses. Advertising for more than one course can cost up to Rs 8 lakh or more.

Overseas institutes spend in excess of $20,000-$25,000 (Rs 8 lakh-10 lakh) in India per month to leverage the SEM advantage.

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Leslie D’Monte

Hardly a three-year-old search engine marketing (SEM) company, Pinstorm is already kicking up a silent storm in the global online advertising world. It’s probably the only agency in the world to neither charge an agency commission nor a retainer fee.

“It’s a pay-for-performance model,” says founder Mahesh Murthy. With a turnover of around Rs 11 crore, Murthy is aiming at Rs 25-30 crore by fiscal 2008.

“Our job is to connect prospects to the brand. We pay for the media, the creative, the account service and the technology. The client only pays for the results,” he asserts. Today, Murthy has around 40-45 global clients across the hospitality, BFSI, education, online business, IT and FMCG sectors. They include Lee Jeans, Sharekhan, Indiagames, Makemytrip, HP and Colgate.

Pinstorm’s model is simple. The online business comprises search engine marketing (45-48%) and online advertising (display, et al) which jointly account for 90-95 per cent of the business. The remaining 5 per cent comes from “building online communities”.

For instance, when Lee Jeans wanted to connect with the youth, it asked Pinstorm to come up with an idea. It came up with leelounge.com that today has over 17,000 members in the age group of 17-23 who surf the internet or use their cellphones to post messages and interact with other forum members. Pinstorm is paid for every recruit it brings in. “This is an audience that does not watch too much TV but is very mobile. It works for Lee Jeans,” reasons Murthy. Likewise Pinstorm claims to generate “two leads every minute” for Indiagames (50,000-60,000 leads every month) and “one person every minute” for Sharekhan too.

Pinstorm’s bread and butter, though, comes from search engine marketing (SEM) which worldwide is estimated to be a $14 billion business. Also consider the Rs 70 crore online ad spend by Indian companies (not those of Indian origin, but ones with operations here). Naukri.com alone is said to spend around Rs 16 crore annually. And with Internet users predicted to grow to and 50 million by March 2008, SEM has a future you cannot ignore.

Incidentally, the company has developed a software called Livecontext (filed for patents) which scouts websites, recognises a new write-up or story, extracts the content, breaks it down into keywords, then buys the keywords from search engines, automatically writes an advertisement based on the keywords and hosts the ad on the search engines – all within five minutes of the story being posted online.

Using this software, Murthy claims to be alluring 10,000 visitors every month to the Yahoo! Answers site from Google.

Sponsored ads or links work thus. If you search for a `hotel in Matheran’, the search will also throw up sponsored results by travel sites and hotels in the vicinity. However, buying sponsored links is no longer a low-risk game. Brands generally buy around 40 keywords.

“While you might be happy with 10 or 50 keywords, a typical campaign we run will feature at least 10,000 keywords -– and there are a few in the hundreds of thousands of keywords range. This gives our clients a wider coverage and lower costs per response compared to others bidding on a limited set of words.”

And the price of keywords seems to keep on rising. Specific keyword(s) are priced anywhere between Rs 2 and Rs 1,800 ($40) in India. Pinstorm has devised a way out. “Our BroadWords technology sniffs out non-obvious but relevant, inexpensive keywords. Second, our BidWise systems ensure we bid appropriately on each word – across millions of keywords,” says Murthy.

SEM, though, will have to put up with the ‘distrust’ factor — up to 85 per cent of searchers say they “tend to ignore the paid listings”. And 87 per cent of commercial clicks take place “on the natural (not sponsored) search results”, according to Jupiter Research.

However, this new channel is changing the way many advertising agencies do business. It no longer can be ignored.

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By M. HAFIDZ MAHPAR

ADVERTISING agencies don’t like our revenue model because it threatens their existence,â€? says Pinstorm Technologies Pvt Ltd founder and CEO Mahesh Murthy.

Pinstorm, a Mumbai-based search engine marketing (SEM) firm, works on a pay-per-performance model rather than the commission or fee system generally used by the ad industry.

Clients pay it based on actual results, that is sales leads Pinstorm generates for them.

Agencies say: Whether our campaign works or not, pay us. Pinstorm is a far more responsible marketer, far more results-focused. One day, all advertising will be like this – accountable,� he tells BizWeek in Petaling Jaya.

