Beating earnings expectations for its Q2 2021, Facebook Inc registered total revenue of $29.1 billion, a 56% year-over-year increase. Facebook’s record performance was driven by the digital transformation that was accelerated during the pandemic along with the company’s long-term investments in tools and products to help businesses make the shift online. Creators, adding value to Facebook’s business. The company is expected to replicate a similar success in India, achieving a record revenue quarter in the country.
TikTok ban, Facebook Gain
Days after the Indian government banned the popular short-video platform TikTok, Instagram rolled out Reels in the country. Cashing on the void left by TikTok, Reels was Facebook’s way to create and discover short, entertaining videos on Instagram. Over the last year, video has become an integral part of Facebook product offerings as videos account for almost half of all time spent on Facebook, and Reels has already emerged as the largest contributor to engagement growth on Instagram. Globally, Facebook is building a number of new video monetization tools for creators for getting compensated for making great content. According to Mark Zuckerberg, last year, people spent more than $50 million of stars to game stream creators going live on Facebook alone. And now we're extending stars to [Indiscernible] to any creator doing on-demand video as well.
Online shift due to COVID-19 pandemic
With the nation going into lockdown due to the COVID-19 pandemic, offline businesses instantly switched to online platforms and expanded their presence on social media platforms across social media platforms including Whatsapp, Facebook and Instagram. All the top three social media platforms in the country happen to be Facebook’s product offerings.
“As a vibrant mobile-first nation, the growth of India’s digital economy has been made possible by a strong digital infrastructure, increasing smartphone penetration, and affordable data costs, among others. Over the past year, the pandemic gave further impetus to digital acceleration, and we now, truly are at the cusp of a perfect storm. Small businesses, in particular, have stepped-up and gained digital maturity to connect and better serve their customers where they are. In an everything-from-home context, consumers have spent more time online, translating into enhanced digital consumption,” says Prabhu Ram, Head – Industry Intelligence Group at CMR.
Bullish about India
From more than 3.1 billion people globally using Facebook services every month to stay connected as of the quarter ending June 2020, the company has reported 3.5 billion people in the latest quarterly earnings call ending June 2021. And India continues to be the biggest market for Facebook. As of April 2021, there are over 330 million Facebook users in India alone, making it the leading country in terms of Facebook audience size. And even for Instagram, India has an audience of over 150 million users accessing the photo-sharing and editing app, according to Statista. “As we move ahead, India’s digital economy will only grow aided by strong growth in not just Urban but Aspirational India, that is beyond the Tier-II and Tier-III cities and towns. All of this would translate into increased digital ad spends, and that’s where platform companies, such as Facebook, will stand to benefit,” adds Prabhu Ram.
However, the company’s future outlook is not so promising. With COVID-19 recovery and normalcy returning, Facebook is expecting a decelerating growth for the next two quarters globally, which will also replicate in India.
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