Facebook struggles to sell advertising in India

Facebook is trying to lure sceptical advertisers in India with features such as free email support for questions about advertising and advice on increasing sales in a bid to boost revenue from its second biggest market.

Facebook (FB.O) has 132 million users in India, trailing only the 193 million in the United States, according to the company, and the country is critical for the Menlo Park, California, social network’s global expansion.

But so far, the payoff has been small: Facebook earns 15 cents per user in India every quarter, compared to the $7 to $8 it makes on each U.S. user, according to analysts.

Facebook does not break out its revenues in India, but Neil Shah, an analyst at Counterpoint Research, a Hong Kong-based technology consulting firm, estimates it brings in $15 million a quarter, far behind the $350 million he estimates Google earns there per quarter.

Google, which set up in India in 2004, has been in the Indian market six years longer than Facebook, and its search ads are more familiar to advertisers there than the display ads Facebook offers.

The business-boosting features, described to Reuters by company executives and Indian business people, are aimed at advertisers such as Mohit Khattar, managing director at online grocery company Godrej Nature’s Basket, one of the roughly 60 to 65 million small- and medium-sized businesses in the country.
He said he began advertising on Facebook about two months ago as the company ramped up its online presence. He found that advertising in-store events and sales helped attract customers, but would not provide specific figures.

“Since our customers are on Facebook, we are on Facebook. It’s that simple,” Khattar said.
But other advertisers are still sceptical of the medium. Sumant Kasliwal, CEO of online clothing retailer 20dresses.com, uses ads on the social media site to reach potential customers between 18 and 35, but says he would prefer to advertise on TV.

“In India, TV still has the most reach, so if you have the money you would want to be on that,” he said.
Facebook declined to say how many staff members it has in India or how much it has invested since it launched operations there in 2010.

But the world’s largest social network says it has seen early signs its efforts are working. The company unveiled a new type of ad designed specifically for India last year, called “click to missed call.”
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