Murthy is familiar with the workings of ad firms, having worked in several multinational agencies, including Ogilvy Hong Kong where he was the creative director.

Pinstorm, which opened a KL office four months ago, is believed to be South Asia’s largest agency specialising in search engine-driven marketing, and one of the world’s top five. (These are Murthy’s estimates, as SEM companies prefer not to disclose financial figures.)

Search engine marketing, a relatively new subset of Internet marketing, is growing by leaps and bounds. Basically, it involves driving the target audience to a marketer’s website when these consumers use certain keywords or phrases to find products or services on search engines such as Google and Yahoo.

For example, an airline flying to Kuching may want its web link to be featured high on a search engine’s rankings – preferably on the first results page – when a potential customer performs a search for “flight to Kuching.â€?

For the widely used Google, most pay-per-click ads that link to the advertisers’ websites appear on the box to the right of the search results, under the heading “sponsored links�, and on the websites listed on the editorial content side.

Marketers bid for keywords/phrases, and then pay Google based on how many times someone clicks on the sponsored links or display ads under the search results (no payment needed if there is no click).

Pinstorm, through its BroadWords software, guesses the keywords that the consumers would use and then place the clients’ ads based on the possible searches.

“We buy about 260 million search impressions every month on behalf of our clients by predicting consumer behaviour in terms of what they’re searching for,â€? Murthy says.

The pay-per-click SEM is big business, worth US$10bil annually. This media area, dominated by Google, is growing by 40% a year.

A marketer typically picks between 50 and 500 keywords. However, Pinstorm buys between 10,000 to 1 million keywords per client! Furthermore, it buys words in 16 languages, including Chinese, Hindi, Tamil, Japanese and French.

Murthy claims Pinstorm, which started operations two years ago, was the world’s first “long tailâ€? SEM agency. This refers to an agency that buys a huge number of search words to reduce drastically the average cost per word.

“It’s a huge cost advantage,â€? he says, noting that there is no upfront cost to “buyâ€? a word; a marketer pays only when someone clicks on that word and actually responds to its ad.

When advertisers bid for words, the “obvious� words can cost up to US$45 per click although the bidding starts at just 5 cents.

“We use our technology to bring the price down by finding not just the commonly used words but also undiscovered gems – words that work but which nobody else has discovered,� says Murthy.

Sometimes the best keywords – those giving the best conversion rate from clicks to sales – do not come to mind easily. Pinstorm, for instance, discovered that the best search term for client Taj Hotels’ resort in Seychelles is “whale expeditions,â€? not the more expensive term “Seychelles resorts.â€?

After selecting the words, Pinstorm uses its BidWise technology to bid appropriately for each word.

Pinstorm creates the ads at no cost to the clients, and it also buys the ad space itself. Clients need only pay based on sales leads, enquiries or, in rare cases, number of unique visitors.

The agency charges clients differently, depending on factors such as how expensive the clients’ products are. Thus the costs per action can vary as wide as between US$2.50 and US$250.

Pinstorm is taking a risk by paying for the clicks itself; after all, not all clicks lead to a sales lead or enquiry.

But the company has managed to be profitable. In fact, Murthy says its margins are “significantly higher� than those of ad agencies.

“We would lose money on 15% to 20% of our clients but make money on the others,� he explains. As Murthy advises would-be entrepreneurs, “You do not get greater rewards without taking great risks.�

Pinstorm was rated as one of Asia’s hottest technology companies by Red Herring Magazine last year and again this year.

The interactive marketing outfit expects revenue of US$5mil this year, up from US$1mil last year.

On this big jump, Murthy says: “Clients love our business model. If I don’t give the results, they don’t have to pay.â€?

Pinstorm’s clients include well-known names such as HP, Dell, National Geographic Channel, Kodak, American Express and eBay.

Pinstorm keeps changing its ads to determine which ones work best. “For one large client, we do 225 new ads every month!� notes Murthy.

He says the kind of technology needed to handle search engine marketing automatically is not within the reach of most ad agencies. “Most agencies don’t invest in technology,� he adds.

Pinstorm already has four offices and over 60 employees. Besides the one in Mumbai, it has three business development and client management offices in Malaysia, Singapore and New Delhi.

The firm is now looking at China, the US and Western Europe. By the end of this year, it wants to have at least two more offices.

Murthy says Pinstorm may seek a listing in a year or two to get funding.

“By 2008 we should be the top two in the world in terms of revenue or billings,� he says