How Meta made a billion dollars in India

That India produced a record 45 unicorns in 2021, ushering in a whopping $40 billion in private capital, is a matter of pride for the country. And Meta in India is an ecstatic cheerleader. What is the link ? Well, the allure of half a billion users (India is Meta’s largest market by user count) means that these new age start-ups, which are sitting on mounds of money and high growth goals, are big advertisers on Facebook and Instagram. Naresh Gupta, co-founder and chief strategy officer of media communications company Bang In The Middle, says: “Mamaearths [a beauty start-up] of the world are all three to four year olds and were built on the back of digital advertising because content aggregation happens on Facebook and Instagram.

Propelled by consumers flocking to the internet to shop and live during shutdowns, these startups and other brands big and small have piled on digital advertising. In fact, if you’re not digital today, you’re dead. Add to this the direct-to-consumer (D2C) boom where a class of brands and start-ups primarily focused on consumer products are leveraging social media to connect directly with their consumers, bypassing distribution models. traditional ones, and you know why bags of money have somersaulted at high speed in Meta in the vaults of India.

Also read: Facebook 2.0: Meta’s India Play

So much so that Meta’s ad revenue in India is now greater than what the broadcast giants earn from running ads on their channels. According to RoC filings and the company’s annual reports, the country’s largest television network, Star India, generated advertising revenue of Rs 5,918 crore in FY21, while Zee Entertainment Enterprises made Rs 3,710 crore. Their growth rates (-21.2) and (-17.2)%, respectively, compare very modestly to those of Meta in India (41%) and 21.36% of Google India, indicating a preference growing brands for digital advertising. While TV networks would most likely post better numbers post-pandemic (FY21 was a full pandemic year where TV had virtually no new content and therefore had few ads), the trend is expected to continue.

A FICCI-EY report on advertising spend estimates that digital advertising in India grew by 22.5% to Rs 23,400 crore in 2021. Industry insiders peg it higher at around Rs 27,000 crore . At Rs 9,326 crore, a significant chunk of this pie belongs to Meta in India. Google India, of course, is the big gorilla here, with gross ad revenue of Rs 13,668 crore in FY21. (To be clear, Meta, which is an ad reseller, only charges a portion of the advertising revenue it makes here at the Indian branch. The rest is billed to its parent company. Thus India’s net advertising revenue is Rs 637 crore in FY21.)

Ajit Mohan, VP and GM of Facebook India (Meta) traces the achievement of Meta in India to a conscious call made around 2018-19 to focus more on India-centric innovations and features that can be brought to the rest of the world, such as digital payments on WhatsApp and short videos called “Reels” on Instagram. “India had become big for Facebook as a business,” Mohan says, adding that one of the factors they decided to bet on was the shift from offline to online commerce in the country, both others being creators and small businesses. This is what reaps the benefits today, he believes.

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