New Delhi: Facebook, the world’s largest social networking site, plans to tap India’s online advertising market by signing more partnerships and making heavy investments in the country, as part of a global strategy to focus on emerging Internet markets such as India to offset user saturation in mature markets such as the US.
In her first visit to India as a Facebook executive, chief operating officer Sheryl Sandberg also said that the Menlo Park, California-based company is in the process of monetizing its business in India, having brought at least 900,000 small and medium businesses online.
“Globally one of the best ways we take people and get them to be paying customers is (that) they start using pages and then up-sell into advertising. We’re already seeing that happen in India,” Sandberg said in a discussion with reporters.
Even as Facebook attempts to convince more companies such as Hindustan Unilever, Coca-Cola and PepsiCo to spend more advertising dollars, the social network is also making “serious investments” in drones and satellites that will deliver Internet services to third-world countries.
“This stuff is in its really early, nascent stages, but we’re making serious investments because people who don’t have connectivity..., we want them to have connectivity,” said Sandberg, who has previously served as chief of staff to then Treasury Secretary Lawrence Summers in the Clinton administration.
Facebook, which currently has a partnership with India’s largest telecom firm Bharti Airtel Ltd, is also testing a new kind of advertising service in India by tapping an uniquely Indian concept, missed calls, allowing cellphone users to click a button calling an advertiser, hanging up and then getting a return call.
For this service, Facebook has partnered with Indian start-up ZipDial Mobile Solutions Pvt. Ltd.
Sandberg, who is widely seen as one of the most influential figures in Silicon Valley and has also worked as vice- president at Google Inc., said that the missed call service would be rolled out across other parts of the world.
“We really want to invest here because the returns are so great both for our local and global business,” said Sandberg. “As people are spending more time on digital, marketers will go there....The users we have in the US represent a large portion of the US population. The 100 million that we have in India do not represent a large portion of the Indian population, which means there’s such huge opportunity for growth here.”
Facebook will look to drive growth in the country through partnerships with the government, companies and non-profit organizations, she said.
Sandberg, who is expected to meet Prime Minister Narendra Modi during her visit to India, also said Facebook currently has no hardware aspirations, unlike rival technology giant Google Inc.
“I don’t think we need to make hardware or phones,” said Sandberg. “We’re doing very well with software-based products and that’s what we do.”
Facebook may consider having a research and development (R&D) base in India, Sandberg said.
“Our R&D base has expanded slowly—as of three years ago, we only had Palo Alto, California. We are just in the process of opening remote engineering locations and I think we will continue to consider possibilities and obviously continue to consider India as well,” Sandberg said.
Globally, Facebook is betting heavily on mobile advertising to drive growth, after conceding that it was late to make the transition from desktops to mobile phones.
Experts tracking Facebook warn that the social networking firm may find it difficult to sustain current growth levels in advertising, because it will find it tough to offset the decline in advertising spends in mature markets from revenue in emerging economies.
“The rate of growth of their advertising revenues is going to slow down. While advertising will grow, it will not be at the double, triple digit growth rates that we have seen over the last few years,” said Brian Blau, research director at Gartner Inc. “Over the long term I think they’re going to have trouble growing because I don’t see advertising having the kind of impact in emerging markets (as mature markets) for many years to come.”
Facebook, which is currently battling widespread criticism over a psychological experiment it conducted on users two years ago, conceded that it could have handled things better.
The experiment, which was implemented by data scientists at Facebook, manipulated what nearly 700,000 users globally saw on their news feed, and sought to influence their emotions.
Details of the study emerged recently, raising privacy fears and questions over how Facebook could have conducted the study without seeking the consent of users.
“To address this specific issue, we communicated really badly on this subject. We regret how this was communicated because people are concerned and we never want them to be concerned,” said Sandberg.
The developments have prompted regulators in the UK to launch a probe over whether Facebook broke data protection laws by conducting the study without the permission of users.
“This was a one-week study a long time ago and it was like any product, testing different aspects of a product so that we could provide instant communication on it.”
Sandberg said that Facebook was working closely with regulators across the world and that the social networking site was fully in compliance with privacy laws.
“We work very closely with regulators all over the world. We are fully in compliance with the laws. We take privacy very seriously and that is the hallmark of our service.”
The study attempted to find out whether Facebook could alter the emotional state of users and thus influence them to post either more positive or negative comments.
Facebook’s data scientists tried out the experiment for a week in January 2012 and as part of the study, which was published in the Proceedings of the National Academy of Sciences, changed the number of positive or negative comments that users saw on their news feeds of articles and photos.
Given Facebook’s elaborate influence across the globe where it reaches more than 1 billion users, the news feed experiment has raised concerns over privacy and over the social network’s ability to influence users’ thinking and moods.
Sandberg insisted Facebook had not made any changes to content on the news feeds of users they had experimented on.
“We don’t produce content—we’re not a newspaper,” said Sandberg. “There’s nothing we’re trying to push at people. We’re just trying to give you the best of what you see. People you message more, you see their posts more often. Posts you engage with, you see more often. If you engage with fewer people, Facebook shows fewer people. None of this has a political point of view.”