Facebook racks up 27% revenue rise in India to Rs 123.5 crore

January 16: acebook posted a 27% jump in its revenues in India to Rs 123.5 crore during the year to March 2015 from Rs 97.6 crore a year earlier, according to filings with the Registrar of Companies on Thursday. However, the social media firm earned less than Rs 9 per user on an average in the country, its second-largest market outside the United States, where it earned Rs 630 per user.

The revenue from India is negligible for the California-headquartered firm, which clocked $12.5 billion (nearly Rs 84,000 crore) in global sales and is pushing for a free internet plan in the country to take on search engine firm Google.

Facebook India’s profit after tax rose 33% to Rs 16 crore during the year. Although Facebook has nearly 138 million users in India, its revenues are low here. That’s because though most marketers have increased advertising spends on digital media, nearly 70% of that budget is spent on Google, which has seen its annual revenues swell to Rs 4,000 crore in the country after a decade of operations. An email sent to Facebook did not elicit any response.

According to experts, marketers are gradually looking to spread their budget across social media platforms and mobile applications. They said Facebook’s latest venture, Free Basics, a plan to make parts of internet available for free by convincing local telecom companies such as Reliance Communications to cover data charges, could be a game changer.

But the service itself is under a cloud in India, where it has been caught in the debate over net neutrality. The telecom regulator has forced RCom – the only Free Basics distributor here – to put commercial deployment of the service on hold. Free Basics has been panned by critics in India for being a “walled garden,” which violates the concept of net neutrality, one which guarantees free and non-discriminatory access to the web.

“Facebook is still not as free and kind of a default gateway for internet like Google. With Free Basics, they are trying to get more people on their platform at zero cost, which could work for them very well,” said Karthik Srinivasan, national lead, Social@Ogilvy, the social media arm of advertising firm Ogilvy & Mather.

He said, “For most marketers, Facebook is one if the best option when they want to do targeting at a micro-level in terms of select locality or user base.”

Apart from free internet, Facebook is also trying to attract more advertisers by launching other services that can attract more users. For instance, with the majority of Indians still using 2G connections, the company has come up with a fast-loading, lighter version called Facebook Lite, for which users pay less for data.

New York-based market research company eMarketer estimates that digital media will account for 14.2% of total ad spend in India this fiscal, ahead of only Argentina and Indonesia. But by 2019, when more than a quarter of the ad spend in India will go towards digital, the country will pull ahead of many others, including France, Spain, Italy and Brazil, by this metric.

Companies across segments – from telecom operators and mobile phone makers to automobile and fast-moving consumer goods companies – have been increasing digital spends to attract younger consumers. India’s largest advertiser, Hindustan Unilever, spends nearly 10% of its advertising budget on digital media.

There is increasing activity on this count among small businesses, said Carolyn Everson, vice president of global marketing solutions at Facebook, in a presentation to investors last month. “They have already moved to mobile commerce…More traditional CPG (consumer product goods) companies and auto companies are seeing a market like India as their future market to get the next billion consumers, as they grow economically and they have access to more of these services,” said Everson.

“In India of a population of 1.3 billion people, a billion people are still not connected to the internet. And so, we are in a very early stages,” she said. With 375 million internet users in October 2015, India ranked third in the world on this score, according to a joint report by Internet & Mobile Association of India and market research agency IMRB. (Agencies)