What's driving Meta's unstoppable growth in ad revenue from India?

Social media giant Meta clocked in gross advertising revenues of Rs 16,189 crore in India in FY22, up 74% year-on-year from Rs 9,326 crore in FY21. As per the platform, this growth is the result of Indians embracing digitisation in the aftermath of COVID. It is also the result of Meta’s bet on Instagram.

As per Ajit Mohan, VP and MD, Meta, the company saw a massive growth in Instagram Reels in the country. It became Meta’s biggest bet in short-form videos. FY22 started with the second COVID wave. The rapid digital adoption led many Indians across regions to enter the Meta fold during this time.

Rajiv Dingra, founder & CEO, ReBid.co (a unified madtech platform), points out that multiple factors, including the pandemic, the explosion in online content consumption - especially video consumption on Instagram, led to this.

Meta India’s major income source is advertising on Facebook and Instagram. The company operates on an ‘ad reseller’ model in the country. Indian brands and marketers have realised the importance of digital marketing and the result-oriented advertising on Meta’s platforms, which has further provided a boost to its ad revenues.

Siddharth Devnani, co-founder & director, SoCheers, says that the uncertainty of the previous year, solidified many brands’ confidence to invest in advertising on digital platforms.

“Many brands renewed their efforts to double down on their digital marketing efforts. Several large-scale events, like the Indian Premier League (IPL), made a comeback after a year and brought increased advertising opportunities with them,” adds Devnani.

The rise of the influencer economy and more brands realising the importance of content-to-commerce model, have also contributed to Meta’s growth. “There has been a massive rise in D2C players that have come up over the last two years. The shopping ads allow these brands to target the right user for early adoption of their products through the Meta suite,” mentions Dingra.

He adds that the video format will be the go-to format across channels, for both the brands and marketers. “Instagram advertising is scaling much faster than Facebook, by virtue of little or no competition and TikTok being banned in the country.”

Rikki Agarwal, COO & co-founder, Blink Digital, says that Meta’s platforms are on the top of every brand's marketing mix, when it comes to social media advertising. Brands from various industries, including food, cosmetics, clothing and e-commerce, opt to advertise on Instagram, Facebook and WhatsApp.

“Reels is currently the most popular short video format in India, providing advertisers with the ideal opportunity to serve both current and potential clients. Most businesses have noticed a rise in revenue by fusing Reels with influencer marketing.”

While brands across categories, like FMCG, electronics, e-commerce, automobile and real-estate, are bullish as far as advertising on Meta’s platforms go, Devnani explains that the ad format preferred by various advertisers is entirely dependent on their brand and business goals.

For instance, e-commerce brands rely on the 'click to website' format, real estate and automobile players spend heavily on lead generation, whereas FMCG and D2C brands invest in awareness campaigns using Reels, etc.

In February 2022, when Facebook reported its first-ever quarterly drop in daily users, its chief of finance said that higher mobile data costs were slowing growth in India. Women were shunning the network due to safety and privacy concerns.

According to the company’s internal research, obstacles like nude content, the perceived complexity of its app design, local language and literacy barriers and a lack of appeal among Internet users seeking video content are among major concerns of Facebook users.

Will this decline in Facebook’s user base impact Meta’s ad revenues over the long run? Blink Digital’s Agarwal mentions that though Facebook's user base declined in 2022, the company still occupies the first spot, in terms of mobile advertising.

Dingra of ReBid.co believes that while Facebook may be seeing lower user activity, the reverse is happening in the case of Instagram and WhatsApp, which are becoming even more popular in India.

Industry experts have diverse viewpoints regarding which of the three platforms rake in the most ad revenues for Meta. While a few say that Facebook still holds the prime spot, given its legacy of ad monetisation and types of ads, others believe that due to the increase in ad revenues and interest from brands, Meta is leaning more towards Instagram.