Full Transcription

Anand

Hello and welcome to Season five episode two of the Voiro Podcast. We are very excited to have our guest today, Varadharajan Raghunathan, who is the head monetisation and customer engagement at Bigbasket, Varadha has been a friend of ours for a few years now and every time we meet him we have the most fascinating conversation and both at Bigbasket as well as through his career at the Times Group, Amazon, and now at Bigbasket, he spends his time working at the intersection of technology and psychology.

Anand

And as Varadha says, magic truly happens at this intersection. So we’re very excited to have a conversation with Varada today. Welcome to the Voiro podcast Varadha. It’s so, so nice to have you. How are you two doing?

Varadha

Doing very well, thanks, Anand. It’s good fun to be here.

Anand

Yeah, absolutely. We’ve known you for a while now and we’ve always had such exciting conversations. I don’t know if you know this, but every time we have a conversation with you, we go back and chat about it because there’s always something insightful you tell us depending on where you’re coming from or where you’ve been. Um, and what I’m particularly excited about today is I feel like I’m picking up from two episodes ago, which was a conversation with Lava Kumar from Entropik.

Anand

We broke down the intricacies of attention and how it impacts advertising and kind of how it’s actually a very important component. Um, we were looking into your background as one does as we prepared and we looked at your LinkedIn and I noticed two interesting things. One is you have a line up there that says Magic truly happens at the intersection of technology and psychology, and I’m hoping we can break that apart in today’s conversation.

Anand

But we were also looking at your journey from the Times group or Bennet Coleman and Company to Amazon to Bigbasket. And I feel like the timeline of your journey coincides with a very dramatic shift in the Indian consumer’s behaviour. And I keep thinking about the fact that our generation possibly has had a very interesting privilege of witnessing one of the most dramatic shifts in how we behave, the intersection of of money, of technology, of social curve.

Varadha’s Current Role at Bigbasket and his Primary Area of Focus

Anand

And I think you’ve had a front row view into that, given your career. So I’m curious to know what led you to your current role at Bigbasket and what is your current primary area of focus?

Varadha

Sure. I run the monetisation business at Bigbasket, which essentially includes search ads, display ads, you know, not just et cetera et cetera. Obviously you’ve just taken the first step in search ads. There’s a lot more to go. Right. And you know what I’m particularly sort of excited about, and I always sort of tend to look at this as my own Ikigai is, is that I think more than, let’s say, the job or the company that I work for, right? What is so fascinating, at least for me, is this is this entire thing around human cognition and attention. Right? Why do people perceive things? How do people perceive things? And what makes them perceive it better or worse? And what makes them act on their perception? What are layers that can be moulded around that? Right? And these are things, for example, if you ask, for example, a cine director. Right? Incidentally one of my batch mates is a has turned a you know cine director and he she made NH10, Udta Punjab and more recently, Khorra and so you know, if you’re a director, right, you’re looking at a scene and saying script is one portion, right, the characters are one portion. The atmosphere is one portion. The tropes are one portion, right? And those small little things that you sort of embed, right, into that that makes sure that the viewer retains attention and more importantly, associates the character with with that symbol or trope or Pillar, etc., etc., right? These things are very fascinating. Of course, there’s no sort of real science to it, but I think obviously, needless to say, some of the great people, you know, whether it’s Steve Jobs or Steven Spielberg or, you know, more importantly, more recently, one of my favourite directors, David Fincher, who made Fight Club, Seven, etc., etc., right? Get some of these persistent tropes that get into your brain remarkably well, right? So you know, for each of the each of their movies, if you go back, you’ll remember two or three things that just sort of stay with you for life. So and I just find some of this fascinating possibly because I grew up reading a lot of Sherlock Holmes and Agatha Christie, and I always used to think, the one piece that is always unanswered for, you know, from layman standpoint on Sherlock Holmes is, Hey, it’s fine. You know, you’re able to do that line of reasoning, saying, you know, look at that fellow’s shoes, that that fellow’s shoes have mud. So hence he must have, for example, walked on clay, it rained in that place so hence he must have gone etc. etc., right? But what no one seems to ask is how do you even decide what to look? Why you look at only shoe? Maybe you look at shirt. Maybe look at something else, right? So how do you out of 100 things in a frame, out of 50 things that you hear, or out of 10 things that you’re prying for, how do you even sort of begin to begin to sort of perceive what you perceive, right? And I’m just saying that’s an endless sort of fascination. For example, if I were to, sort of, take take that view between, for example, print, right, versus TV versus digital, right, print. You’re giving it you are giving the ad undivided time out of your own volition. Because you’re choosing to turn that page over, right? Whereas in TV, somebody is inserting an ad while you’re watching a movie, right? And this, for example, has ramifications in terms of what actually goes on into your processing, right, for a long time, like Lava said, viewability was used as a substitute for perception, but I could be starring through you, and not not even registering who you are or what you are seeing, and vice versa, I could be looking elsewhere, and I could be all ears and all senses.

Anand

And I am thinking about what I’ve seen. But yeah.

Varadha

I think the part with digital is now that you know, you get so many screens and visual clues and sounds thrown at you, right? And everyone is just, just sort of using a proxy that a completed supply, when I say a completed supply, that a page is fully loaded on a screen, means I have looked at it. That’s just so not true. Right? Because I could be staring at somebody else, you know, I can’t think of a single human being on this planet who has less than four or five tabs open, right, apart from WhatsApp, apart from, you know, whatever else, right? So how do you even sort of make sense of this, and more importantly, right, sort of, you know, sort of an extension of what you saw in the movie Minority Report, right? How will this all now fall back into ads, as we see, go forward, right? And I just think, this, of course, is my, sort of, view that ads as in ads as ads may no longer be ads. I think what is going to happen more and more and more is given the amount of clutter that we have, eventually, ads will become personalised to nudges, right? How those nudges manifest themselves? And exactly at a point of, you know, time that it matters to you will obviously evolve, I don’t quite have obviously a good sense of it. Like, for example, this is a problem that Google is struggling with, right? Earlier they were just throwing the table of contents on the search results saying, hey, you know, these are all the books of the library. Now you go figure. Now folks are asking, hey, you know, I know if I have to search for electromagnetism, these are ten things, right. But I am looking for this specific subtopic in electromagnetism just peel me only that piece from any of these books and give it to me. So, I think a library or, you know, troves of information are no longer troves of information. I think the distinction will be made based on how well they can contextualise, and pull them in.

