Facebook’s 100 million users in India give only 0.1% revenue to the Internet giant

By Varun Aggarwal & Jayadevan PK, ET Bureau | 29 Jul, 2014, 07.00AM IST

BANGALORE: For social networking giants Facebook and Twitter, the world’s third-largest Internet market is a paradox.

While their largest number of users outside of the United States are in India, the companies make very little money from the country, where Google owns a large part of the digital advertising market.

Facebook has 100 million users in India, its second-largest market worldwide. Similarly, for LinkedIn, India is the second-largest market while for Twitter India is set to be the third-largest market in terms of user base. However, when it comes to monetisation, the story is completely different.

For each of these platforms, India contributes less than 0.1% of their global revenue, a problem they are trying to address in new ways. Growing smartphone penetration is likely to help these companies monetise better.

Twitter said in its latest annual filing this March that in emerging markets like India many users access the service through feature phones with limited functionality.

“This limits our ability to deliver certain features to those users and may limit the ability of advertisers to deliver compelling advertisements to users in these markets,” the company said.

Another hurdle for the growth of these companies in India is that Indians do not prefer to click on links that take them away from a website, according to Karthik Srinivasan, National Lead, Social, at O&M.

Compared to the global click through rates of close to 2%, in India it is much below 1%. “We often have to tone down the conversion metric to look at whether the customer clicked on a link or not instead of a more meaningful metric such as whether the customer added a product to the shopping basket,” he said. Online advertising is growing at 29% year-over-year with estimated revenue of about Rs 3,000 crore in 2013-14, according to the Internet And Mobile Association of India. Google owns over 80% of this market.

The share of the online advertising pie is also increasing, with large FMCG companies increasing their online ad spend to 10-15% of budgets from 6% earlier. “Large FMCG companies such as HUL and ITC spend about 10-15% of their ad budget on digital. Ecommerce companies on the other hand spend as much as 80-100% of their advertising on digital,” Srinivasan said. Facebook, for example, is increasing its focus on small and medium business in order to grow in India.

The company said it has 9 lakh Indian SMBs active on Facebook compared to 30 million SMBs globally, and it is investing in the business to grow monetisation in India.

LinkedIn is trying to customise its offering for the Indian market. The professional network’s Recruiter offering for the Indian market allows a recruiter to hire unlimited India based candidates. The company is also trying to increase user engagement on its platform in India.

Twitter’s tie-up with Amazon to enable shopping within Twitter and the launch of Twitter Cards to add rich content within Twitter itself are some of the initiatives that can help the platform monetise better in India.

(Source – http://economictimes.indiatimes.com/tech/intern…)