just dial

At a point in time where it is important for companies to launch innovative ideas to stay ahead of the competition, Just Dial is going back to its basics to increase growth.

Just Dial had initially made plans to reignite its new additions such as an inventory management platform for sellers– JD Omni, a payment wallet– JD Cash, and the monetization of its advanced meta-search cum marketplace service Search Plus. The company is however now focusing on the revival of its core search business– its listing model.

Ramkumar Krishnamachari, the CFO of the company has stated,

In the past two years, there have been too many things that we have been experimenting with. Due to the focus on newer initiatives, we lost focus on our core search business which forms the crux of our revenues

According to Just Dial, the dilution of the management’s focus is the cause of a limited expansion of the company’s core business. This, in turn, led to a fall in the revenue growth from 25% to 5% in the past few years. Additionally, there has been a steady rise in vertical-focused players who’ve started moving away from Just Dial’s umbrella to other services like MakeMyTrip, BookMyShow, Zomato in travel ticketing, movie ticketing, restaurant booking etc.

The annual results for the financial year 2017 revealed by Just Dial earlier this week showed muted revenues of ₹181.7 crores which are only a 1.2% growth from last year. Its EBITDA, however, has improved by 28.5% to reach ₹32.2 crores. This improvement is a result of employee rationalization, in an attempt to streamline costs.

Another cause for the dip in business is the steady decline in the pricing mix between Tier I, Tier II, and smaller cities and towns. According to Shashi Bhusan, Just Dial’s growth in Tier I cities has reached its peak and now, incremental growth is only from low population areas of Tier II, III, and IV. As the revenue per listing decreases, there is an increase in the pressure on margins.

This pricing decline is pulling the company down and offsetting the growth seen in paid campaigns, which has seen an upward trajectory over the past few quarters. Ramkumar also added that,

We now want to get the core search business back to double-digit growth and that is the immediate objective.We have to do whatever it takes to get it back on track. The rest of the businesses can wait

Just Dial is also now looking to start aggressively advertising using the ₹100 crores which were earmarked for this very reason a few years ago. The much-delayed ad campaign is expected to be released in this quarter with the company having spent ₹7 to ₹7.5 crores on marketing in the last quarter. It plans to spend the rest of the money within the next three-four quarters.

According to experts, however, the aggressive advertising strategy to rebuild the brand to increase recall in the minds of customers is two years too late. Bhusan takes the example of Google and Yahoo to explain this. According to him, even if Yahoo went on an aggressive campaigning spree right now, it would not be able to replace Google. he said that the reduced utility of the core listings model cannot be compensated by spending money on advertising.

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