Fair & Lovely, one of the products of Hindustan Unilever is sold at a stop in Mumbai, India on April 27, 2013. (Kuni Takahashi/Bloomberg)

Unilever is using a new method to sell products from Lifebuoy soap to Fair & Lovely skin cream 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 cellphones in two states, said Anaheeta Goenka, the executive director of Lowe Lintas & Partners, the agency handling the campaign for the second-biggest consumer company. The offering expanded to Uttar Pradesh, India’s most populous state, on March 31.

Companies from Unilever to PepsiCo have turned to mobile campaigns in the second-largest phone market to reach consumers including those in villages as growth in rural spending exceeds that in urban centres. With ad spends surging, cellphone 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,” Girish Nair, the chief executive of Netcore, the agency that is executing Unilever’s mobile service, said.

“You now have the opportunity to get data on each subscriber” that could help optimise ad campaigns and improve distribution, he said.

Hindustan Unilever started the service last year in Bihar, one of India’s poorest states, and extended it to neighbouring Jharkhand, Goenka said. The service had 8 million listeners since it started in October through the 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.

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.

There are some concerns about the effectiveness of such a service. “It’s a new thing and might be successful for the first three or four months,” Harsh Mehta, an analyst at HDFC Securities, said. “The customer would eventually get bored with the same stuff.”

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

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

A 10-second spot on mythological drama Mahabharat on India’s Star Plus television network costs about 250 000 rupees (R43 362). That is enough to pay for reaching at least 21 000 people with a 10-minute phone call, according to calculations based on prevailing mobile airtime tariffs.

Indian companies spent 3 billion rupees on mobile ads last year, and the market is projected to grow 43 percent 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.

Hindustan Unilever shares have gained 26 percent in the past year to 598.30 rupees versus a 22 percent advance in the benchmark S&P BSE Sensex.

PepsiCo last year started a campaign similar to that of Unilever – playing back entertainment content on cellphones.

Several companies including Mondelez International’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 enables 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 percent on average annually in the five years through March 2012, from 1 percent in the previous decade, according to India’s Planning Commission.

Interacting directly with consumers is vital because the weakest economic expansion in about a decade, combined with consumer price inflation exceeding 8 percent, has prompted a switch to cheaper substitutes for everything from soaps to food. – Bloomberg