Mumbai: Unilever is using a new method to sell products from Lifebuoy soap to Fair & Lovely skincream to 350 million villagers in India: Bollywood music on their phones.

Last month about 2 million people listened to Unilever’s free music service available on mobile phones in two states, said Anaheeta Goenka, executive director of Lowe Lintas & Partners, the agency handling the campaign for the world’s second-biggest consumer company. The offering expanded to Uttar Pradesh, India’s most populous state, on 31 March.

Companies from Unilever to PepsiCo Inc have turned to mobile campaigns in the world’s second-largest phone market to reach consumers including those in villages as growth in rural spending exceeds that in urban centers. With ad spends surging, mobile-phone campaigns are more attractive because they cost less and are more targeted than mass media.

Mobile advertising has the reach, the power to measure, and the power of constant engagement, said Girish Nair, chief executive of Netcore Ltd, the agency that is executing Unilever’s mobile service. You now have the opportunity to get data on each subscriber that can help optimize ad campaigns and improve distribution, he said.

Hindustan Unilever Ltd, the Mumbai-based unit of Unilever, started the service last year in Bihar, one of India’s poorest states, and extended to neighbouring Jharkhand, Goenka said. The service has got 8 million listeners since it started in October through end of March, Hindustan Unilever said in an e-mailed response, declining to comment on the costs of the campaign and on the plans for the service.

Not spotify

This is not like Spotify Ltd’s popular music-streaming service where subscribers can listen to personalized playlists. On Unilever’s service a user places a call to a toll-free number which disconnects after two rings. The system then calls the user and plays a 15-minute pre-recorded chunk of music interspersed with ads for the company’s soaps, skin creams, shampoos and detergents. All users listen to the same recorded segment each week, Goenka said.

There are some concerns about the effectiveness of such a service.

It’s a new thing and might be successful for the first three-four months, said Harsh Mehta, a Mumbai-based analyst at HDFC Securities Ltd. The customer would eventually get bored with the same stuff.

Unilever, PepsiCo and other companies are seeking to reach villagers as mobile phone ownership increases. There were 364 million rural mobile phone users as of 31 January, and the pace of additions in villages was faster than cities for the fourth consecutive month, according to the Telecom Regulatory Authority of India.

Mobile ads

Many advertisers are starting to use mobile as a way to reach areas where cable television and newspapers have a limited reach due to poor infrastructure, said Anand Thakur, national sales head for digital ad agency Aidem Ventures Pvt And the medium is also more cost effective, he said.

A 10-second spot on mythological drama Mahabharat on India’s Star Plus television network costs about Rs250,000 ($4,143). That is enough to pay for reaching at least 21,000 people with a 10-minute phone call, according to Bloomberg calculations based on prevailing mobile tariffs.

Indian companies spent Rs300 crore on mobile ads last year, and the market is projected to grow 43% this year, according to the Mobile Marketing Association. The bulk of this spending goes toward voice-based services because the majority of Indians use basic feature phones.

Free talktime

PepsiCo last year started a campaign similar to that of Unilever— playing back entertainment content on mobile phones.

Several companies including Mondelez International Inc.’s Cadbury’s unit have offered free mobile airtime credit to buyers. A code printed inside the packaging of Cadbury’s 5-Star chocolate bar enabled the user to redeem the points, according to the ad.

Marico, India’s biggest seller of hair oil, in September started a service in which users would receive a pre-recorded call offering basic English lessons, according to its website.

The rising incomes of villagers is an attraction.

Farm wages adjusted for inflation rose almost 7% on average annually in the five years through March 2012, from 1% in the previous decade, according to India’s Planning Commission.

That’s prompted consumer products companies to expand their rural networks, hire armies of village housewives to sell soaps and detergents to their neighbours, and advertise in hundreds of country fairs.

Market share

Interacting directly with consumers is vital because the weakest economic expansion in about a decade, combined with consumer-price inflation exceeding 8%, has prompted a switch to cheaper substitutes for everything from soaps to food. Unilever has faced the pinch amid intensifying competition.

The company’s market share in the skincare market, which includes whitening creams and moisturizers, declined to 50.5% last year from 53.7% in 2012, according to Euromonitor. Its share in laundry detergent and bar soap markets increased, as it spent more on ads.

Mobile ad campaigns tend to be more targeted, and may help grab an individual’s attention better than ads on TVs or in newspapers. Even then, some marketers such as Aidem Venture’s Thakur say it’s difficult to measure how a campaign like Unilever’s music service can translate into product sales.

Costs for the companies can quickly rise to unsustainable levels if millions of users flock to a free service, said Milind Pathak, global head at One97 Communications Ltd., which owns the mobile recharge provider PayTM.

It’s impossible to sustain these kinds of costs unless you are a really big company with lots of brands, Pathak said. It’s the real-time data that companies can get from mobile that makes it attractive. BLOOMBERG