Facebook Inc (NASDAQ:FB) India Ad Sales Slow
Facebook is trying to lure skeptical advertisers in India with features such as free email support for questions about advertising and advice on increasing sales in a bid to boost revenue from its second biggest market.
Facebook has 132 million users in India, trailing only the 193 million in the United States, according to the company, and the country is critical for the Menlo Park, California, social network’s global expansion. But so far, the payoff has been small: Facebook earns 15 cents per user in India every quarter, compared to the 7 to 8 it makes on each US user, according to analysts. Facebook does not break out its revenues in India, but Neil Shah, an analyst at Counterpoint Research, a Hong Kong-based technology consulting firm, estimates it brings in 15m a quarter, far behind the 350m he estimates Google earns there per quarter.
Google, which set up in India in 2004, has been in the Indian market six years longer than Facebook, and its search ads are more familiar to advertisers there than the display ads Facebook offers.
The business-boosting features, described by company executives and Indian business people, are aimed at advertisers such as Mohit Khattar, managing director at online grocery company Godrej Nature’s Basket, one of the roughly 60 to 65 million small- and medium-sized businesses in the country.
He said he began advertising on Facebook about two months ago as the company ramped up its online presence. He found that advertising in-store events and sales helped attract customers, but would not provide specific figures. “Since our customers are on Facebook, we are on Facebook. It’s that simple.”
Facebook declined to say how many staff members it has in India or how much it has invested since it launched operations there in 2010. But the world’s largest social network says it has seen early signs its efforts are working. The company unveiled a new type of ad designed specifically for India last year, called “click to missed call.”
Users click a button on an ad, which automatically calls an advertiser. The user hangs up – to save them the charge for the call – and the advertiser calls back with a pre-recorded message. Garnier Men, a leading men’s hair care company in India and a unit of beauty products giant L’Oreal SA, saw online sales more than double by using click to missed call, according to Facebook and the company. But Indian advertisers still overwhelmingly flock to television ads and remain skeptical of the value of advertising on social media, analysts and business executives said. “Advertisers in India are not warmed enough to social media as a concept of marketing,” said Shah, the Counterpoint analyst.
“We really need to help them see how Facebook pages and advertising will help grow their businesses,” said Andy Hwang, Facebook director of small- and medium-sized businesses for Asia Pacific.
For instance, the company advises businesses to create interactive Facebook pages and use Facebook Messenger to interact with customers as a way of increasing sales. Technology companies have turned to India and other markets in Asia for growth because the region contains two-thirds of the world’s population. Asia is Facebook’s fastest-growing region, with 57 percent year-over-year growth in monthly active users.
Facebook said it plans to use its strategy in India for other emerging markets such as Brazil, Indonesia and Mexico, which are Facebook’s third-, fourth- and fifth-largest markets by users.
That makes success in India even more important for its global expansion.
Facebook, Inc., incorporated on July 29, 2004, is a social networking company. The Company builds engaging products that enables people to connect and share through mobile devices and personal computers. The Company offers various services focused on people, marketers and developers. It offers online and mobile-based platform for people to share their opinions, ideas, photos and videos, and to engage in other activities. The Company’s products include Facebook, Instagram, Messenger and WhatsApp. As of December 31, 2014, the Company had 890 million daily active users (DAUs). The Company’s subsidiaries include Andale, Inc., Facebook Operations, LLC, Oculus VR, LLC and Parse, LLC, in Delaware; Edge Network Services Limited, Facebook Ireland Holdings Limited and Facebook Ireland Limited, in Ireland, and Pinnacle Sweden AB, in Sweden.
The Company’s Facebook mobile app and Website enables people to connect, share, discover, and communicate with each other on mobile devices and personal computers. Facebook is available across the world. Its Facebook product has over 890 million daily active users (DAUs) in December 2014. It had over 745 million DAUs who accessed Facebook from a mobile device in December 2014.
The Company’s Instagram product is a mobile application. The application enables people to take photos or videos, and share them with friends and followers in a photo feed or send them directly to friends.
Messenger
The Company’s Messenger product is a mobile-to-mobile messaging application available on iPhone operating system (iOS), Android and Windows phone devices. Messenger works similarly to texting short message service (SMS) or online chat to enable people to reach others and also integrates with Facebook messaging functionality on personal computers.
WhatsApp Messenger is a cross-platform mobile messaging application. The application allows people to exchange messages on iOS, Android, BlackBerry, Windows Phone and Nokia devices.
The Company competes with Google.
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