Facebook eyes lion's share in digital ads, hopes to reap higher revenues

Eyeing a lion’s share of digital advertisement space, which would be around $10 billion by 2020, social media giant Facebook is putting in a chunk of its resources in the area, on hopes of higher revenues.

The company has in the last few months come out with a slew of reports in association with global management consultants and is in touch with companies in various sectors, telling them the benefits of advertising on social media.

“The opportunity on social is focused on driving three types of outcomes for our original equipment manufacturers (OEM) advertisers in that space. We at Facebook can provide five per cent incremental reach over television at one-seventh the cost, which is an efficient way of giving additional reach to the customers. It is a targeted personalised reach,” said Umang Bedi, managing director, Facebook India.

Facebook in its recent report with Bain & Company, ‘Changing Gears 2020: How Digital is Transforming the Face of the Automotive Industry’, said that almost 70 per cent of Indian automobile sales or $40 billion will be digitally influenced by 2020, compared with $18 billion today. 

The social media giant is working with BMW, Chevrolet, Ford, Maruti, and others on digital. “We have helped them grow their brand awareness. Today we work with the FMCG (fast-moving consumer goods) sector, Tata Housing to sell homes online, jewellery brands,” added Bedi.

Target marketing is something the company would be concentrating on for the next few years. “The market at present is $7 billion, which is growing at eight per cent. By 2020, it would be approximately $10 billion. Within that, sectors growing are FMCG and then automobile and e-commerce. There lies a significant opportunity and would be a key focus area on ad side of the business,” Bedi said.

Facebook’s report looks at the impact of digital technologies on automotive industry, and finds that digital engineering, 3D printing, smart sensors and the Internet of Things are poised to disrupt auto research and development, manufacturing, sales, marketing, and after-sales services. Social media will influence about 40 per cent of sales valued at $23 billion by 2020, up from 20 per cent of sales today.

Highlighting the importance of mobile in the overall device mix, the report said that 80 per cent of online research is on mobile phones today and this is expected to rise further with the increasing penetration of smartphones and mobile data connections. 

The report reveals that the nature of the game is changing. Apart from the fight for the consumer, it also referred to the fight for relevance as new business models compete for attention. More than 40 per cent of lead consumers report using app-based taxi services like Ola and Uber more than three or four times per week and further headroom for growth exists. 

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