Anand

Yeah, I, I think you touched upon a couple of things that are very dear to us on this podcast and me personally. I’ll tell you why. One is, like you said, there is just a barrage of content in advertising where effectively, the the amount of attention that is being tapped into and monetized is basically nearing the time itself.

Anand

And we frequently on this ad sometimes touch up on this, on this podcast, sometimes talk about the question, what is an ad? I think we have forgotten it’s long gone the traditional concept of not even in the print or in the television world something that interrupts you and like the original meaning of the word advertising, if I’m not mistaken, the root word comes from attention.

Anand

And so in in the in the world where a banner pops up and prevents you or stops you from reading or consuming the content is effectively trying to divert your attention without your permission. 

Varadha

Yeah.

Anand

And we’ve also been wondering about the concept of an ad, and I read a stat recently that said on a in a 24 hour period, the average human is subjected to 10,000 ads.

Anand

Where is viewability going to be a proxy for for attention or perception I think that is long gone. Also, I someone recently told me that if you go back and rewatch the movie Seven, you will notice that David Fincher has chosen to use a handheld camera every time he is showing you Kevin Spacey and a tripod or a mounted camera for anybody else.

Anand

Yeah, I didn’t know. And like you said, the great people know how to wield these two. They have mastery over their craft, right? But the fact that there is an unstable character with an unstable camera, I never it never hit me back, and I must have seen that movie like 15 times, at least.

Varadha

I don’t know if you know this actually as a trivia in Fight Club. Every time Edward Norton has shown, Brad Pitt is also shown for a flickering second. It’s he’s shown that your perception of vision is faster than that so you can’t quite recognize it. So if you do a slow motion,

Anand

Yeah.

Varadha

You know, you would actually see Edward Norton and Brad Pitt, Edward Norton and Brad Pitt in each of the scenes in which he exists.

Anand

That reminds me of the movie Memento, where at some point where the timing overlaps, then you start to see what people, anyway, I think we can definitely talk about movies all day long. I want to dive a little deeper into what what what you touched upon, right? How do we know of all of these 100 things that that we see,

Anand

how do we know what is it that we perceive? What is it that whether or not we’re looking at it, is actually making its way into our brain? I was wondering in the context of retail itself, given where you operate, can you just start by explaining to us and to our listeners what behavioural economics is and what exactly framing and context priming, two concepts that are written in your LinkedIn bio and of course or things that you’re passionate about, what are these and how do they have an influence on our decisions to to buy or take a certain action?

