Our name, Pinstorm, in fact comes from our belief that the era of “big” campaigns typified by the “one expensive ad shown once during Superbowl” school of thought is well and truly over. The future for marketing, we believe, lies in doing hundreds, even thousands of pin-pointed campaigns aimed precisely at niche audiences, wherever they live on the planet. All running in parallel.—Pinstorm web site.
Pinstorm began its life in May, 2004 in a small office in Mumbai with just one employee, entirely funded by serial entrepreneur Mahesh Murthy. Well-known in India for his provocative columns in various print media, Murthy exemplified the “new generation” of entrepreneurs who arose in India after the end of the license Raj outside the traditional families and regions that have been India’s wellspring of new businesses for centuries. The son of an Army officer, Murthy was born in Hyderabad into a strictly traditional middle-class Brahmin family of Tamil origin. The brilliant lad won a number of national quizzes and IQ contests and his father urged him to pursue the well-trod path of attending a top university, earning an engineering degree abroad, and settling down. Yet while studying engineering at Osmania University, young Murthy realized he wanted to do something far less traditional, so he dropped out of college and started two small ventures.
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These small businesses taught Murthy that he enjoyed design and marketing communications, so he cut his teeth at two advertising agencies in Hyderabad before joining Trikaya Grey in 1996. At the age of 23, he took charge of the account of HCL, and when a pioneering comparative advertising campaign helped drive HCL’s share of the Indian photocopier market from 4% to 37% in one quarter, Murthy was established as a star advertising director. At the age of 25 he joined the US-based global advertising giant Ogilvy & Mather, moving to Hong Kong where he branched out into consumer marketing, working for clients such as Microsoft, Pepsi, and Unilever. Murthy returned to India in 1993 to help launch MTV, then in 1995 joined a pioneering Internet advertising company in the US, CKS Partners.
“People in advertising had no idea why I went from working with huge brands to doing this,” he recalls. But in 1995, a small “dotcom” company with big ambitions approached CKS to ask whether the agency would help them build an online advertising revenue stream in return for equity. Murthy believed in the entrepreneurs, who gave CKS 40,000 shares in their company at $2 apiece. “I met the guys, spent a few months thinking about their problem, and helped them figure out how to divide their links into categories, what size their online ads should be, what the site should look like and so on,” Murthy says. The risky development effort paid off when the client, Yahoo!, went public in April, 1996 at $24.50 per share and hit a high of $43 before closing at $33. A year later, CKS helped Amazon.com position itself as ‘Earth’s Biggest Bookstore.’
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Murthy became a partner at CKS but left at the end of 1997 to join a software startup that was acquired in December, 1998 by Intel. Having invested personally in Yahoo! and Amazon, Murthy was financially independent and had time to ponder his options after the acquisition. In early 1999, he returned to Mumbai to take over Channel [v], which had lost money since its launch in 1994 and was on the verge of closing in India. Murthy succeeded in turning the property around and launching the channel’s online presence. He then started his own angel investment company, Passionfund, with friend and partner Arun Pai., which made 14 investments in Internet-related or technology-enabled companies between 2002 and 2005.
While running Passionfund, Murthy began helping the well-known non-profit CRY (then “Child Relief and You,” now “Child Rights and You”) to place advertisements with search engines. This led to the idea for Pinstorm. Murthy explains:
Google auctions off words or phrases, such as ‘mobile phone’ or ‘Siemens mobile phone.’ You have to input your budget, and the more you bid, the higher the position of your advertisement relative to other ads for that phrase – all typically part of a column down the right-hand side of the page. The price for a particular word varies enormously, from perhaps five cents per click to $100 per click. If you are marketing mobile phones and bid on obvious or common words, you pay a lot because they are the same words that everyone else is bidding upon.
Murthy thought it would be possible to develop a technology that would help marketers find relevant but less commonly used search terms that would therefore cost much less per click. He explains:
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