Facebook struggles to sell advertising in India

Expects Facebook Lite and Internet.org to expand reach

Facebook struggles to sell advertising in India

 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 US, 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 with 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 $15 million a quarter, far behind the $350 million 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 to Reuters 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.

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, 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.

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 per cent year-over-year growth in monthly active users.
India alone has 1.3 billion people, second only to China, and Facebook increased the number of users there by 22 per cent last year. On the other hand, only 252 million people in India have Internet access.

In addition to efforts to attract more Indian advertisers, Facebook is working to make it easier for users to get on the service. More than 90 per cent of Facebook’s Indian users access it through mobile phones. So the social giant developed Facebook Lite for India and other emerging markets.

It has also rolled out its Internet.org initiative in India, a program started in August 2013 that aims to connect the two-thirds of the world without Internet access. Many of India's advertising dollars are in rural and semi-urban cities, analysts said, where users do not have a reliable Internet connection.

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