Unlocking the power of high frequency-shopping: A lesson from India’s data marketers

By Tom Limongello, Guest Contributor , written on February 25, 2015

From The News Desk

Editor’s note: This is an unpaid guest contribution by Tom Limongello, VP of Product Marketing at Crisp Media. The post went through Pando’s usual editorial process and Mr. Limongello was not paid for his work

Sometimes we're on the wrong side of economics. Like when I’m running out of toothpaste from one of those unnecessarily small, over-priced, 0.8 oz travel tubes, I realize how little power I have to change the sizes of travel toothpaste sold on shelves. We all live in a world where we’re incentivized to go big and buy 128-load magnums of Tide and 500+ channel, monthly cable subscriptions.

That economic equation is flipped in India: a nation of entrepreneurs, the majority of whom do not earn a steady, monthly salary. Indian consumers revile being forced to buy large volumes of physical products. For example, the vast majority of Indians want to buy shampoo in small sachets instead of full sized bottles, a fact that has succeeded in forcing producers to price sachets cheaper than family-size.

As a result of this market dynamic, companies like Unilever and P&G have been forced to innovate formulas instead of packaging sizes in India to be able to increase pricing over time. Indians call this phenomenon sachet marketing, and for the past 45 years, it has been the law of the land for physical products. Now, it seems Indian consumers’ high frequency shopping habit is creating packaging pressure for even digital media like mobile minutes and satellite television. Harit Nagpal, a consumer marketing veteran at TataSky, explains:

“It used to be that TV services were sold like they are in the West on a monthly basis. Now over the past few years you’ve seen those payment periods come down to a matter of hours. You can top up your plan to watch for the day, rather than buy TV programming packages for the month."
Sachet marketing, however, is a traditional practice that did not enter the realm of data-based inference the way digital marketing has, for example, in the US. Offline data from home, car, and credit purchases are used in the US to enhance marketer understanding of retail sales data and online browsing behavior. In a country like India, however, where the average person does not have a credit card, mapping an individual consumer’s data between physical and digital purchases is not easy.

But hasn’t there been a lot of investment in e-commerce within India? Sure, but from today’s perspective the $5.6 billion that has been invested in the top 3 companies -- Flipkart, Amazon and Snapdeal -- has not driven much change in how purchases lead to accessible data. Flipkart, the e-commerce leader in this market, had only 26 million registered users (2 percent of the 1.2 billion person population) as of the end of last year. On top of that, the preferred method of payment for e-commerce is still cash-on-delivery, as opposed to credit or debit cards. Hence, India has seen lots of traction in companies that help consumers avoid paid transactions. Take, for example, ZipDial, which makes its impact through marketing phone numbers that consumers can call but not connect to, submitting their phone number in exchange for opt-in coupons from various marketers.

There is, however, one reliable way to get offline data for Indian consumers: mobile phone carriers. If only a company were in a position to package that data in a way that marketers could use. Enter Vserv, co-founded by Dippak Khurana and Ashay Padwal, who worked together for nearly a decade on Yahoo! Mail, Messenger, and SMS. After its early efforts as a video ad server, and then a free ad SDK for app developers, Vserv is now the first independent company to build a data management platform (DMP) on carrier data working in partnership with India’s largest carrier, AirTel.

To understand the degree of difficulty in asking a carrier for consumer data, you can refer to Verizon’s recent issues when it tried to offer US digital marketers access to its domestic consumer data. In India, however, with mobile as the only point of entry for data collection, Vserv had few alternatives. The founders spent a year convincing AirTel’s top brass, many of whom started their careers in consumer packaged goods companies, of the merits of applying data to sachet marketing.

"India and Southeast Asia lacked organized third-party consumer data sources, which was reinforced by the absence of any independent DMP,” Khurana says. “On the other hand, Vserv was generating petabytes of data on mobile internet users. We wanted to combine proprietary data, telco data, and offline data. Our Vserv Smart Data algorithm takes hashed mobile numbers with pre-paid or post-paid user, location, interest, purchasing power, and 80 other such attributes to make consumer intent signals and behavior actionable."

AirTel gave Vserv the go ahead in 2012, and now companies like mobile access broker FreeCharge can use Vserv’s data to target ads to pre-paid mobile customers. For example, an advertiser may wish to reach consumers that have a low balance, a characteristic that has proven to improve conversion for Freecharge's balance top-up service. Similarly, Samsung uses device-age data from Vserv matched with AirTel’s high value top-up segment (+500 rupees per top-up) to find purchase intenders who might buy the latest Samsung phone.

