From the Trenches – How to counter-attack Recession [Tips from Instablogs Founder]

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[Guest post by Ankit Maheswari, Founder/CEO of Instablogs. Ankit. candidly shares Instablogs traffic, what worked / what didn’t – and most importantly, what are they doing to counter-attack recession.]

In India, our financial year ends 31st March. This might sound a bit odd to our Americans friends, but remember we are more British than you.

Last academic year has been a roller coaster ride. We got funded, launched some cool new features, expanded our team, then had a 10-15% salaries cut in Q4 2008, also let go off few of our consultants and took the recession monster head on. But overall, I believe we managed to put on a great show. This would have been impossible without the great team we have, highly supportive investors, very energetic advisors and great friends in the industry.

Like any other media company, pageviews are our bread earner. We saw a plunge in CPM rates from November, but we compensated the low CPM rates and unsold inventory losses by nearly tripling our pageviews.

Here’s our page views graph from Statcounter.

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Today we have over 50,000 registered members, 600 Citizen Journalists, 75 bloggers, 15 country editors, full time staff of over 40 people in 15 different countries and readership of around 6 million pageviews per month.

How recession affected us

1. CPM rates

Most of the Ad networks saw CPM dropped to 30-40% of their pre-recession prices. And a few networks who refused to lower their CPM, saw their unsold inventories going up to 60% in many cases.


2. Losing old clients, partnerships and deals

Some of our old clients started asking discounts or cutting down their ad budget. In few worst cases we saw even some of our wealthy clients going out of business. I was in the US, as an exhibitor for Instablogs at BlogWorldExpo, when Lehman Brothers declared bankruptcy. Dozens of partnerships and ad deals which we were able to sign up there, ended up getting postponed or even canceled. Some of our successful partnerships which stayed, were later canceled as their parent companies went out of business or merged with others. One advertiser who committed us a huge deal for Christmas later canceled it entirely in November.

3. New Ad Sales Team didn’t work

And worse of all, the new sales team we built was not able to perform. We suffered a drop in revenues in the last quarter of 2008.

Counter Attack

1. Letting go off our consultants
We also took some preemptive measures for recession, by letting go off all our consultants. It was a tough decision but we ensured that it didn`t hurt the team morale too much – as we retained all our full-time staff.

2. Salary Cuts
A salary cut of 10-15% was done across all our departments, and as a CEO, I took a 100% pay cut and decided not to withdraw any salary till we as a company got to positive revenues. We were looking to save as much cash as we can.

3. Renegotiated all our lease
We renegotiated all our lease from hosting, utilities, rent to ISP. If people were not able to give discounts, we asked them to chip something extra, for e.g, we got a dedicated load-balancer from our hosting and increased our monthly bandwidth usage free of cost. We were also successful in negotiating and reducing our monthly office rent cost by nearly 30%.

4. New strategy
After a close door discussion with our advisors and our VCs, we realized that we had enough cash to survive with the same revenues for the next 18 months, and there was no need to press any red buttons at the moment. Now we decided to go offensive in these hard times. The plan was plain and simple, when everyone was cutting their staff, reducing content and compromising on quality, we would just do the opposite.

5. Art of War: Offensive and Defensive
We built two teams for our content network – the old team who would concentrate on holding the fort, ensuring that we don’t lose any ground or in other words will remain defensive. A new team – who has been trained to go for the kill, to go offensive. The new team was in charge of churning out more innovative articles, featured discussions, in-depth coverage and multimedia stories.

6. Concentrating on few things, and giving our 100%
We slowed down few projects, like our video network and content syndication. But overall by concentrating on few things and thus putting most of our resources on its execution, we waged the recession bullet easily.

7. Using recession as a team building tool
To some extent, I also owe some of our success to this recession; this recession grouped us more vigorously as a team and filled us with more energy than ever before. The vision of every team member became crystal clear, just like those summer blue skies having no patches of clouds. I am indebted to every single member of our team, who not only took a cut in their pay cheque but performed harder and made us emerge as winner.

8. Better bonding with investors and advisors
I am also very thankful to our investors, who not for even a second lost their faith in us. Vishal and Samir with their positive attitude lifted our energy on so many occasions, that I have stopped keeping a count. Our advisors,Sameer and Nandini not only helped us in being focused, but also kept on guiding us on various fronts.

But Recession is far from over

I do understand that this recession is far from over. We are still months away from seeing the bottom. Things can become more tough, and ad CPMs can take even a more deeper plunge. So we have to be more prepared, agile and ready to take any challenges thrown our way. We are cash flow positive at the moment, but we need to move our top-line and bottom-line together upwards north. I am confident that with this great team at Instablogs, we have the ability to emerge as winners in the toughest of times.

Remember: Pressure is a privilege.

> Reproduced from Ankit’s blog.

Recommended Read: Recession, Downturn and Startup Survival

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