Meta's Facebook India Adapts and Thrives, 19 Percent Profit Growth in FY23
Indian Digital Advertising Set to Soar, $35 Billion Projection by 2030
24 October 2023
In FY23, Facebook India, a subsidiary of Meta, saw a 19% surge in net profit, reaching INR 352 Cr, while total revenue increased by 20% to INR 2,776 Cr, demonstrating resilience in challenging economic conditions.
Facebook India underwent a strategic shift in August 2022, transitioning to a dual model for ad inventory that reduced ad inventory costs by 63%. The company markets ad slots on Facebook, Instagram, and WhatsApp.
Meta, the parent company, is considering launching an ad-free subscription plan in India by 2024, marking a shift from its free-access model. The Indian digital advertising landscape is poised for significant growth, with projections of reaching $35 Bn by 2030, driven by millennials and Gen Z users.
In FY23, Facebook India Online Services, the Indian arm of Meta, the parent company of Facebook, Instagram, and WhatsApp, experienced significant growth. The company's net profit surged by 19% to INR 352 Cr from INR 297 Cr in FY22, while its total revenue increased by 20% to INR 2,776 Cr from INR 2,324 Cr in FY22. This performance reflects the resilience and adaptability of the social media giant amid challenging economic conditions.
One of the notable changes in Facebook India's operations was a strategic shift in August 2022. The company transitioned from solely reselling ad inventory to adopting both a reseller and operating license model. This transition led to a significant decrease in ad inventory costs, dropping by 63% to INR 5,666 Cr from INR 15,120 Cr in FY22. The firm generates its advertising income by marketing ad slots on platforms like Facebook, Instagram, and WhatsApp.
While the growth rate of Facebook India's advertising revenues in FY23 was notably lower than the 74% YoY expansion seen in FY22, it is important to consider the broader context. The global advertising sector has been grappling with challenges amid an economic downturn and a funding freeze. These factors likely contributed to the moderated growth in advertising revenues for Facebook India.
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Meta, the parent company of Facebook, Instagram, and WhatsApp, is also exploring the possibility of launching an ad-free subscription plan in India by 2024. This subscription offering would mark Meta's second, signaling a significant shift from its initial approach of offering free, unrestricted access to its primary services. With this move, Meta aims to diversify its revenue streams and cater to users who prefer an ad-free experience.
The Indian digital advertising landscape is set for substantial growth in the coming years. According to a Redseer report, the industry is projected to expand to $35 Bn by 2030, a significant leap from the $3 Bn recorded in 2020. This growth is driven by the increasing numbers of millennials and Gen Z individuals who spend a significant portion of their daily hours on digital platforms.
Furthermore, the consumer internet opportunity in India is predicted to reach an astounding $1.6 Tn by 2025. A substantial portion of this opportunity lies within non-English-speaking segments of the population, and numerous startups are capitalizing on regional languages to penetrate this market more deeply. Meta, for example, has introduced its platforms in various regional languages, including Hindi, Punjabi, Urdu, Tamil, Telugu, Marathi, Gujarati, Bengali, Kannada, and Malayalam on Facebook, Instagram, and WhatsApp, enabling millions of users to engage with these platforms in their preferred languages.
In conclusion, Facebook India's FY23 performance highlights its resilience and adaptability in the face of economic challenges. The company's transition to a dual model for ad inventory has positively impacted its financials. Additionally, Meta's exploration of ad-free subscription plans reflects the evolving strategies within the digital advertising industry. With the promising growth prospects in the Indian digital advertising landscape, the future appears bright for both established giants like Meta and innovative startups catering to the diverse linguistic preferences of Indian users.