Google, Facebook surpass top Indian media firms in ad revenue in FY21

According to experts, most of this growth has come at the expense of print, radio, and outdoor

e4m by Javed Farooqui
Published: Dec 6, 2021 9:26 AM  | 6 min read
digital marketing

The Google and Facebook duopoly has strengthened its hold on the Indian advertising market as brands are allocating higher budgets for the digital medium due to the growth in time spent on mobile and other smart devices by users. As per their annual filings, the tech giants have seen a 29% surge in their gross ad revenue for the fiscal ended 31st March 2021.

The combined gross ad revenue of Google India and Facebook India Online Services grew to Rs 23,212.5 crore in FY21 from Rs 18,054.9 crore in the previous fiscal. The two companies have added Rs 5157.6 crore in gross ad revenue in FY21 compared to the previous fiscal. According to experts, most of this growth has come at the expense of print, radio, and outdoor.

Facebook India recorded a whopping 41% growth in gross ad revenue at Rs 9325.8 crore while Google India's gross ad revenue from the sale of advertisement space has jumped 21.36% to Rs 13,886.7 crore. The net advertising revenue of the two companies jumped 19.47% to Rs 2261 crore from Rs 1892.5 crore. Facebook India recorded net advertising revenue of Rs 636.5 crore, which is an increase of 22.3% over the previous fiscal. Google India's net sale of advertising space increased 18.39% to Rs 1624.5 crore.

Both Google and Facebook buy ad inventory from fellow subsidiary companies, Google Asia Pacific and Facebook Ireland respectively. Google India is a third-party reseller of advertising space of Google Ads program and other Google advertising products and services. Likewise, Facebook India Online Services acts as a reseller of advertising services to Indian customers through a reseller agreement with another group company and generates revenues through resale of advertising inventory on Facebook.

During the fiscal under review, Google India paid Rs 12,262.2 crore to Google Asia Pacific for purchase of advertisement space which is a 22% jump over the Rs 10,070.2 crore that it had paid in FY20. Facebook India paid Rs 8638.5 crore to Facebook Ireland for buying ad inventory which is a 42.36% increase over Rs 6067.9 crore in FY20.

Interestingly, the combined gross ad revenue of Google and Facebook is more than the combined revenue of top media firms like Star India, ZEEL, Sony Pictures Networks India (SPNI), Bennett Coleman and Company Limited (BCCL), TV18, Sun TV Network, DB Corp, Jagran Prakashan, and HT Media.

As per company filings, these nine firms had collectively earned Rs 21,395 crore ad revenue in FY21  compared to Rs 29,233.3 crore in FY20. The pandemic has had a devastating impact on the ad revenue of traditional media companies in general and print, radio and outdoor in particular.

Star India's ad revenue shrank 15% in FY21 to Rs 5,918.98 crore from Rs 6,940.05 crore. ZEEL's ad income saw a 20% reduction to Rs 3748.8 crore from Rs 4681.1 crore. SPNI's ad revenue declined 11% to Rs 2563.37 crore from Rs 2876.5 crore. Sun TV's  income from advertising and sale of broadcast slots dropped 28.4% to Rs 1,058.78 crore from Rs 1,478.86 crore. TV18 ad revenue was down 21% to Rs 2712 crore from Rs 3414.2.

Media conglomerate BCCL's advertisement revenue nosedived 48% to Rs 2,782.92 crore from Rs 5,367.88 crore. DB Corp saw a 35.5% YoY drop during FY21 to Rs 1008.4 crore from Rs 1564 crore. Jagran Prakashan ad revenue contracted by 42% to Rs 886 crore from Rs 1,521 crore. HT Media's ad revenue was down 48% to Rs 716.84 crore from Rs 1379.96 crore.

Mirum India Joint CEO Hareesh Tibrewal noted that Google, Facebook dominate the market due to the reach they offer, innovative products, and in-depth consumer data. "Google and Facebook continue to dominate the advertising ecosystem. The reason for this increasing dominance is (a) Very wide reach. No single platform can offer the kind of reach that Google and Facebook can (b) Product evolution : Both are constantly evolving new products that continue to keep advertisers engaged (c) Consumer behavior information : also data capture continues to  become better and more detailed."

He also said that the FY21 growth of the two tech giants came at the expense of outdoor and print. "Print definitely seems to be on a declining trajectory and Covid-19 has accelerated this trend. More and more of us are becoming used to getting instantaneous news via digital channels. Also, with lockdown, a lot of outdoor advertising channels (like theatre for example) could not get any business. One interesting channel of media spend that has emerged in the past few years is digital influencer marketing. And this is not just celebrity influencers. The larger traction is with micro influencers."

Profit Wheel Co-Founder Vivek Bhargava said that the Indian market will resemble developed markets like the UK where digital is head and shoulders above other mediums. He also said that digital will become the default medium for advertising and brand building.

"In the UK, digital advertising today is more than TV, print, outdoor, and radio combined. What happened five years ago in the UK will eventually happen in India. Digital works as a combination of all these mediums. Digital was named by conventional medium because the dominant player names the less dominant player. We call it rural advertising because we are urban advertisers. We call ourselves advertising and marketing, but rural marketing is different because urban is dominant. But now the tables have turned as digital has become dominant and will become the default advertising and marketing vehicle whereas other mediums will be called conventional advertising," he added.

He further stated that digital also has an edge over conventional mediums in terms of measurement. Conventional media measurement, he said, has always been about extrapolation which is ridiculous. "You measure 30,000-40,000 homes and extrapolate it to 150 million households whereas digital is a census medium where every user is measured," he averred.

Bharagava's company ProfitWheel provides profit as a service and helps brands to identify their specific consumers and do advertising that is targeted at them. "The goal of a brand today is going to be to define their best customers and reach out to similar customers. That's where you build your brands. The other thing is conventional media earlier was superior to digital for building brands because the ad unit was superior. With the arrival of metaverse and destination having a video, the ad unit has become equal if not better than the conventional media ad unit. Secondly, earlier digital didn't give enough reach, but now you get twice as much reach as you want. Digital not only gives you more reach than all conventional mediums combined, but it also allows you to decide the frequency and order of that frequency in terms of ad units. Thirdly, digital allows you to reach specific psychographics but also target intent," he elaborated.

According to a digital expert, the new age tech start-ups whether it is edtech, fintech, D2C or crypto brands have pumped up digital advertising in India. He further stated that lack of competition is not good for the digital advertising industry.

"The duo have been the biggest gainers of growth in digital advertising. As the overall share of digital advertising grows, the duopoly is a dangerous situation because it will lead to all sorts of issues like competition. It's a risky situation today as there are no other advertising platforms of scale other than the duopoly. There are other independent advertising platforms on digital, but they are not able to scale up because of the duopoly. They control all forms of advertising like search, mail, social media, instant messages, and video. The amount of customer data they have also allows them to offer targeting advertising solutions to brands."


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