Varadha

Yeah, sure. First I’ll start off saying a lot of what I learned is through, you know, podcast from Rory Sutherland who I think is he’s done some really pioneering work, you know, from Ogilvy in UK, in fact, he actually runs a behavioural sciences consulting unit and they do some pretty splendid work with especially on public policy, for example, and I always think that public policy is one of the hardest to solve for. For example, you know, they, for example, try and see how you can prevent urination on a public wall, so, does graffiti work, does, you know, do, for example, you know, the drawings of god’s work, etc., etc., right? And these are very, very fascinating sort of examples. I think some of us, for example, have even heard of this, you know, this fly experiment or that Heathrow used in their London urinal to make sure, you know, the cleaning processes, the cleaners save a lot of time and so on and so forth. It’s just sort of all around us. Like Newton said, we just sort failed to observe it, right, and I’ll just sort of take a step back. Essentially, you know, think about it like this, right? You’re willing to pay ₹200 for a water bottle in a hotel room, comfortably ensconced on a white linen, right, watching TV. But whereas you whine about you having to pay for water when it sells for 20 rupees outside. So, what’s happened between the two places is you become more comfortable. Inertia is your default state, right, in a hotel, right, and you’re surrounded by things that scream quietness and relaxation. Right? So hence you’re, sort of, somewhere in your mind, your willingness to pay a premium, not to pay two steps extra has gone up substantially. Of course, I may be sort of oversimplifying it. I’m sure, you know, there are sort of better reasons, other reasons that we would discover as we go along. So that’s, for example, that’s example a way for someone to make sure, you know, you extract a premium, or show better value for the product, right? And similarly, you know, I’ve heard this from multiple offline retailers that you actually have a well-lit, extremely white showroom. Right? People actually somehow feel that your product is A, premium, B, pure. And it’s a well-managed company, right? And of course, the master of that is Apple. Yeah. This is just sort of basic colour psychology. So I think that I’m sort of getting at this when someone is looking at something, right, and they’re trying to cognite that, right. Four or five things that impact that or your values and your culture, right? Which which are the slowest to sort of change, right? So which are for the context and the environment, right? For example, culture and values remain the same, irrespective of whether I’m in a hotel room or outside, right? But the context and the environment have changed, right? And three anchors. I am now used to I know what pasta costing 900 so a 200 rupee water bottle does not seem that expensive. It’s like, you know, you’ve got a Mercedes Benz for the same battery that you saw that you would probably buy, you know, for 4000 in a Maruti, right, costs you 12 thousand bucks. So nothing has changed. Battery is the same. It’s just that you probably get a little better white glove treatment, right? So anchors, right? And then how do you prime? What is prime? Meaning, maybe, you know, you, for example, right, so, chances that, you would pick up a water bottle if I actually just had a card kept on your on your bedside table that said, you know you get cashews, you get all this, by the way, you also get water, obviously get increased substantially, right? So how do you make information, right, available to the person in the manner that you want him to decide on, right? Is really how information architecture and context priming work? And there’s this, you know, theory called behaviour is ultimately a function of means. It’s called MAP. I forget what the A is right now, but I’ll just sort of look it up. But essentially, you know, can you provide the means, right? Provide a nudge? And provide a process for the guy to, you know, try this through, right? So, for example just closer home, just to give you a couple of examples, when a website says, for example, you bought, let’s say, a product A and they say, you know, you may also like product B, right? CTRs are let’s say 0.5 or 0.7%. But if they say customers who bought this also bought this, CTR moves up to 1.2%. If they say must buy, it goes up to 1.4%. Right? If they say trending in in Bangalore or you know trending in a place near you, it obviously goes up, right, because people want to belong to a tribe or a group that they are a part of. Right? And so on and so forth. And this is especially, for example, even more sort of material in conspicuous consumption categories like fashion or, you know, retail, right? One of the things that I always find funny is that a bunch of websites still have, you know, their anchors are hero images of clothes, right? Whereas actually, when you’re actually buying a cloth, you’re not thinking of the clothing. You’re actually thinking of how you would look in that. It’s such a such an obvious sort of insight, right? And similarly with cars as well, obviously, I think most cases and now, I guess, an open insight, right, nobody just now shows the features and the functions of the car, right? And, you and me, for example, grew up in the 80s where fuel efficiency and Indian power where what was paraded, right, on on newspaper ads. You would say, you know, I’m getting 10 kilometres to a litre, this has a 100 bhp engine. But none of these new age ads, rather ads for these new age cars, never talk about that. I think that’s long past. They want you to, sort of, imagine how your own image or your own aspirational sort of lifestyle would improve if you drove that car. Right? So I think that’s how most industries move, right? From a function, from a basic utility to a differentiation on functionality to an emotional response to signalling. When I say signalling, you know, at a Mercedes Benz, I guess, you know, 50% of the value that you paid to a Mercedes-Benz is just for the logo. And just the fact that everybody else recognizes the logo to the Mercedes-Benz. And they always have this imaginary question. If there was an ultra ultra niche luxury brand which nobody knew about. You know, would people buy it as much, right? I think it sort of is like a parabola where I think you, sort of, there is this Goldilocks zone in the middle where a BMW, Mercedes-Benz, etc., etc., sort of peek out on. And after that, you know, there are these extremely esoteric sort of ultra luxury brands, right? Which are usually bought by people who don’t want to be sort of identified on the road, right? Cars are great, but they don’t want a car that screams that this is the Rolls-Royce. Right? So that, of course, becomes a very small niche. Where I’m sort of going with this is you need to understand where your market is and play accordingly. For example, I think pretty much thanks to what’s happened in COVID, I think e-commerce is no longer about basic functionality and utility. Which is why you see all these cashbacks, all of these, you know, I will deliver quickly etc. etc. all gone away, right? I think someone when I was working at Amazon, somebody said this and it sort of stuck with me that people come in for price, stay for the delivery experience and buy in the long term for the selection. Right? So sort of selection is that so eventually over a period of time you want to see a large selection, right? Half the value that Starbucks, I think, you know, sort of, shows to you is the fact that you can choose from over 200 coffees. Never mind the fact that 99% of us end up buying one of the top 3 coffees, latte, cappuccino, espresso, right? I think it’s that perception of choice and creating that, right? That is important, right, at the first level, and now that you’ve made sure that you have that perception of choice, what do you do to prime that person to make him or her move towards the intended direction, right? Could it be social proof? Could it be because maybe my friend is buying it? Could it be because, hey, you know, everyone else is buying it, so I might as well buy, right? So, you know, if you ask someone who is buying a Maruti, which is probably me, I just say, look, I don’t want to deal with any hassle. Everyone seems to be buying it. It’s a hassle free service, it’s a hassle-free car, so might as well sort of buy, right? So I just want to belong to a broad sort of denominator right? That’s, for example, I am framing it. Whereas somebody may want something that truly stands out. In fact, there are lots of people who say, I don’t want to buy a car that’s common because I want to stand out. Right? So they’ll end up buying a unique car in a red or a yellow shade, right? Or somebody may say, hey, you know, I want to make sure, you know, when I drive, there is a conspicuous sort of signalling, maybe, you know, it has a bauble or it has an exhaust, it has one of these tropes that make sure everyone on the road sort of turns back and looks at you, right? All of us have these have these psychological sort of needs. How do you sort of fulfil them, right, and how do you move them gently towards that direction? Right, is where, I think I personally think in the next two, three or four years, there’s going to be a lot work done. Lots of companies, including Google, including some of these AI driven companies have said that I think the big sort of juice that happen by squeezing out data, which we saw between 2015 and 2020, that’s pretty much gotten done, right? So I think most people now understand what is big data. They have an analytics team. They know what does a segment, right? What is now more important is to marry that science with an acute understanding of consumer behaviour and psychology. So how many Steve Jobs’s will we see across the industry who understand technology as a hygiene, but most importantly, they can sort of differentiate themselves through psychology? That’s going to be the sort of fascinating, you know, piece as far as digital ads is concerned, at least as far as I go. So, for example, you know, lots of people come and say, hey, you know, if we are now just so used to an Instagram image, right, if you actually make an e-commerce ad look like an Instagram image, I suspect that you get more attention. Right? So, you know, very similar to what the 7 up Fido Dido said, normal is boring, right? How much will you stand out in a normal? Right? If you’re also normal, right? How do you sort of gently peel away one layer to at least make yourself or your work stand out from the crowd? These are things starting, that’s that’s going to happen, definitely, in the next, you know, couple of years or so.

Anand

Yeah. As you are running through that, my mind is gone to so many places and examples, right, because I can keep thinking of this in not just my own behaviour as a consumer, but also what I’ve been reading about lately. So this the shoe company, the shoe shop, Payless, these you must have seen that example. Yeah. They set up a prank where they had a fancy looking white colour showroom and people paid 10 times the price for the same shoe.

Anand

There was, there was a guy who wore a garbage bag and gatecrashed a ramp of a fashion show, and the audience did not notice because until one of the security guards noticed that he was not actually a model. There are just so many of these examples that we can keep thinking of. There was a guy last week who entered a 2 Euro wine in a competition with all these 500 Euro wines and just replaced the label and it won.

Varadha

Yeah, yeah. Yeah, yeah. There’s so much of this. I mean, a lot of our perception is essentially what we attach value to. Yeah. Because of our own, you know, our own sort of stereotypes, misconceptions, idiosyncrasies, culture, values, etc. Right?

Anand

Yeah. Through all these examples that you have studied, both out of academic interest as well as the nature of what you do, what are some common cognitive biases that we have that may span across all of humankind, different different classes, different wealth levels? What are some common biases that we have, you mentioned white showroom, that’s one example.

Varadha

Like I mean, I think all of us know it. I am no great academic, confirmation bias, endowment bias, availability bias, we only look for things that are available, right? We are prisoners of our own stereotypes. If you have seen Rahul Dravid succeed very well, like for example, for a long time I used to think I was sort of very anti-t20 cricket. So, I think with hindsight I was clearly wrong. Like that, you know, so, because you think something has happened, you know, in a way and it’s succeeded or led to an outcome, you think all outcomes form there on have to be in the same way. So, you know,  availability bias, obviously we only look for things that we are presented with. These are some common biases.

