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Netcore Revenues Lower Than Expected, Costs Same, Says Rajesh Jain; Thoughts On Advertising

Rajesh Jain, MD of Netcore, of which Push SMS service MyToday is a part, has written that the company is facing a “crucible moment” – a defining experience moment which “transforms us, and shakes and shapes our lives”.

For Netcore, “…costs are as per projections, and revenues are lower than the ambitious targets we had set at the start of the year. Which means, cash burn is higher than anticipated. We have two choices: either we can reign in costs to account for the slower revenue growth, or keep on the accelerator and search out new revenue streams to bridge the gap. Of course, we need to do both! But which are the areas which get my attention more than others — that is the key question. We are in a blue ocean, in unchartered waters. We are pioneering many facets of mobile marketing. And I know that the multi-monetisation streams that we have planned out can be done. Which of these should we focus more than others is the thing I need to ponder on. The decisions we make now will make a big difference to our growth. In a way, this is our own crucible moment.”

Keep in mind that Jain had earlier written that Netcore’s funding had fallen through owing to differences over valuation, among other disagreements. The word is that even in case of Webaroo (SMS GupShup), there were differences over valuation, and they used the leaked story to their advantage.

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In case of a downturn, the first spend that gets cut is advertising; a part of that cut will also be the the experimental spend, of which Mobile Marketing is a part. This is also going to be a testing time for Digital Advertising spends as a whole – whether Online, Mobile or OOH.

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Over the past 6 months or so, there has been a significant effort by online advertising agencies in India to wean Advertisers away from a lead generation or ‘pay for performance’ model, to a brand building effort. As advertisers will now expect more bang for their buck, they’ll be faced with two choices – either take the digital medium as a relatively cheaper means for brand building (in comparison with TV and Print), or use the medium mainly for lead generation.

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Do take a look at Sequoia Capitals now (in)famous presentation to their portfolio companies (here):

Related:

Netcore Funding Falls Through; MD Rajesh Jain On Raising Venture Capital
MediaNama Launch Discussion: In Case Of A Downturn – Reduce Spending On Technology, Double Your Sales Team, Merge To Scale
Teething Troubles For Google’s SMS Channels In India; Battle At The SMSC
Google Gets Into The Push SMS Business In India, Takes On MyToday, SMS Gupshup
Why Push SMS Services Would Need As Much As $10 Million In Funding
Your Take On The Cost Issues Of Push SMS Services In India

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