Rise & Shine of the Digital Duo

12 Nov,2019

 

By Indrani Sen

 

The digital marketing trends in US indicate the trends across the world (except China). Recently, an article in www.emarketer.com indicated that the Facebook-Google duopoly will continue in the US market in spite of the amazing growth registered by Amazon which has been steadily increasing its share (https://www.emarketer.com/content/facebook-google-duopoly-won-t-crack-this-year?ecid=NL1009). Google is the leading partner in this duopoly across the world.

 

The same duopoly enjoys together 68 per cent of India’s digital ad market and it is likely to grow as the digital advertising spending is expected to also increase by 30 per cent in 2019. Even if the growth forecast takes a dip as foretold by the less than expected yield of digital media during Diwali 2019, it will not affect the stronghold of the duopoly.

 

Google India, the arm of the technology giant, reported total revenue close to ₹ 9337 crores in FY18.  A most unprecedented financial result reported by Google India for FY19 has created confusion in the market place. Google India reported a 56 per cent fall in revenue to ₹ 4147 crores in the year ended March 31, 2019 (https://www.statista.com/statistics/717633/google-revenue-value-india/). The fall was attributed to a new accounting standard introduced by the Ministry of Corporate Affairs, Government of India.

 

Google is the undisputed leader in India’s mobile search engine market, but its biggest cash cow- Google AdWords, is registered under the Google Asia Pacific division. As such, the revenue and profits from AdWords cannot be filed as part of the Indian division without incurring certain burden of taxation as per the amended rules. So, advertising revenue, the biggest contributor to Google’s  overall revenue is missing from the revenue posted by Google India.

 

On the other hand, Facebook Inc’s Indian operation has reported revenues of ₹ 892 crore, compared to revenues of ₹ 521 crore, a 71% jump in revenues last fiscal for fiscal year ended 31 March 2019  (https://economictimes.indiatimes.com/markets/stocks/earnings/facebook-reports-84-jump-in-net-profit-for-india-at-rs-105-crore-for-fiscal-2019/articleshow/71891826.cms?from=mdr) As a result, share of Facebook has gone up in the duopoly in Indian market, though it has a long way to go before its revenue gets closer to Google’s revenue. It remains to be seen if Amazon will be able to grow its share in the Indian market following the US example.

 

As advertisers and agencies continue to use Google AdWords and place digital advertising through Google, the analysis of the revenue sources will not match with the money spend on digital advertising across various platforms offered by Google and will add to the computing confusions in media planning.

 

 

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