How is Consumer Behaviour Leveraged to Nudge Purchases in Retail and E-commerce

Anand

In the world of retail, in the world of retail, e-commerce, marketplaces, companies like Amazon and Bigbasket, how is this being leveraged to guide the customer in a certain direction? I’ve always wondered, especially in the context of, like you said, people are also buying similar items. This is a must buy item. This is a trending item. What is the weightage in all of this given to just giving you what you’re looking for versus enabling discovery for you versus driving you in a certain direction? How are these businesses leveraging this to actually improve revenue? The end of the day, I think I guess that’s what everyone is going for.

Varadha

Yeah, sure. I mean, I’ll give you a you know a few examples. Like, for example, I think we find out that, you know, in a basket purchase like grocery, right, people have anyway decided to commit to purchase 4 or 5 items. So the friction to add another 2 or 3 in the basket, which normally in an offline store would just add because you get to walk around and supply creates its own demand. Right? Does not happen online, right? So I think almost every single retailer that we’ve spoken to the west says, hey, you know, pass the customer at the review basket before he or she checks out. Very similar to what a waiter actually does to you in a restaurant. Right? After you’re finished ordering, he’ll come back and say, hey, you know, the chef has just made this great eel or whatever, right? Please try it. God knows whether he’s trying to sort of farm off something that isn’t selling or whether it’s genuinely so good. Of course, I’m just joking. And, you know, you probably will buy it, right? And, I mean, many, many years back I met somebody from L’Oreal who said that, I think L’Oreal, for example, is one of the brands that benefits quite a lot from this, because nobody actually goes into a salon for anything beyond a haircut or hair colouring. But of course once you’re under the knife, you know, the beautician says, sir, you know whatever, you know, your grey looks odd, do you want this, do you want some steaming, etc., etc. because you are anyway committed to it, right, and suddenly you know the thousand bucks that he would have probably asked for does not look that that bad, right, you know, to you.

Anand

Interestingly, as I was getting my most recent haircut, I just I asked the guy, I say, how do you learn all the new trends and cuts that people ask for? And I said, do you learn it online? Do you keep getting training? He said, once a month, L’Oreal takes us and trains us, and they also tell us how to push their products.

Anand

But in the as a as a quid pro quo, they train us in all these new, you think so, I have a recent conversation around the same thing.

