May I respectfully take issue with some of the assertions that other members of this forum have made. {The responsibility for mis-paraphrasing them is all mine:-)}

One said: 1) "...higher brand recall..which also is a first step towards building brand loyalty!!....

" Is it, really, online? The difference between the real world, where shelfspace is limited to a few hundred or even a thousand competing brands, and the web world is that, in the latter, over 10 million sites jostle with each other for the pleasure of being keyed into your browser's address bar. In the real world, brand recall for a me-too product in a limited competitive set may ensure repeat purchases. But, on the net, with global competition for your time, all that brand recall can influence is the first visit to a site. The site's uniqueness and usefulness to you that sets it apart from 10 million other sites globally is what determines whether you go back a second time. And all that continued heavy advertising ensures for such a site is that it creates in you, the underwhelmed first-time user, an opinion of "wahan kuchch nahin hai". An opinion you will gladly and frequently share with your friends when somebody asks you what you thought of so-and-so highly advertised site. So here continued heavy advertising of an average product could actually increase bad word of mouth and kill it faster.

Look at it another way.
Situation 1: Company A has one lakh rupees to advertise with, attracts a hundred first-time visitors, and it is a useful site, so 25 of them come back (and 75 may not or never).
Situation 2: Company B has a crore of rupees to advertise with, and attracts ten thousand first-time visitors, but the site's offerings are vanilla and average, so only a hundred come back (and 9,900 may not ever come back). Which site has created more brand loyalty? Which brand awareness led to more brand loyalty? Which has a greater chance of long-term success and long-term good word of mouth?

To sum it up, one would put forth a contentious belief: "Brand awareness has almost nothing to do with brand loyalty in the online world."

One would further add that geographic specialization may often be meaningless on the web. "Broad English portal just for India" may be a little like saying "tomato soup just for left-handed people". Is that really a significant niche?

The biggest broad portal that Indians use is Yahoo!, at over 180 million page views monthly from India, many times bigger than any portal produced in India - and they've got there without spending a dime on hoardings or wraparounds in TOI - or even having a site. Now that they've announced a specific Indian focused subset in addition to the mothership, do you think their pageviews will increase or decrease overall (we hear that they are already at 15m page views/month from their Indian site since a week of lanuch!)? And what of their P&L as a company? Who has greater lasting power in a market such as this - somebody who spends nothing on advertising but commands a revenue CPM five times that of Rediff or Indiainfo or Indya, or somebody who's furiously outspending everybody else with no apparent plans of how to ever make money?

Why stop at one contentious statement - shall make another, even more contentious one: "The broad English portal game is over. Finito. It was won. Three years ago. By Yahoo. MSN and AOL came runners up. Why waste your time building yet another broad portal, or even yet another Indian copy of some internationally successful vertical - sooner or later, the global leader, from whichever country, will surely eat your lunch, and choose not to acquire you while doing it.

If you are copying somebody, differentiate now, get into a smaller niche that you can be a true leader in - protect it and build it. Better, though, there are billions of as yet undiscovered profitable net businesses.
Go on, be original, build a global winner."
Amen;-)

2) ....i am sure even Rajesh Jain wud resort to advertising. Word-of- mouth cant be enough for anybody trying to survive in a vortal/portal war given the war chest enjoyed by them."

Is that true, really? Do we know of a single net company with a me-too product that outspent competition on advertising to win? I could be wrong, but to my personal knowledge, the bellwether defining net companies: Yahoo, Amazon and EBay, all spent close to $0 in their first year on the net - and less than a few million dollars each worldwide in their second. Even today, they are the stingiest companies when it comes to spending - for good reason - they believe that they primarily need build a better product / service to win. And one doesn't believe that is true only because these brands had a headstart of a few years.

How many Napster ads have you seen? How did those 11 million Napster users get created in the last 9 months? One believes that all that lavishly spent marketing warchests may do is produce the boo.coms and the etoys.coms of the world. Here's hoping that we wont see the same fate for the big spenders here. One hears that there are a few Indian VCs that believe in giving you more money than you asked for to outspend and 'create a brand' - perhaps that can only be rationalised by an assumption that none of people offering the money or building such brands have actually ever run a net business before to understand how the net works.

