Pinstorm

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.� 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.