Varadha

Yeah. So I’m of course when the customer enters a website or a store, right? What you always do is make sure your key value item is seen as significant one, right? So ironically enough, offering of onion at 50% discount might help you drive traffic even if the, and eventually, you know, maybe the customer is even willing to pay a premium for a broccoli or sushi. So because no one’s thinking of the substantial saving that you can get on a 200 rupee broccoli. It’s onion, potato, tomato, cooking oil, rice, sugar that actually drives perception. It’s just like I think it’s a well sort of sort of trick. Of course I think, you know, most offline retailers would tell you that I think this is all baked in into the way, you know, the store is laid out, right? They essentially make sure that you pass through food counters where the aroma sort of seeps out. You know, items that you would that you would buy anyway or always kept at the end of the shop so that you end up passing through nondiscretionary, sort of rather discretionary items, a deo or you know, talcum powder, before you actually walk up all the way to buy a talcum, no, buy a, you know, cooking oil, right? So essentially and of course, I think some of us may have heard this IKEA example about how they purposefully make sure that the shop is sort of like a maze without any windows because they don’t want to see daylight, because then you’ll get a sense of how long you’ve spent, right, and they make sure that you meander through the store. And usually some of these, you know, trinkets and some of these smaller items are always kept towards the end so that you end up passing through a big sofa that you don’t need, before you eventually make your, you know, way around to, let’s say, a bedside lamp that costs only 1000 bucks, right? That’s essentially how do you improve availability, availability being a bias, because normally if I just kept the bedside lamp right at the entrance, the customer would just pop in buy that and then checkout. right? You know, now he or she has to wait through a longer route, right? And what obviously then they try and do is intersperse some of these larger ticket size items with trinkets like smaller stuff. So you end up buying a lot of stuff or let’s say 500, 1000 bucks. So you’re sort of pre-committed. And that’s how if you sort of look at, you know, some of these metro metro I mean these large hypermarts work, right? You end up buying lots of these sundry stuff. Then you see one large stuff that you don’t necessarily need, and say, you know, I’ve made all of this trip. Might as well just, you know, just buy this because probably it’s on a discount or you know what have you, right? So I think essentially how do you sort of pipe information, make it available, build anchors? For example, you could, I mean the most common thing that everyone does this they have a price, they strike that off and show you another price, which is anchoring, right? Is that price really true? Nobody knows, right? Or they just say, you know, this is a market price. Or for example what they probably do is bundle two things together and make it look make it look optically cheaper. Of course, the past master of this is the Amazon. I think the Prime program is just so exceptionally well bundled. It encompasses free music, free movies, free shipping, free delivery, free, I don’t know what, downloads etc etc, so you just have no idea what part of that value would you even attribute towards free movies. What part towards free shipping and what part towards music, right? So all of them feed off each other. Somebody comes in for free shipping, watches free movies. Somebody comes in for free movies, watches, starts buying stuff because it’s free shipping and they end up obviously buying the and also using the music podcast as well, right? So I think essentially these are some sort of old tricks, right, make things appear as easily as possible in front of the customer’s eyes, provide anchors so that the customer feels there is obviously value in all of this. I’ve heard about this iPhone 64, 128 and 256 being priced the way they are, right? Usually what most car manufacturers do is they stretch the price of the top end variant as much as possible. They keep a modestly priced mid variant so people end up committing to the mid variant and then they go through these spans and they eventually say, you know, I’m going to buy a car only once a ten years, what matters if it’s good, yeah. I’ll go to the top end variant, right, where typically margins are better. Or they end up bundling stuff, right? Most car dealers will tell you that they don’t make many money on cars. They make money on the extended warranty, the AMC, and the insurance, right? These are not things that you even think about. Everyone tries to negotiate the the price, the ex-showroom price of the car. But what is probably even more chunkier in terms of margin is actually the cost of the insurance on the on the cost of whatever AMC or extended warranty, right? So, and the the last thing is after anchors is a social proofing and you know tropes, right? So what are the ways and means in which you could sort of make them perceive value in this, in a product? It could be a direct sort of functional comparison with a competitor, which is what the insurance companies would do, because it’s a very rational sort of product or it could be an emotional sort of you know thing saying, Google pixel might say, I’m giving you, you know, unlimited storage to store all of your photos. An iPhone might say, hey, you know, simplicity is my thing, right? So you choose between these they don’t these don’t necessarily have to be contrasting on the same axis, which is what makes this fascinating. So it’s a multi dimensional, multi multi-polar sort of problem, right? Is the simplicity of Apple better than the unlimited storage of the Google pixel photo? I don’t know. I guess these are two different audiences, right? So that’s how it sort of these are some things that that work rather you know that this that they even sort of trying to build on. The last thing I, sorry, I didn’t, I forgot to mention is the more you can do to resolve the ambiguity, right, and the uncertainty that the customer sort of you know faces, right, the better it is, right? So like for example, a lot of guys, you know, I don’t know, I heard the story about LinkedIn and I have this fascination for sort of filing in all of these examples. For a long time they were trying to sell this premium subscription, and maybe it was LinkedIn, maybe it was somebody else. A lot of these guys say, hey, you know, first month is free and your card won’t get charged until after the first month, right? Lots of times people had this sort of worry that I’m giving you my card number, right, now what if you just charge it just straight away, right? And some some companies even take it to the next sort of extent saying they will give you a notification before charging the card so that you can choose to not not actually pick up the subscription after a free month or whatever, right? Of course, I think the whole whole sort of thesis is that we are just so caught up and busy with our lives, what we would have probably scrounge for. We just sort of go into this, you know, you know, deadbeat mode. Which is how, you know, I suspect you have a lot of these subscriptions. I bought a YouTube subscription just to listen to something it’s been running on for three years. Because after a while I said it’s okay. A few, you know, a few hundred bucks, so might as well just sort of run with it. I think, inertia is an exceptionally good, you know, sort of a tool, right? The more you can do to break the initial inertia. And you know and make that sort of persistent the better the end results are. Yeah. So I think these are some things that I can think of closer home on public policy. You know, I think, you know, when we tried to do some work for the Metro, one of the things that often metro passengers actually said was these metro stations just look like rectangular boxes. Why would you not have an LED board that has the ETA of the next train on the ETD of the next train? And more importantly, in fact, one in one suggestion that really sort of caught my attention was, hey, you know, usually the the pivot point for somebody to try a metro could often be that let’s say, you’re running late to go to the airport or go to Majestic. Right? So, it’s raining, you’re in a cab, or you’re about to think of taking a cab. You don’t know if you will actually reach reach Majestic on time if you took a cab, right? And at that point, you’re willing to try the metro, right? But what’s stopping you? You don’t know when the next train is. And you don’t know when it will reach Majestic. Right? So someone actually said, you know, why don’t you just frame it, saying ETD, rather, whatever, expected time to go to Majestic on the metro is 23 minutes, by road is 46 minutes. And flash that, all four sides, right? What you eventually are doing is you essentially are figuring out an inelastic travel plan. Right? And using that as an ingress for people to try out that first metro. Right? If I just said, hey, you know, save fuel, go green, etc. etc., we could say, it’s okay. We’ll think about it. But now, I have to get to the airport in the next half an hour. It’s a inelastic defined clearly. I have to do it. There is no alternative. At this point of time, I’m willing to bend. But you essentially have to resolve the ambiguity about whether I will reach the, you know, the airport on time, right, in the next 30 minutes. So, you know, that often would be like a great sort of trope, right, you know? Imagine the number of people who want to go to college on time, want to go to a high court hearing on time. You want to go to the office on time because there’s a 9 o’clock meeting that’s starting, right, etc. etc. Right? Why should Metro boards be just a number? Why can’t they be frames saying reach you office meeting on time in the morning, right? I mean, then I suspect a lot of people might.

Anand

Which people care about far more than it being green and it being responsible.

Varadha

Got it. Absolutely right. You know, you will have let’s say review with your skip boss at 9:30, and you’re leaving your house at 8:45. Google Maps is showing you at 9:33, Right? How many times has this happen to you, right? And you don’t know if 9:33 will become 9:43 or 9:53. You’re pretty sure 9:33 will never become 9:23. Right? So these are obviously I think you have to figure out what’s that one piece, right, that is that could even be an unmanifested sort of need that you can get a leverage on. Right? So and I keep thinking that I travel quite a lot and I actually thought the other way to frame it in when I go to Dubai or London. Right? You actually take a Metro Express to go to the airport. Right? I actually thought, why don’t you do a security check-in within the metro train? And provide that as an incentive. Because that, right, will go to some of these airports, right? Thousands of cars come in and go out and there’s persistent honking, all kinds of confusion. Right? Imagine you just said, for those folks who come by Metro, you get the security check done in the Metro and no one and this is anyway the last stop. Right? I’m in many cases, most of these most of these metros also do a security check even before you board the metro. And it saves you time. You’re just sort of getting straight into the heart of the airport, right? And that just becomes a hook for you to ditch the car or get dropped at a station that is not necessarily close to the airport. Right?

Anand

Yeah. Yeah. As opposed to willingly going and putting yourself through the pain of the honking and then the security lines and everything else, it’s kind of like what Abu Dhabi achieved at the airport. You do the U.S. immigration in Abu Dhabi itself.

Varadha

Yeah. Got it. Absolutely correct.

Anand

That somehow tapped into the fact that when you land in the US that it’s a very painful process.

Varadha

Yeah. Got it. Yeah. So there are so many things. It’s like I said, we just

Anand

It’s all around us. The more we start and I’m sure after this conversation I will continue to just observe it everywhere and also catch myself falling, like, prey to various traps that have been set around me, right, I’m sure. I had two questions for you on the role of advertising. Everything you’ve talked about applies in obviously multiple realms, applies to certain target audiences, but at some point is also going to push someone from one one group to another, depending on their willpower, so to speak.