Another adds: 3) "... in an emerging market with a {high} growth rate of Interrnet users in India, it is as important to attract the new users as to advertise to the existing net users..."

But what is the role of the advertising? In the traditional, terrestrial-distribution-driven world, one would say it is "to attract the user to come visit / sample the first time". May one venture a different advertising goal in the "e" world: "it is to get the user to come and visit the second time". Almost anybody will check out a site for the first time - it could be a sign of random experimentation and/or euphoria from having someone else's money to burn and/or cluelessness that somebody spent US$ 1 million on day 1 alone to "launch" a site in India and committed another US$ 24 million in advertising alone for the rest of the year - in a business where the entire market for revenues this year was less than $15 million. At best, you could call it a slight case of overkill. At worst...well, forget it:-)

Regardless, the real challenge is in having the services and products on your site that will voluntarily make people want to come back a second time and become loyal users - one would personally be tempted to spend the money on those fronts instead. Emerging market or not, even today, over 55% of Amazon.com's new customers come from word of mouth - and an additional 20% from referral affiliate programs - leaving less than 1/4 of Amazon's new customer acquisitions to come from traditional advertising (which includes online, offline, everything else). Ironically, for an ex-advertising person, one would readily admit that advertising is far and away the least cost-effective medium for acquiring new customers for an online site - no matter what stage or state the market is in.

Ask yourselves a question - many of you may have heard of the Yahoo India launch or even been to their site - what do you think their ad spend has been to date here, in this intensely competitive market? You're right, US$0.

4.) "...VC money is drying up..."

Is it, really? VCs are sitting on more money than ever before, in India too - but many seem to be waiting and looking for a new sign, a "new star in the east", a new investing paradigm {there, I used that dreaded word}. The earlier god of "spend as much as possible as soon as possible" had many followers as it was an easy religion to follow (you didn't have to be picky about your entrepreneurs - many people know how to spend) - but then this particular deity went into decline, followed by the ascension of the god of "everything should be B2B" - who was almost as easy to follow, and who also quickly proceeded into relative obscurity. Today, many are getting to grips with the inexorable rise of the god of "there is no fast buck, everything's about whether it's a solid business with a profitability plan or not". Unfortunately this is a slightly more demanding religious dictum - not an easy one to follow, for the devotees need to have significant domain expertise, alliances, a proven business model and, actually, sob!, sigh!, paying customers. Virtually none of the currently funded businesses one is aware of has anything close to this - they're lucky, they 'got away' - so it demands more application from the new entrepreneur, as well as from the investor. Give it a little time - both sides will come to grips with this radically new trend of uncommon sense. And the VC chequebooks will come out again.

On a personal note, for us, at passionfund.com, it's a great time to be alive. The plans we're seeing are more real than ever before, the entrepreneurs more seasoned, less quick-buck-driven, and the funding needs have moved from that magically common "Rs.4.4 crores" number to the actual deficit of startup costs over starting revenues - which is often considerably more palatable

5)"...If a business like indya.com has actually made the decision to spend 4 Crore Rs on an ad in TOI - well there HAS to be some thinking, some deliberation behind it..."

Why would you necessarily assume so? One potential check before having this level of confidence about any net company's marketing is to see if anybody, either at the company founders / management / employees level, or even at the funders / investors/ VCs level have any internet business operating experience whatsoever. This investigation may just leave you surprised - even about many of the big or 'loud' names out there. On the flip side, there is good opportunity. If there is a chance that even the well-funded and first out of the gate have little idea what they're doing, then there is an equally good chance for a lot many more people to win - as you can nullify any supposed first-mover advantage with a better offering.

6) "...asking all dot coms to advertise on other dot coms instead of advertising on newspapers..."

While one isn't all that sure about the wisdom of this, on a lighter note, there is certainly a great revenue opportunity here:-) Let's say five struggling net-based sites get together and decide to spend on each other - each gets to show marketing spend, each gets to show revenues - and impress the next round of VCs or the public.

Or the next best thing is to start two sites - and have them advertise on each other, endlessly. Voila! an advertising revenue model that is hopefully less contentious than anything one may have mentioned earlier:-)

As always,
just my $0.02,
Mahesh
mahesh@passionfund.com