Amid controversies of fake news and data security, Facebook has set itself a steep revenue target of $1.1 billion (equivalent to Rs. 7,800 crore) revenue mark in India -- the social media giant’s largest user base -- by the end of the current financial year, sources told Moneycontrol.
In 2018, the company was supposed to make $980 million, according to some media reports but fell short of the mark because of policy controls and new features like Stories, which took some time before bringing in revenue. One of the sources said that Facebook had made anything between $800-900 million in 2018-19.
“The company had set the target after the new CEO joined, and is on track,” one of the sources said. “Last year, the company was in deep s*** in India, but it seems that (Ajit) Mohan has got it back on track.”
No sign of stagnation at Facebook India
Mohan joined Facebook from Hotstar in September, at a time when the social media giant was facing a leadership crisis at the top and had soured its relationship with the Indian government. At Hotstar, Mohan is credited to make it India’s largest video-streaming platform.
In India, Facebook continues to grow. At 270 million, its user-base here is 80 million more than its second-largest consumer-base, the United States. “The size of our user base and our users’ level of engagement is critical to our success. Our financial performance has been and will continue to be significantly determined by our success of adding, retaining and engaging active users of our products, particularly on Facebook and Instagram,” the company said in its 2018 annual report.
India’s digital ad market grows at a healthy pace
Facebook’s user growth in India has not kept pace with revenue growth. In 2018, the social media conglomerate posted $55.84 billion in revenue. India’s numbers are like a drop in the ocean. That’s also because the digital ad business is a fraction of the US market. In 2019, digital ad spends in the US will touch $129.34 billion. And, in India, it is expected to reach $3.2-3.5 billion.
If Facebook manages to achieve its revenue target, it will corner about a third of India’s digital ad market. More than another one-third, or perhaps a tad higher, is with Google. In 2018, Google reported Rs 9,337 crore of revenue, with Rs 407 Cr in profits.
At $1.1 billion, Facebook’s revenue would by about 30 per cent above 2018. To be sure, the revenue would come from Facebook, Instagram and WhatsApp. “Instagram will contribute about six to eight percent of Facebook’s overall revenue,” the source said.
Questions sent to the company did not elicit any response till the time of publishing. We will update the story if Facebook sends responses.
The social media company’s growth in ads came after the company had allowed marketeers to put ads as Stories in between user-generated content. “Stories are the most important feature for social media platforms, and Instagram has shown that it can be monetised,” the second source said.
Facebook counts some of India’s largest ad spenders like Hindustan Unilever, Pepsi, Nestle, and a host of ecommerce companies and startups, as its clients.
However, the competitions for Facebook is also at its peak, and it is not just Google. Snapchat has started monetising its platform in India, and so has its Chinese rival TikTok. ShareChat, too, is in talks with advertisers to get a share of marketing dollars.
“There is a lot of competition, but both Facebook and Google have the best user targeting algorithms backing its ad platforms,” said the second source. In the world of digital advertising, money flows where the targeting is the best.