Anand

It sounds like people with high willpower are not desired anymore in this, right, because you have the ability to say no, I will not, I will not pay 200 rupees for this bottle of water. I would bring my own bottle of water from home, or or what’s other trick that I have been taught, which is you don’t call room service, you call housekeeping.

Anand

And they give you free water at a hotel. But there are people who will figure it out. But I’m guessing.

Varadha

And I do even cheaper stuff. Now I carry a water bottle around. So I give the water bottle and say, fill it, right, and obviously they don’t have a water fountain, right? So they just pour that into this and give it back to me.

Is The Role of Advertising Today to Cut the Clutter?

Anand

Yeah, but very clearly, this is this has been studied and applied for decades. And I’m curious to know, at the intersection of this as a general consumer experience as well as ads, especially in the world of retail, both offline and online, in today’s world, given so much noise, so much that we are being forced to see this barrage of experiences, data, ads, what is the role that advertising is playing today in this experience?

Anand

Is it helping us cut through the clutter and get the signal out of the noise? Is it supercharging the experience? Is it what is the primary role of advertising today, or is it the same as it has always been?

Varadha

I think for a long time advertisement was seen as something, see, there was this theory in the 1940s 50s, the Kotler era that, you know, our brain has these bunch of pigeonholes. There’s a pigeonhole for detergent. If I am Surf, I hammer hard at you, I hammer hard at you day in day out on newspapers to get my pigeon into that pigeonhole. Usually, and there is this other, whatever, stereotype good bad saying, usually each pigeonhole can’t take more than one or two pigeons. So you try and be those one or two brands, which is the stop of mind, recall, right? What can you pick up? Top of mind, unaided recall, etc. etc. It’s like you can just pick up those pigeons straight off the pigeonhole, right? But I think given what has happened, right, more and more of our ROM has become RAM. Maybe you and me still remember Surf or whatever. Right? But the younger generation is probably saying, why do we even need to remember? Which is where I think you see the roles of platforms becoming more and more important. You’re not saying, I want to order the Thai rice, right? You’re saying, let me go to Zomato and figure out, right? So which is obviously which is obviously the reason why in the last 10, 12, 15 years you’ve seen the rise of third party marketplaces, which do this crisscross. And obviously the rise of retail media. That’s how is, sort of, rationalises it saying, nobody now wants to remember stuff. People are looking for cache, right, flash RAM, right? I wanted detergent. Just tell me two three things that are available that are relevant and meet my expectations. Now don’t expect me to remember them thereafter. Each time I read it, I will ask you to just be my, you know, friendly assistant just chirping, which is which is essentially the role that retail media sort of plays. Right? I’m just thinking that is assuming I want to buy Surf. But I think like Uber came and changed the experience, actually I’m interested buying Surf or a detergent and I’m interested in cleaning clothes, right? How will this change? I don’t know, I mean I am no great sort of prescient guy. So, could it be Surf regaining back some leverage saying, I am a brand that helps you clean your clothes, right? Or will it be a platform that says you want something, a solution that helps you clean your clothes. Right? I’m not so sure. But what I am, I am reasonably sure of is the specificity, okay, what I’m sure of is the pigeonhole sizes are decreasing. Whether they’re going away or not, I don’t know. And we certainly are not going to have 200 pigeonholes for 2 pigeons each. I think we will probably go down to 20 pigeonholes with one pigeon each, equivalent. Right? So if you look at some of the younger, younger generation, including my own daughter, they’d say, you know, I know Instagram, I know Amazon, you want, you know, room deodorant, I get it from Amazon, right? Why do I need to remember that Odonil is a room deodorant that I need to buy. Right? I will just buy what is available. Right? So these purchase cycles that involved priming, remembering, stewing over and then picking up that brand back, sort of like what happened in a post office, right? Mail comes in, you sort it, then you pick it up based on street. It’s all now become straight through process, because it’s all data, right? There’s no sort of physicality to it, right? So essentially decisions have become more compressed, faster, with no muscle memory of the choices that are being made.

Anand

Therefore advertising?

Varadha

I don’t know. I also don’t know so but I’m just saying, advertising will certainly become more and more nudges that solve a problem, right, not say I’m a detergent, right? I suspect 10 years later I may actually say, look, I’ll spill some ketchup on my shirt. How do I clean it?

Anand

No. But like you’re saying, if we are heading to an era or are already at an era, where we don’t want to do all that thinking. If you’re if you’re saying ROM has become RAM, essentially, right, where, either we have become more or less perceptive or more or less lazy, the jury is still out, but if I just want the straight through process, then advertising the right nudge can effectively find us at that spot.

Anand

And it sounds to me like it is definitely going to get us the signal from the noise, except that in this era, it can also know where we are and what we bought last. It has a lot more context, as opposed to the ad in the sort of supermarket that is promoting a specific product. Right? But the other question I had is.

Varadha

No, I mean, sorry, I mean an extension of that is I think you are seeing yields go up on ads that can overlay one first party data. Which is like saying, see, there was this phase that we went through where there’s so much supply, prices crashed, right? So you could get 20 rupees CPM etc. etc. Now I think people are saying, I don’t need so much, I want detergent, I don’t need 200 brands of detergent. Just take me 2/3 that are relevant to me that I have bought in the past that are relevant to a tropical country like India that can help solve, you know, a darkened collar problem. Right? Don’t give me Tide pods that work well in, you know, in a temperate climate. Right? So you get the drift. Right? I think there’s this thing of like even in the Western economies, now, people are going through this, you know, Marie Kondo thing of, like, I don’t need so much, can I just sort of shrink my choices. Right? And create some space, which I guess is something that most of us do as we sort of age. Right? So I think so essentially what is going to happen is you’re going to have fewer ads, but they’ll be more thoughtful and relevant. And the prices for those will go up. Yes, yeah. So think of it like the hamburger problem. Earlier, you were just selling buns. Buns were, you know, cheap aplenty. Now you don’t want a bun. You just want a hamburger. The more the number of layers you can put, patty, you know, cheese, etc., etc., make it very, very sort of contextual and personalised, you know, instead of a bun, two buns being sold for ₹5 each, you are getting a hamburger for 200 bucks. It includes a patty and a piece in between that cost XXX. Right? So I think that is probably what we’re going to sort of see.

