January, 2015 could bring in some good news for the Indian startup community like it did last year – Little Eye Labs got acquired by Facebook for a deal worth $10-$15M. According to TechCrunch, Twitter is all set to make another acquisition and the startup in question is India’s ZipDial – a Bangalore based startup co-founded by Valerie Wagoner , Amiya Pathak, and Sanjay Swamy to tame the Rs 500 crore missed call business in India.
Missed Call – a common feature to save costs in India and emerging markets, whereby the caller calls the person and hangs up after a ring or two. This is kind of an indication to the other party that they are currently outside and/or request for a return call.
TC further reports – “A few sources tell us that it has already closed, is in the region of $30 million – $40 million, and could be announced as soon as this week. Another source close to the company says that there have been two companies looking at ZipDial, including Twitter (with the other possibly Facebook, although the source would not say).”
Twitter chose not to comment on the rumour but the interesting part is that the 140-character social network has company from the world’s largest social network – Facebook. While both Twitter and Facebook call themselves as ‘mobile first companies’, they have been struggling to make revenues from emerging markets including India; in fact Twitter has been struggling to gain users in India. In such a scenario, Facebook acquiring ZipDial makes more sense than Twitter.
Revenue problems in India for Facebook
Facebook with a 100+ million monthly active users in India is the most popular social network in the country but the revenues have been a challenge. An ET story last year, 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 business returns.
One of the primary reasons why Facebook has performed badly on the revenues side is due to the country’s infrastructure. Although India has been an actively growing smartphone market in Asia, it is still dominated by feature phones, a market where Facebook’s targeted advanced advertising products fail to work.
To overcome these problems Facebook has been working actively on Internet.org in emerging countries but at the same time it wants to tap into India’s missed call economy too.
Facebook’s Ad model around missed call
Mid 2014, we saw Facebook launching an ad product built around the missed call feature in India. With the simple reason that more than one billion people access Facebook on mobile every month and many do so across multiple mobile devices. In many countries, a majority of those people experience Facebook on a feature phone: in India 66%, in Indonesia 71% and in South Africa 68%.
To test the product Facebook initially worked with Gillette India and got positive results. 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%.
During the same time Facebook had also executed a similar campaign for Garnier Men India in collaboration with ZipDial. With the objective to drive sales for Garnier Men India, Facebook created a click to missed call ad campaign for Garnier Men, in partnership with ZipDial, to use in its IPL contest campaign.
ZipDial claims over 900 million engagements across 7,000 campaigns. It says more than 500 brands, including a lot of recognizable names like Disney and Pepsi, are customers on its platform. Besides it is expanding its footprint outside of India to other emerging countries in the region such as markets in Southeast Asia – a market that even Facebook wants to tap for its next million users.
The Facebook- Zipdial synergy looks perfect!
Twitter’s model with missed call
But not all is bad with Twitter that has about 78% of its 284 million MAUs coming from international waters. While Twitter chooses not to reveal India numbers, it has worked around few campaigns along with ZipDial. Banking on the mobile boom and craze for Bollywood super stars, Twitter integrated the missed call feature to get tweets delivered to phones as SMS’s. Twitter first roped in Shah Rukh Khan and then Amitabh Bachchan. In both the engagements, Twitter worked in alliance with ZipDial but both were with the objective of user acquisition.
Twitter’s growth problem isn’t new; the world is aware about it and the company at its end has been experimenting a lot to be informative as well as easy and cool like Facebook.
On the revenue part, India still is not a prominent market even though it is one of the fastest growing markets for Twitter . Over the last few years Twitter has worked with Bollywood, IPL; this year’s Lok Sabha elections has given it the much required boost but revenue remains a problem. “We are looking at bringing our advertising platform to India”, said Dick Costolo CEO at Twitter to LiveMint, “but the primary focus is delivering many more user experiences.” Costolo added that Twitter is looking to bring its extensive advertising platform to the country and expects India to be a key market in the next five years.
Twitter might be tempted to “Reach the next 3 billion with ZipDial,” (ZipDial says in its promotional materials) to spike the 34% of its revenues from outside the U.S. However a Facebook-ZipDial synergy makes much more business sense.