How Meta made a billion dollars in India

That India produced a record 45-odd unicorns in 2021, ushering in a whopping $40 billion in private capital, is a matter of pride for the country. And Meta in India is an ecstatic cheerleader. What’s the connection? Well, the lure of half a billion users (India is Meta’s largest market by the number of users) means that these new-age start-ups, which are sitting on mounds of money and lofty growth targets, are significant advertisers on Facebook and Instagram. Naresh Gupta, Co-founder and Chief Strategy Officer of media communication company Bang In The Middle, says: “The mamaearths [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.”

Propelled by consumers flocking to the internet for buying and living during the lockdowns, these start-ups as well as other brands—big and small—have piled onto digital advertising. In fact, if you’re not digital today, you are dead. Add to it the direct-to-consumer (D2C) boom where a class of mostly consumer product-focused brands and start-ups are leveraging social media to connect directly with their consumers, bypassing traditional distribution models, and you know why sacksful of money have been somersaulting at high speed into Meta in India’s vaults.

Also Read: Facebook 2.0: Meta's India Play

So much so that Meta in India’s ad revenues are now more than what television broadcasting giants make by airing advertisements on their channels. According to RoC filings and company annual reports, the country’s largest TV network, Star India, raked in ad revenue of Rs 5,918 crore for FY21, while Zee Entertainment Enterprises made Rs 3,710 crore. Their growth rates—(-21.2) and (-17.2) per cent, respectively—compare very modestly with Meta in India’s 41 per cent and Google India’s 21.36 per cent, indicating an increasing preference among brands for digital advertising. While TV networks would most probably post better numbers post the pandemic (FY21 was a full pandemic year where TV hardly had any new content coming out and hence had few ads), the trend is likely to continue.

A FICCI-EY report on advertising spending estimates digital advertising in India to have grown 22.5 per cent to Rs 23,400 crore in 2021. Industry insiders peg it higher at around Rs 27,000 crore. At Rs 9,326 crore, a significant slice of that pie belongs to Meta in India. Google India, of course, is the big gorilla here, with gross ad revenues of Rs 13,668 crore in FY21. (To be clear, Meta, which is a reseller of ads, bills only a part of the ad revenue it makes here to the Indian arm. The rest is billed on its parent firm. So, the net ad revenue from India is Rs 637 crore in FY21.)

Ajit Mohan, VP and MD of Facebook India (Meta) tracks Meta in India’s feat back to a conscious call taken around 2018-19 to focus more on India-centric innovations and features that can be taken to the rest of the world, such as digital payments on WhatsApp and short videos called ‘Reels’ on Instagram. “India had become consequential for Facebook as a company,” says Mohan, adding that one of the factors they decided to place their bet on was the shift from offline to online commerce in the country—the other two being creators and small businesses. That’s what is reaping benefits today, he reckons.