Why Advertising Gets Negative PR When Applying Consumer Behaviour Data to Drive Better Ads

Anand

Yeah. Consumers always worry that ads are manipulating them. But if you look at cognitive psychology, especially in the world of retail, it sounds like for decades, people have been trying to figure out consumers and you might call it manipulation, but it’s mostly at scale, how do you figure out? How do you get to the right or do you get your message to the right customer?

Anand

What is it that has resulted in the advertising industry having a negative image as opposed to retail where everybody’s okay? You know that you drive to the store, you’ll have to walk to the corner to get your milk and on your way back, exit through the gift shop. Nobody really cares about it. Nobody finds it overly manipulative, right? It just becomes so normal.

Anand

Whereas the minute you go look for a mattress and the next day Amazon shows you a mattress, people are like, they’re they’re following me, they’re spying on me. I need to put an ad blocker in place. What is it that has resulted in advertising getting a negative PR? Whereas cognitive psychology has been an applied science.

Varadha

And I think that is because you just sort of answered it yourself, right, in the former. You were in the frame of mind to actually buy. That ad was shown during your buying experience box. Right? Just because I was in a frame of mind to buy mattress, then it doesn’t mean I’m in a frame of mind to buy a mattress every minute thereafter. Right? There’s obviously a thin line. I know, I mean, obviously as a marketeer, as an advertizer, you’d say I need to chase him. But what is a Goldilocks zone in which this can happen? For example, to be sort of specific, if I, this is where sort of priming and information architecture comes in, right? Let’s say, for example, I know on, and went to search for a, you know, mattress, right? Instead of me saying, please buy this mattress, why can’t I say, you know, 10 tips to choose the mattress, your right mattress. Priming. Right? Sponsored by XXX. Right? Say, you know, if these are the four or five mattresses that you should choose, let me help you buy the best discount on these four or five mattresses that fit you, is a little more progressive, right? Which I think is something that I have been sort of endlessly thinking about saying, you know, why should digital ads get judged pretty much on straight conversions. Right? If you’re a cricketer, if you if you if you’ve done any, if you’ve undergone any sort of coaching, nobody even expects you to bat for 6 months. First 6 months is like you pad up, learn the technique, improve your stamina, improve your, whatever, improve your hand-eye coordination, learn to catch the ball, etc. etc. Right? I think we may be, obviously because we are a society that is becoming more and more in a hurry. We are getting too obsessed with the output. Right? Without necessarily sort of worrying about the intermediate states. In some sense, I think Google solved it by making the transition from Yahoo ad CPM into a CTR. Right? But thanks to the clutter, click today is probably not fully indicative of intent to buy. Right? And thanks to dark patterns etc. etc., you may even be clicking without, even outside of your own volition. Right? So how do you solve for it? Is there a better way to do it? Like, for example, I think some of these stuff like you know that you play a game, spin a wheel, you know, someone’s not going to spin a wheel unless that person is not fully sort of giving you undivided attention. Right? How do you get that, right? Is something that that I think is an endlessly sort of fascinating experience. Like, for example, 3 things, 2 or 3 things that I can think of that are completely sort of still unused are sounds. Right? All of us remember the Airtel jingle, all of us remember the Paytm Karo tune, right? Everyone is looking at ads as a visual sort of appeal. Anyone who grew up in the 80s and 90s would know that Nirma ad, you know, the jingle, etc., etc. Right? I think sounds are of course another sort of one way to look at it. Could there be something else? Right? Could there be aroma? Obviously, we still can’t do it. You can’t pipe aroma over the internet. But could there be something else that attracts your senses? You know, in the US, I think there’s this concept of ASMR, autonomous sensory motor reflex. Right? So where you know you’re saying, hey, you know, I want to sell food. Can I show you slurping sounds or you know, the straw sucking sound? Right? So essentially, what are those? Those are essentially tropes, very similar to a David Fincher movie, right? I want to sell you a juice. I have to actually think that, sorry, I have to actually make you think of a juice, sorry, rather drinking a juice, right? So that’s what I would do. So those are the things that, that I guess will happen. I mean, why should ads just be limited to the sense of seeing, right? Can the cognition be improved through smell? I don’t smell looks too far away. But hearing, and maybe any of the, half any of the other senses. Obviously it can’t be full given the limitations of the internet as it exists today. Right so.

How Does Varadha Apply Behavioural Insights and Nudges at Bigbasket

Anand

Yeah. No, that certainly fascinating. Last couple of questions before we run this off. In your world at Bigbasket, how does all of this get applied? Is it in the way the product is laid out? Is it in the way your recommendation engine works? Is it through nudges? Notification? Is it through how you interplay ads with regular recommendations? What are the various tools you have to apply all of this as you study your customers behaviour?

Varadha

Personally, I think these are a lot of what I told you is sort of stuff that I do outside of you know work. But I think obviously at Bigbasket we do take baby steps. Essentially, for example, right, I think trying to understand if we can blur the line between ads that are typically get siloed as branding ads and performance ads. Right? So far ads have been construed into two different silos without being joined at the hip saying, you know, either you do CPM or video, which means brand recall improves, right? Or you just do performance ads, which means you improve sales. Or there for example, ways to merge both of them. Right? Is for example, in one, experiment, are there ways to sort of I wouldn’t say ads, but what could be sort of ways for us to talk to you through personalised coupons or scratchcards etc. etc. like I don’t know if you know about this I think like like the GPay experiment showed if you make people, right, do something and then get a small variable reward, people go gangbusters. Right? You know. So essentially the Kinder Joy sort of effect, right? Most kids want to buy Kinder Joy, not for the chocolate. Because they discover a surprise sort of cartoon within, right? That discovery, that hunting for the treasure is the bigger joy than consuming the chocolate inside. Right? That it comes with chocolate, is just an incidental sort of stuff. Right?  And there are so many such products, you know, designed like that. Right. So could that, for example, be used, right? Where I say, hey, you know, you’ve shopped so far Anand, you know, you scratch this card. Right? Pick it out for yourself, how much you got as a discount and for you to use this discount, you need to shop for another 500 or more. Right? So sort of like bundling. Dynamic pricing. Right? So, you know, talking you on the fly. Do you want to call these ads? Nudges? Promotions? I don’t know. That’s why I think these will the lines between inorganic ads and organic nudge and a paid promotion will blur. All of these three lines will essentially, sort of, cross and become an integrated sort of communication. Like for example, I always used to run this thought experiment in my mind, saying, hey, you know, let’s say for example, you looked at a sofa, right, for 20k and you choose not to buy it. Right? What should the guy do? Should he remind you saying drop the price by 2k and say, hey, here is a deal that’s evaporating. Buy it. Right? Or should he say, hey, you know, this sofa is being purchased by 200 others. So buy it. Or should he say that there are only 5 more sofas left and none will be made after that. Or should he say the sofa is great for a weak back. Or should he say that you know this sofa is trending in Bangalore. Or should he say that you know this sofa plus another chair that you would have bought for 5000 is now available to you together for, you know whatever, 20,000. I don’t know. I mean, the only way to figure that out is to run these experiments at scale, right, I think thanks to Midjourney, I think some of that is going to come alive very soon. Right? So because earlier the creative process, which used to be often the slower sort of part of this entire thing, which is the bottleneck, is now very, very fast.

