Why India is an Important Market for Facebook?

Why-India-is-Important-for-Facebook?First quarter of 2015 results of Facebook reveals that the company earns more revenue from overseas than the United States. Overseas market contributed 51 percent of total revenue whereas the United States accounted for 49 percent for the first quarter.

Revenue for the first quarter of 2015 totaled $3.54 billion, an increase of 42 percent compared with $2.50 billion in the first quarter of 2014. Revenue from advertising was $3.32 billion, a 46 percent increase from the same quarter last year.

Mobile advertising revenue represented approximately 73 percent for the first quarter of 2015, up from approximately 59 percent in the first quarter of 2014.

In 2014, the average revenue for Facebook from the US was around 47 percent. The US revenue for Facebook was 47.1 percent in Q1, 44.9 percent in Q2, 47.2 percent in Q3 and 48.4 percent in Q4 and this shows the relevance of international market which is bound to increase over the years.

First, for Facebook, Asia is the fastest growing market in the world as it is currently growing at 57 percent and this shows the importance of India in Asia for Facebook considering its large population. Even a large number of Facebook’s next billion subscribers will come from India.

Facebook Overseas Revenue (in %)
Quarter – Overseas Revenue
Q1, 2015 – 51
Q4, 2014 – 51.6
Q3, 2014 – 52.8
Q2, 2014 – 55.1
Q1, 2014 – 52.9
Source: Facebook, TeleAnalysis

Facebook’s First Quarter Highlights
Daily active users (DAUs) were 936 mn for March 2015 of which 270 mn from APAC
Mobile DAUs were 798 mn on average for March 2015, an increase of 31 percent Y-o-Y
Monthly active users (MAUs) were 1.44 bn for March 2015 of which 453 mn from APAC
Mobile MAUs were 1.25 bn as of March, 2015, an increase of 24 percent Y-o-Y
Source: Facebook, TeleAnalysis

Speaking to Analysts on Facebook Earnings Call, Sheryl Sandberg, COO, Facebook said, “In terms of penetration, we work with almost all the large marketers almost everywhere in the world, but even for the largest clients we have, we are a very small part of their budget. I don’t think we have any large clients.”

Second, India is putting lot of emphasis on MSME (micro, small and medium enterprise) sector and this is where Facebook is strong and the company would like to leverage its advertisement potential from MSME clients in India. In the first quarter, Facebook announced that there are now 2 million advertisers. Presently, APAC contributes $1.18 ARPU (average revenue per user) through advertisement and payment whereas US contributes $8.32 ARPU for Facebook.

“This is the first quarter that entertainment and media is one of our top verticals,” commented Sandberg.

Despite the large number of channels, India’s entertainment and media is growing in a big way as there is a request for a large number of channels in different categories to ministry of information & broadcasting for approval. All this helps Facebook to leverage from India’s media and entertainment vertical in a big way.

So, India and other countries in Asia is important for Facebook if it plans to increase its overseas revenue to 60 percent by 2016.

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