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Aug 16, 2015
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Facebook struggles to sell advertising in India

By
Reuters
Published
Aug 16, 2015

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 expects to apply its advertizing strategy in India to other emerging markets


Facebook has 132 million users in India, trailing only the 193 million in the United States, 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 to the $7 to $8 it makes on each U.S. 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.

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.

"Since our customers are on Facebook, we are on Facebook. It's that simple," Khattar said.

But other advertisers are still skeptical of the medium. Sumant Kasliwal, CEO of online clothing retailer 20dresses.com, uses ads on the social media site to reach potential customers between 18 and 35, but says he would prefer to advertise on TV.

"In India, TV still has the most reach, so if you have the money you would want to be on that," he said.

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 SA, 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.

"Advertisers in India are not warmed enough to social media as a concept of marketing," said Shah, the Counterpoint analyst.

"We really need to help them see how Facebook pages and advertising will help grow their businesses," said Andy Hwang, Facebook director of small- and medium-sized businesses for Asia Pacific.

Getting more Indian users "drives success, or at least the perception of success," said Jaideep Mehta, vice president and general manager for International Data Corporation Southeast Asia.

Facebook said it plans to use its strategy in India for other emerging markets such as Brazil, Indonesia and Mexico, which are Facebook's third-, fourth- and fifth-largest markets by users.

 

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