These uses for data are innovative, but not as interesting as how CPGs combine Vserv and carrier data to profile high frequency shoppers. Even in the US, CPG companies are well behind retailers in the detail of purchase data they can collect or purchase to use in targeting consumer advertising. As a result, the CPG-friendly innovation frontier is beginning to changed the look and feel of mobile ecommerce. Consumers now share location data, allowing advertisers to see when they are at or near retail locations. The emergence of subscription shopping clubs like and Google Express, as well as auto-ship (e.g. and easy re-order (e.g. Amazon-owned variations better insure that consumers do not go without everyday CPG necessities.

In a country like India, where the only viable subscription service is your mobile carrier, US-style subscription commerce doesn’t yet work. Further, location tracking is not really enough of a signal because shopping isn’t relegated to large shopping centers and malls like it is in so much of the US; the stores are tiny little kiosks that are ubiquitous in India metro areas. Instead, Indian marketers serve ads based on intimate knowledge of consumer account top-up behavior, which enables them to better understand the frequency with which they will make other purchases like shampoo or confectionaries.

Why is a mobile balance metric so relevant? Vserv could not share the brand name, but illustrated how a candy manufacturer uses its data in conjunction with mobile carrier data for the launch of a new, 1.2 rupee single-candy pack, sold at shakti convenience kiosks in India. Because the overwhelming majority of pre-paid mobile subscribers visit kiosks to buy top-up cards, knowing who these users are and knowing when their balances fall into a certain range – in this case 0.25-0.40 rupees – is a proxy for knowing almost exactly when those users will visit the kiosk to shop.

Since the kiosk is where that person will also buy their shampoo and other packaged goods like candy, the knowledge of the top-up behavior is almost as good as tracking the user’s location and purchase intent as it would be to track a person standing in front of US retail shelf using iBeacons. In fact, 90 percent of retail sales for this candy manufacturer comes from the ‘un-organized market,’ which is a category used to group the kiosks as a point of purchase.

You may think that equating the top-up as a proxy for a shopping trip to a tiny kiosk is overstated, and Vserv does contend that they don’t just use the user’s mobile balance, they combine that with device location and device ownership segmentation. In the case of the candy manufacturer they wanted to target entry level phones costing less than $100 USD, with the goal of reaching what are likely to be younger consumers.

But the mobile balance on prepaid users’ phones is the key for me, even if it did take me a while to figure out why. I think back to ’99-’00, when I was a pre-paid mobile subscriber living in China as a student. Because I wasn’t renting my own place, I was ineligible to receive a monthly bill. If you haven’t experienced what it is like to be a pre-paid subscriber, the best analogy I can offer is that it’s not unlike being a smoker who constantly has to go out and buy cigarettes.

Imagine if we were to go back to the 1950s to when everyone was a smoker, but layer on an anachronism such that Philip Morris had the ability track how many cigarettes you had left. If you’re addicted to cigarettes, you’re very likely to repurchase before you run out, and that means you would be incredibly likely to go out and buy more when you were low on smokes. (As far as I know, Philip Morris International (PMI) hasn’t yet started putting iBeacon stickers on each cigarette in its packs, but after watching John Oliver's in-depth piece on Tobacco, I’ll bet they’ve thought about it for when the technology gets cheap enough.)

Now, lets substitute a smoking addiction for a mobile addiction. The mobile data addiction is as big in India as it is everywhere else in the world now, but because in India the mobile data purchasing behavior is predominantly pre-paid, marketers can use low mobile balance as a signal for a shopping trip. A shopping trip to a tiny kiosk with its limited shelf space is a near guarantee that a consumer is going to see your products as long as you’ve stocked the kiosk shelves.

For the time being, mobile carrier data access gives Vserv a major advantage over even the digital marketing capabilities available in – for better or for worse, data privacy concerns in this country dramatically limit an advertiser’s ability to access user account information for marketing purposes. Vserv is not currently planning expansion outside of India and SE Asia, but that doesn’t mean that targeting high frequency shoppers could not do well in certain parts of western countries.

Companies like Unilever see sachet marketing as an approach that will penetrate the underbanked populations of the US and Europe where high frequency shopping is the norm. Of course, marketer demand for any type of user data always comes far in advance of user (and regulatory) permission and acknowledgement. So, if some arms-length data provider can offer this data reliably you can bet US marketers would gladly frequent that kiosk.

Editor’s note: This is an unpaid guest contribution by Tom Limongello, VP of Product Marketing at Crisp Media. The post went through Pando’s usual editorial process and Mr. Limongello was not paid for his work.

[illustration by Hallie Bateman]