The Indian unit of Google crossed the billion-dollar sales milestone in fiscal 2017, a year when the search engine’s local business grew at half the pace of the prior year. But its rival Facebook nearly doubled its revenues in the country indicating increasing preference by marketers to advertise on other social media platform beyond Google.
Google India Pvt Ltd, posted a turnover of Rs 7,208.9 crore ($1.11 billion at current exchange rate) in the year through March 2017, a 22% jump from the previous year’s Rs 5,904 crore. Sales had expanded 44% in fiscal 2016.
The US technology giant has several Internet-related services and products such as cloud computing and other software, but bulk of the revenue is driven by the advertising service that displays ads next to search results. While Google enjoys a certain monopoly with most marketers spending more than two-thirds of their digital budget on it, the Indian unit’s turnover is still just over 1% of the parent’s revenue. The company did not disclose profit numbers in its annual return filed with the Registrar of Companies on Thursday. In fiscal 2017, Facebook posted a 93% increase in India turnover to Rs 341.8 crore, even as net profit rose nearly 31% to Rs 40.6 crore from Rs 31 crore.
“Google, along with Facebook, is the most prominent force and critical to the advertising industry. They define the digital advertising industry,” said Sam Balsara, chairman of advertising and PR firm Madison World.
Less-developed markets such as India lag behind in consumer use of digital devices compared with the developed world, as brands have been slower to embrace digital media. Traditional media still secures the bulk of ad budgets in the country. While TV is currently the most popular advertising medium in India, growing demand for smartphones — which are becoming more affordable — coupled with strong social network usage has led advertisers to increase their ad budgets on mobile alongside traditional media options.
This year, mobile ad spending in India is expected to increase 85%, helping boost overall digital ad spending to $1.21 billion, according to eMarketer’s latest media ad spend forecast.
Marketers also say while Google and Facebook compete for digital dominance, both platforms are powerful advertising platforms that cater to different needs of a business. “We continue to see strong growths in digital media ad spending. Google being one of the lead players in the space is riding the wave. The digital space is seeing a lot of new players, especially over the top or OTT platforms offering exciting content. This will add further momentum to ad spends,” said CVL Srinivas, country manager at WPP India and CEO of GroupM South Asia.