Facebook recently released its Q2 2014 earnings and had another strong quarter. Facebook now has 1.32 billion monthly users with rest of world (411) and Asia (410) witnessing positive growth compared to Q1 2014. With 391 mobile only users, the network made $2676 in ad revenue. $1175 comes from the pockets of US & Canada. Asia which contributes $408 has been a concern for the social networking giant but then there has been a sizable growth.
India with more than 100 million monthly active users is a huge market for Facebook, considering the fact that WhatsApp, the messaging giant has more than 50 million monthly active users. The numbers have never been a concern for Facebook in India but revenues have been.
To boost revenues in India, Facebook has officially signed its first agency deal in India with GroupM - WPP’s integrated media and marketing company. The partnership was announced during the recent visit of Sheryl Sandberg, COO, Facebook to India. The size of the deal has not been revealed.
While Facebook had been working with quite a few agencies in the country, this is an official one.
What does the deal offer for GroupM customers?
GroupM that has been in the forefront of digital developments in India covering areas like Search & Platforms, Mobile, Content and Measurement will provide its customers access to unique data and marketing insights that Facebook generates and be in a better position to deliver targeted personalized campaigns.
GroupM has already shown success in the way it is working with brands by driving the much required business results. For Nokia Lumia, GroupM pioneered the deployment of Facebook’s outcome measurement and leveraged Facebook’s sophisticated targeting capabilities to deliver a 54x return on Facebook ad spend.
With Gillette India the agency executed Asia’s first campaign targeted towards feature phones. Gillette used Facebook Ads on feature phones to drive measurable awareness of its new Vector 3 razor among its target group in India. The campaign reached a target audience of more than 60%.
Once again, leveraging Facebook’s sharp targeting capability, GroupM delivered outstanding results for Arrow, a premium apparel brand. Arrow was running an end of season sale and wanted to drive a special discount promotion to an audience between 18 to 35-years-old residing in metro cities. Arrow was able to deliver a 30x return on Facebook ad spend and a significant redemption rate from this exclusive Facebook campaign.
What does the deal mean to Facebook?
Facebook which has 84 million active monthly mobile users out of 100 million has been focusing on emerging markets like India. With Indian already shaping into a mobile economy, Facebook which is a mobile first company doesn’t want to be missed out.
A recent ET story reported that India market accounts for less than 0.1% of Facebook’s revenues. This is what Facebook wants to change and with organic reach dead, the networking giant needs to convince bigger brands to shell out more budgets by showcasing the business returns. GroupM is the best agency in the country as it has got big marque names on its roster and also shown potential in executing the earlier mentioned campaigns.
Smartphone penetration in the country is exploding but feature phones still rule in the country. To meet this challenge, Facebook recently introduced an ad product built around the missed call feature.
Facebook stated that: “When a person sees an ad on Facebook they can place a “missed call” by clicking the ad from their mobile device. In the return call, the person receives valuable content, such as music, cricket scores or celebrity messages, alongside a brand message from the advertiser — all without using airtime or data.”
Subsequently, Facebook has been trying to introduce new feature while making the news feed intelligent. In a latest announcement Facebook revealed that it is testing a new feature with ‘a few’ small and medium-sized businesses in the US – a Buy button. The goal is to help businesses drive sales directly through Facebook via News Feed ads and Page posts. While the feature is in it’s nascent stage, it could be interesting considering India is still drawing a lot of attention in the e-commerce space.
Smartphones will play a big role here too and GroupM’s association could work out tremendously.
Deals like this may be new to the Indian social media market but we have seen Facebook signing a multi-year digital marketing deal (rumoured to be in the vicinity of $500 million) with French advertising agency Publicis Groupe. The deal involves the co-creation of product around data, video and images mainly for North America but could extend to other regions too.
The $100 million deal with Omnicom to open up ad space on Instagram was a similar kind of working relationship of Facebook with global ad agencies.
Both Facebook and GroupM are charged up with the development but are the customers too? There are genuine fears that such deals may see them getting forced on to the Facebook platform even if they are not keen. But I doubt if GroupM will dare to play with customer interests.
The deal may boost the confidence in the industry but the real results will show up when Facebook reveals the profit from India for the financial year of 2014. For 2013 financial year Facebook witnessed a 63% rise in profits. Facebook India profit after tax was about Rs 9.6 crore for the year ended March 2013, compared with Rs 5.9 crore the previous year.