It is a source of national pride that India created a record 45 unicorns in 2021, bringing in a whopping $40 billion in private financing. In India, Meta is a jubilant supporter. What’s the link between the two? Because of the allure of half a billion people (India is Meta’s largest market by a number of users), these new-age start-ups, who are flush with cash and ambitious growth goals, are major Facebook and Instagram marketers. “The mama earths [a beauty start-up] of the world are all three-four-year-olds and have been built on the back of digital advertising because content aggregation happens on Facebook and Instagram,” says Naresh Gupta, Co-founder, and Chief Strategy Officer of media communication company Bang in The Middle.
These start-ups, as well as other firms large and small, have poured upon digital advertising, propelled by customers migrating to the internet for purchasing and living during the lockdowns. In fact, if you’re not on the internet today, you’re already dead. Add in the direct-to-consumer (D2C) boom, in which a class of mostly consumer product-focused brands and start-ups are using social media to connect directly with their customers, bypassing traditional distribution models, and it’s easy to see why sacks of cash have been flying into Meta’s vaults at breakneck speed.
Meta’s ad sales in India have now surpassed those of television broadcasting companies that display commercials on their networks. Star India, the country’s largest TV network, hauled in Rs 5,918 crore in ad income for FY21, according to RoC filings and corporate annual reports, while Zee Entertainment Enterprises made Rs 3,710 crore. Their growth rates of (-21.2) and (-17.2) percent, respectively, are quite low when compared to Meta in India’s 41% and Google India’s 21.36 percent, demonstrating that companies are increasingly preferring digital advertising. While TV networks are expected to show higher figures after the epidemic (FY21 was a complete pandemic year with no fresh material coming out and hence fewer commercials), the trend is likely to continue.
Digital advertising in India
Digital advertising in India is expected to expand 22.5 percent to Rs 23,400 crore in 2021, according to a FICCI-EY analysis on advertising spending. Insiders estimate it to be over Rs 27,000 crore. Meta in India owns a major portion of that pie, with revenues of Rs 9,326 crore. With overall ad sales of Rs 13,668 crore in FY21, Google India is the huge bull in the room. (To be clear, Meta, as an ad reseller, only invoices a portion of the ad money it generates in India to the Indian arm.) The remainder is invoiced to its parent company. So, in FY21, India’s net ad income is Rs 637 crore.)
Meta’s take on their success
Ajit Mohan, VP, and MD of Facebook India (Meta) attribute Meta’s success to a strategic decision made in 2018-19 to focus more on India-centric innovations and features that can be scaled globally, such as digital payments on WhatsApp and short films dubbed “Reels” on Instagram. “India has become significant for Facebook as a company,” says Mohan, who adds that one of the causes they chose to gamble on was the country’s move from offline to online commerce, along with entrepreneurs and small companies. He believes that is what is reaping rewards now.