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Tuesday, April 26, 2016

Start-up funding crisis and its adverse impact on bloggers

2015 was a great year for Indian start-ups. Besides those who already existed, thousands of new start-ups were born, hundreds of them secured multi-million dollar investments and a good part of this investment money was spent on brand building, marketing campaigns and needless to say blogging community benefited a lot from these spending. Unlike traditional companies that took decades to grow and are cautious in spending, start-ups were keen on quick growth and spent lots of money on activities that could get them better visibility, mileage and valuation. Good part of the promotional budget was spent on social media and bloggers, social media influencers and digital agencies that coordinated between brands and bloggers benefited a lot from these expenditure, in terms of sponsored posts, campaigns, paid trips or goodies. Of course bloggers and influencers did their part-writing about the brand and its product/services, giving the brand lots of back-links, twitter trends, facebook likes and such online visibility.
This huge spend on online activities by brand also resulted in emergence of thousands of new bloggers and social media influencers, who saw money in blogging/other online activities and wanted a piece of action. With no pre-defined qualifications or a governing body that certifies someone as an influencer or blogger, anyone and everyone could open a blog or call themselves as influencers. Many of these folks were happy to buy followers online so as to get noticed by brands. This sudden surge in bloggers and influencers made life difficult for brands and PR agencies- identifying and engaging a quality influencer among the crowd started to become increasingly difficult. With desperate influencers willing to work for very small amount, many brands found it sensible to go for quantity instead of quality- like engaging 100 newbie bloggers for Rs 1000 each instead of approaching 10 popular bloggers for Rs 10000 each.

But first half of 2016 is NOT looking good
  1. Few startups have begun to shut shop (TinyOwl, PetterTrap, Vasan etc)
  2. Few others (like Jabong) are on sale for an amount 10% of what they were seeking an year earlier.(news)
  3. Many other start-ups are having difficulty getting fresh funds and their valuations are under pressure, such as foodpanda (news)
  4. Investors are waking up to the reality that the joyride can’t go on forever and are pressing for cost cutting, consolidation and focus on profitability
  5. These have forced other start-ups- even if they are well off as of now- to review their spending and strategies
  6. Discounts, sign up bonus etc have nosedived.
This has already begun to show its impact on blogging community. Below are some of my observations
  • Many new social media agencies that have come up in recent times, which had begun collecting database of bloggers with an intention of pitching to brands and getting some business- are yet to get their first campaigns
  • Number of new campaigns at existing agencies/platforms (like Blogadda, indiblogger, blogmint) etc have reduced. Brands are avoiding big budget social media spends.
  • In 2015, Indiblogger used to have at least two new campaigns every month. Now may be one in every two months. (Good that they launched IndiPR, ensures some sustained revenue, even though not as lucrative as mega campaigns)
  • I have noticed few brands suddenly going cold. They were interested to engage sometime back but when the time has come to close a deal, sudden loss of interest has kicked in from nowhere
  • Have noticed few instances where brands have refused to pay after blogger/influencer delivered required posts, citing some silly reasons
  • Average delay in payment has gone up from few weeks to few months.
  • Some agencies are running campaigns for an amount as low as Rs 10 per tweet and even at that rate there’re enough people signing up for it. [Read this Mint article about trending your brand on twitter]
Thus we can say a sort of slowdown/recession is pertaining for social media community who were on an upbeat based on 2015 experience.

How Bloggers can overcome current scenario?
  1. Don’t quit your job. If you were thinking of quitting your job and doing blogging full time, may be now is NOT the right time. (That is just a thought. You be the judge. If you are already earning good money from online and have repeat business then maybe there’s no harm)
  2. Keep writing: When going gets tough, tough gets going. Once paid campaigns become scarce, all those who jumped blogging bandwagon with hopes of making quick money will go away. If you are serious, keep writing and use the time to increase your reader base, engagement rate. Keep writing at regular intervals, even if you don’t make money. When the situation improves, you will be ready to reap the benefits.
  3. Support worthy brands in their time of distress: If you have worked regularly with a brand/start-up, know their core team and/or believe in their product/service and potential, do support them during their tough time even if they are not able to pay you. Once situation improves, brand will remember your support and will be more than happy to start paid engagements with you again.
  4. Offer some discounts- I am sure some bloggers may not agree with this, but the market dynamics demand that prices go down when demand goes down. So maybe you can lower your quotes a bit for serious opportunities.  Where possible give extra discount for advance payment, so that there’s no painful follow-up to endure.
  5. Don't get desperate: While working for a small discount is fine, avoid getting desperate and accepting deals way below your value. This will only make things worse- you will end up disappointing your readers, blogging community and might end up in frustration. Let next level of bloggers get these deals instead of everyone working super cheap and reducing the bar.
  6. Try to deliver more value than promised. You will be noted if your contribution performs better than what brand expected
  7. Try additional revenue sources- there are many other ways to make money- such as affiliate marketing, CPC/CPM ads etc- these may not bring huge cash, but can give you some little but critical income.
  8. Focus on print: If you think you are good writer, try contributing to magazines in your area of specialization. If they accept to publish your work, it will get you some money and more importantly recognition.
  9. Network better with your peer bloggers: Indian bloggers are known to try outsmart each other instead of helping one another. If you can network well with other bloggers in your niche then you can know what’s working and what’s not working. Being aware and helping each other will put you in a better position against brands/PR agencies trying to take advantage of current scenario.
  10. Work more with offline brands/physical business: Build relationships with real entities in your city in your area of specialization. Form city based groups and try to engage with local brands (Chennai Bloggers' Club is doing great job in this regard)
Do you agree? What are your thoughts?

Similar: Startup Saturday at IIM B * The Mouse Charmers by Anuradha Goyal * How much to charge for sponsored posts? *

15 comments :

Shrinidhi Hande said...

Rajesh wrote below comment but it seems to be mising

"
You mentioned, but forgot to link to that how to trend on twitter article.

I've found that depending on a single source of income is always dangerous online. And still, we need to keep reinventing and doing different things. But that's true of any business, not just blogging.

Destination Infinity "

Shrinidhi Hande said...

@Rajesh- Have added link. Thanks for your comment.

Sreedhar Bhattaram said...

Right time for the Post.. Valid points to be noted!

Indrani said...

What an elaborate well researched post!
I too noticed a reduction in paid posts. Your article helped me understand the market situation.
Great post.

Shrinidhi Hande said...

Thanks Indrani and Sreedhar sir

Shrikant said...

Detailed study of market and overview post for us! Thanks for sharing.

Shrinidhi Hande said...

Thanks Shrikant

Bushra Muzaffar said...

Very insightful article on the present scene of blogging and payments...!

Shrinidhi Hande said...

Thanks Bushra

Katie Nathan said...

Nice analysis and tips too. The best part is to be consistent and not fall out due to lack of patronage. One opportunity goes out to make way for something else. Be there when it knocks on your doors

Best
Katie
http://chennaifocus.in

Shrinidhi Hande said...

Thanks Katie...

Puru@ShadowsGalore said...

Every bubble has to burst someday or another. This slump will be good to discourage the people who start blogging just to earn money, waste their time and add more low quality content to the internet

Shrinidhi Hande said...

Yes Puru

Thanks for commenting

Swati & Sam said...

Such a well-researched article ... Great insight on market conditions ... after all it is coming from a BA :) :)

Completely agree with you that as bloggers we should help each other to grow, accept constructive feedback, after all, we share the same passion for travelling.

Shrinidhi Hande said...

Thanks Swati. This particular post is very generic and not specific to travel bloggers