What is the Role of General Purpose Technology (Generative AI) in Advancing Advertising

Anand

I asked Lava Kumar a question around peeking into the future and much like what you just said, the Stable Diffusion models are what he believes are going to be far more applicable. And in his opinion, he said the creatives of the future will not be fetched. They will be generated on the fly. Correct. Midjourney has kinda helped us get there faster in the sense that we’re able to run all these experiments at scale without waiting for a creative process.

Anand

But as he was peeking into the future, one of the things he believes is in future these models itself, with far more context, with boundaries, will be and with the ability to have enough computational horsepower will generate creatives on the fly. And I think that that can actually be a game changer. So I will throw that question to you as well, Varadha before we close this podcast episode out. With Generative AI, Stable Diffusion models, we are possibly at the cusp of a new general purpose technology. It always tickles me that they’ve called it GPT aptly, right, with the hope that that’s what it will eventually become. With a powerful technology like this becoming more and more democratised and accessible, what is the impact that it will have on the application of cognitive psychology?

Anand

One of the things like you just mentioned is what Midjourney has already done. Where is all of this going? What is five years, ten years from now? What is it that today we’re unable to fathom? That’s actually right around the corner?

Varadha

I think essentially, essentially a lot of these high margin services, right, which were founded on fine human judgement. Right? Like, for example, management consulting, investment banking, creative, you know, artistry, etc., etc., right, will eventually get disrupted because a lot of you being a good painter, right, is essentially you just distilling learnings from the thousands of paintings that you’ve done. So now the machine just does that. Right? So obviously there is still be a lot of finishing to be done. There will be, you know, there will be sort of finessing that needs to get done. Right? So for a long time, I think we as humankind struggled with processes that were at the intersection of art and science. Right? They could not be assembly line, rather you know they could not be transported to an assembly line. Because painters used to believe that each painting is a bespoke, beautiful piece of art, right? So very similar to I guess what we all believed, you know, before Henry Ford said, or just means 4 doors 5 tyres, I will just assemble it. Why should one guy assemble all of this by himself, right, over a period of 5 days? 50 guys will do only one thing, and each car will come out in 15 minutes instead of 5 days. Right? I think that to me is a hugely you know disruptive sort of experience. So a lot of stuff that, you know, we take for granted. Sometimes, you know, I always think I have to register for a webinar. Fill up the same form, fill up the same name, etc. etc. Can somebody just do all of this for me as a personal assistant, keep track of it and tell me exactly saying, log into this webinar, do this. Pay the electricity bill etc. etc. That future is almost, yeah, it’ll happen in the next 5/6 months. Right? So what it then does is hopefully you could get a little more time for creative thinking, provided you have the bent of mind for it, but it’s so easy for you to obviously fall back and not do that. Right? So like, for example, I think somebody gave me this example saying, after the Industrial Revolution, right, during the Industrial Revolution, essentially, some of these elites of Europe found a lot more time to enjoy music, do fine arts, etc. etc. Right? It is no coincidence that the peak of Renaissance also happened alongside. You know. I won’t say peak of Renaissance, the industrial Revolution essentially gave rise to a little more time for people to pursue stuff that was not necessarily of today’s utility, but had profound long term implications like space travel or sketching or music or something, etc. etc. So that could potentially happen, you know, in the next 10-15 years. I am obviously no soothsayer. I am myself an average sort of Joe. But I think just let’s say Google and Microsoft getting smart, right, will, for example, save you and me tons of time that you would have spent on a PPT or an Excel. Where do you use.

Anand

Yeah. And it’s up to us to decide where to use that time. No, but I like I like the premise because you’re saying much like what happened during the Renaissance or right after the Industrial Revolution, there was a sudden availability of time and some people chose to be creative and do great things with it. Some people became lazy. Some people became greedier and ended up working more and everyone goes their separate ways.

Anand

It’s kind of a repeat of that entire stretch of time, in a, in an upgraded era. We are already benefiting from time saved because there are so many tools to use and like you said we’re not far from this assistant that can do a lot for us. I have already started heavily leveraging like Midjourney and tools. The other day I didn’t make a deck at all. I just generated it and used it and it did the half decent job. It was for some internal presentation.

Anand

So it was okay. But the point is I would have otherwise spent like 2 hrs like poring over that deck and trying to fine tune every little thing on it. So I definitely think we are either close or already at that era and I like the premise that over the next few years what we do with the time saved is, is, is again going to repeat what happened in the Renaissance.

Anand

And and I think that’s interesting. So on that note, I wanted to close this podcast and I must thank you for your time. This has been a most enlightening conversation.

Varadha

And I mean, I don’t know if it is any useful. I mean, I just enjoyed sort of blurting out whatever little I knew. And, you know, a bunch of this does not even have anything to do with my sort of age or it’s just stuff that fascinates me.

Anand

I, which is what we like as well. Right? The the reason we set up this podcast is because we just love to jam and we just decided to do it. And in fact, some of our very scripted and sort of focused episodes are the less enjoyable ones to be honest. The more fun ones to do are this and even the people who listen in tend to agree with that. So I think it is definitely going to pique a lot of people’s curiosity to go and explore more around what you already find fascinating and what you spend a lot of your time reading. And I think for that I must thank you. You’ve definitely piqued that curiosity even for me and for Santhosh who’s listening in.

Anand

So thank you Varadha. And we look forward to meeting you again sometime sometime soon. But thank you for the time.

Varadha

Sure. Thanks Anand. Thanks Santhosh.