Imagine having to pay for five pieces of clothing, chosen by the store, without being able to try them on. How would you know which one fits and which one will look good on you? Would you buy those randomly selected clothes and pray that it was worth your money? As puzzling as it may seem, organisations and brands actually do this all the time. After spending millions on market research and trying to understand consumers, they spend on ad space (yes, those ads you skip on YouTube or ignore on Facebook), hoping that maybe one of those ads catch a consumer’s eye and they make a sale! But, do they? Click rate on the internet for ads averages 0.3-3%, according to Raghav Anand, segment leader-digital media, EY India. Then, why spend so much money on digital marketing?
To optimize such spend, Saurabh Singh, Rahul Jain and Nagender Sangra have a solution — only pay a publisher for an ad when a user makes a transaction. This idea of performance marketing is becoming popular all over the world, but founded in 2016, Flickstree is the first of its kind in India. Founded as a movie recommendation platform that redirected users to streaming websites who paid Flickstree a small commission, the start-up realised there was a bigger opportunity in content creation and marketing, but did not want to spend millions in building a new platform of original high-end content. Thus, Flickstree found its present avatar.
Essentially, the platform brings three stakeholders together — the clients (or advertisers), publishing platforms (say a cashback website) and the users. So, if a consumer is browsing through Coupon Dunia, they might see a video titled, “Here’s how to make that white dress stand out”. The user could then click and buy a product like say a red scarf that was seen in the video, you know, to make that white dress stand out. Flickstree’s two-three minute listicle videos made in partnership with brands are posts such as “Why do we procrastinate?” or “Side effects of cumin seeds” (in its health section) and each video is a potential ad. These videos have clickable ‘buy’ links that redirect the consumer to the product. “These are not blatant ads but content that the customer would like to watch. People love watching stories and brand integration works much better inside these stories,” says Singh.
But here’s the best part. The client (selling that scarf) does not pay Flickstree for advertising its products. Nor do its clients which include Nike, Flipkart, Amazon, Myntra, Paytm and Coursera amongst others. Only once a transaction is completed on a partner brand’s website, the start-up earns an affiliate commission of around 30% of the sale. Of this 30%, about 80-85% is passed on to the publishing website or app, where the video was embedded. These publishers include e-commerce sites, media platforms, blogs, and coupon and cashback sites such as TV9, Tellychakkar, Telegraph India and more. The start-up has also partnered with smartphone manufacturers such as Samsung, Xiaomi and Gionee, where its video content and ads will automatically show up in the manufacturer apps’ inbuilt notifications.
With a team of 23, Flickstree produces around 1,000 branded videos every month, each costing approximately Rs.1,500, which includes the subscription fee for over six image and video libraries. The videos are also supported by an AI feedback mechanism, which adds the right keywords, chooses the appropriate thumbnail and suggests trending topics to make videos on.
Stream fast, sell faster
In a world of Tik Toks and snackable content, Flickstree has gained users at a steady pace. With content in 10 languages including Bengali, Marathi, Tamil, English and more, the platform attracts an average of 300 million users clocking transactions of Rs.100 million-150 million every month. They have signed up 650 brands globally and partnered with 112 publishing websites and apps, while 500 more are in the pipeline. While the click through rate in India for video ads is between 1.2% and 1.8% according to Invespcro, Flickstree claims that its rate ranges between 1.4% and 3.5%. It has found backing from former Indian cricket captain Sourav Ganguly, Samsung Ventures Corp and Venture Catalysts, with total funding of $3 million.
But what came as the biggest win for the start-up was when, in July 2020, Optimise Media Group, one of the largest performance marketing services, announced the launch of a video commerce facility powered by Flickstree. Optimise India is an affiliate marketing company, but it does not do much around videos, which is Flickstree’s strength. Through this partnership, the start-up will onboard about 6,000 of the group’s publishers in India. Interestingly, Optimise India CEO Laxmi Datt Sharma was one of the investors in Flickstree’s last round of funding, investing about $250,000 in the start-up last year.
“The beauty of affiliate or performance marketing is that the client company does not have to keep a separate marketing budget. This also helps us gets clients faster,” says Sharma, who believes video is the future. “More than 60% of the internet data usage happens through video viewing,” he adds. In fact, its gross merchandise value has been growing at a rapid pace over the past three years — from Rs.700,000 in FY18, Rs.6.5 million in FY19 and Rs.235 million in FY20. For the current fiscal, they have already raked in transactions worth Rs.380 million.
While Sharma is optimistic, Raghav Anand, segment leader-digital media, EY India, believes it may not be the best option for brand building. “For start-ups and SMEs who have limited resources, performance-marketing model is the best solution as it helps in targeted marketing. But when it comes to brand building for prominent companies, full-page newspaper ads and television will create more impact,” he says.
India is yet to see emergence of any big player in this field. That, according to Forrester’s forecast analyst Sanjeev Kumar, may be a big positive for Flickstree. He draws a parallel to China’s advertising industry, which is predominantly digital today and therefore, performance marketing has found many takers. “Advertisers have now started looking for avenues to improve the ROI associated with digital ad spend. In India, Google AdWords and Facebook Ads still command a hefty share of overall digital marketing spend. There is certainly appetite for performance-based advertising as businesses try to plug holes into wasted marketing budgets,” he says. Even though the two giants follow a similar model, their clients are charged ‘per click’ unlike Flickstree’s ‘per transaction’.
The analyst believes the right content can create wonders for any platform. Take the case of Tik Tok, which had reached content creators far and wide, giving a platform to users in Tier-II and Tier-III cities. Currently, Flickstree’s 55% of domestic revenue comes from metros. Kumar says, “If Flickstree is able to create an intelligent and entertaining AI-enabled interface that feeds content to users, it can certainly see growth across demographics.” But, he adds that to gain scale, the start-up is in a race against time. From attracting the right license deals with the right brands and investing in technology to target consumers, it is going to be an uphill task for Flickstree. EY’s Anand agrees. “Scalability will be a challenge. They have to invest a lot to attract more users and content creators and hence, advertisers and right publishing partners,” he says. For instance, they could attract major advertiser interest if they sign a deal with smartphone manufacturers to showcase their content on the lock or homescreens, a plan that is in the works. “Unless they make deals like these, it will be difficult to breakeven,” adds Anand.
Singh is confident that they will conquer homescreens of the smartphone brands they are partnering with. After all, they also get 80% of the commission that Flickstree makes. With 70% of their revenue coming from global brands, Flickstree is also exploring markets such as the UK, Southeast Asia and the Middle East. After seeing their users grow 10x in the past six months during the lockdown — from three million to 30 million — including daily content viewers as well as publishers, Singh’s next goal is to onboard the next 200 million users.
Even the cautious sounding Anand adds a hopeful note while observing that digital marketing spends are gradually moving towards this performance-based model. “There has been an acceleration in this shift since companies are cutting down on marketing spends,” he says. As they do that, performance-marketing ensures each brand gets more bang for its buck.