The Indian edtech startups have undergone a major shift following the Byju’s fallout. More than 2,200 edtech startups have shut down their operations in the past five years, and the venture capitalists’ (VC) funding has drastically decreased from $1.9 billion in 2020 to $536.7 million in 2024, according to the data from the market intelligence platform Tracxn.
Amidst Byju’s plummeting valuation, legal disputes, and financial crisis, India’s ed-tech sector has adopted a frugal approach to regain the trust of both investors and users.
Dr Sandeep Goyal, Chairman of Rediffusion states, “Byju’s has been a huge downer for edtech. It has taken the sheen off the entire industry and made them appear to be dodgy and unreliable”.
Consequently, India’s leading edtech startups have abandoned the glamorous route of branding and marketing, such as sponsoring marquee events like the Indian Premiere League (IPL), cricket teams, or reality shows.
Instead, they have significantly cut down their advertisement, marketing, and promotional expenditures. “Most ed-tech firms are undergoing philosophical reset after Byju’s debacle,” says Neha Chopra, Leading Strategic Planning at ad agency Enormous. She points out that ed-tech firm Unacademy’s “Legends on Unacademy courses”, featuring eminent personalities like Kiran Bedi, Shashi Tharoor, Virat Kohli, and others tutoring students, is an interesting way to leverage celebrity endorsements for brand promotion.
The inspiring story of IPO-bound PhysicsWallah founder Alakh Pandey has also helped the company gain the audience’s trust. “PhysicsWalalh’s story is so compelling that they achieved significant growth with minimal traditional advertising,” Chopra added, “They have built trust through authenticity”.
Once the key sponsor of quiz show Kaun Banega Crorepati (KBC), Bengaluru-based Vedantu has also moved away from ostentatious marketing. In fact, the company has abandoned celebrity brand ambassadors altogether. Sagar Mankar, Director-Digital Marketing at Vedantu told Storyboard18, “We have shifted 90% of our focus to user acquisitions and sales, with branding accounting for only 10%”.
According to the FY24 filings of the ed-tech startups, Unacademy reduced its marketing and promotional spending by 33% to Rs 201.3 crore in FY24 from Rs 293.4 crore spent in FY23. Additionally, PhysicsWallah’s ad spend stood at Rs 37.3 crore, Simplilearn’s marketing and promotional expenses were Rs 204.79 crore, Vedantu’s ad expenses were Rs 23 crore, and upGrad’s were Rs 340 crore in FY24, respectively.
Byju’s once the poster child of India’s edtech industry, spent over Rs 8,000 crore between FY16 and FY22 on advertisement and promotions.
“Byju’s one-month promotional spending was equivalent to the quarterly spending of a single edtech startup,” said an industry veteran, emphasizing the scale of spends. “Byju’s dominated the ad space, preventing competitors from securing slots. The company splurged on advertising, paying vendors or affiliates 2-3 times the industry benchmark to book ad slots. This move barred other companies from entering the market at comparable price points. Byju’s had a stronghold in OEMs, sports, and IPL advertising,” the executive added.
However, following Byju’s downfall, ed-tech companies have shifted their focus beyond “vanity metrics”, which may lead to a decline in ad expenditures, experts say.
According to Mankar, Vedantu promotes its narrative through its teachers, rather than relying on celebrity endorsements. “We found that celebrity brand was not effective for us. Instead, our teachers have become the face of our marketing, as students can better relate and connect with them”.
Edtech platforms have stopped sponsoring high-profile events like the IPL.
“The euphoria that we saw in this category during Covid, along with the expected growth, was not sustainable, leading to unrealistic business projections. As a result, companies in this sector are now being more cautious with large investments while refining their business models,” Navin Khemka, CEO, EssenceMediacom, South Asia said.
According to Shabbir Motiwala, Chief Content Officer at Infectious Advertising, ed-tech startups are adopting sharper ad and marketing strategies compared to Byju’s peak period. “Influencer marketing, content-driven engagement, and referral programs are proving to be cost-effective alternatives for the ed-tech companies. Furthermore, collaborating with schools, universities, and businesses has helped bring in steady users without relying heavily on ads”.
For instance, Unacademy’s focus on community-driven engagement, and upGrad’s partnerships with universities and corporations are sustainable marketing strategies that balance growth, costs, and trust, Motiwala added.
While, edtech firms may have reduced their promotional and marketing expenses, regaining the trust of affiliates remains a long and challenging road ahead. An expert, who wished to remain anonymous, told Storyboard18 that following Byju’s failure, vendors and partners have become more insistent on advanced payments. “All affiliates have reduced credit limits from 60-90 days to 15-30 days. They are now demanding upfront payments or payment on an order basis”.
Additionally, to rebuild parents’ trust, ed-tech startups are heavily relying on Artificial Intelligence tools, as well as Meta and Google for targeted marketing.
However, AI has been a double-edged sword for edtech. On one hand, it helps improve content on their platforms, but on the other hand, it may result in losing users due to cheap and easy access to GenAI platforms.
According to Chopra, “AI can only provide a formative or surface-level understanding of an audience, but it cannot provide a comprehensive picture. What will really differentiate ed-tech startups is mentoring on a regular basis, which can be a game changer”.
Goyal notes, “AI will surely recontour the business of edtech firms, but its impact will be more pronounced on products than brands”.