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NEW DELHI : Facebook's decision to access commercial user data of its encrypted chat platform WhatsApp will help advertisers target consumers with relevant and customised ads on the company's family of apps including Instagram, said digital experts. Currently, advertising is not available on WhatsApp.

The move by Facebook will strengthen its social commerce and advertising play as it leverages WhatsApps' massive reach in India.

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There are 400 million users on WhatsApp in India which also happens to be the first country for WhatsApp to launch payments. Facebook user base stands at 310 million, according to data platform Statista.

"So, while WhatsApp wouldn't have access to user chat but they will have data on location, interpersonal connections, interaction with business accounts and any third party links of products or services that a user clicks. If a user, for instance, is interacting with a WhatsApp business account of Nykaa then Facebook can show beauty related ads to the same user on its other platforms," said Gautam Mehra, CEO, DAN (Dentsu Aegis Network) Programmatic & chief data officer, DAN – South Asia.

According to a GroupM advertising forecast put out in February last year, the digital advertising market in India is expected to touch 27, 000 crore in 2020 led by video, voice, and vernacular advertising. Facebook and Google dominate the market owning 80% of the digital ad pie.

"While Google is larger in many respects but certain brand categories are extremely sticky on Facebook/Instagram. Beauty e-tailer Nykaa, for instance, spends 4X ad money on Facebook than Google. Most of the direct to consumer (D2C) brands are Instagram-first. Majority of online commerce is being driven by disposable income and impulse buying where Facebook scores over Google as it helps consumers discover brands. Purchase on Google is more intentional," said Mehra.

WhatsApp can also help Facebook to target consumers in tier II and III towns which is around 70% of India's total internet population, argued Prashant Puri, co-founder and chief executive of digital marketing agency AdLift. "User data from WhatsApp translates into relevant ads which are not a nuisance to users therefore creating better reach and higher conversion rates. If Yatra.com, for instance, sends a user confirmation message on WhatsApp then that's a crucial data point for MakeMyTrip that can also target the same user," he added.

Noting that WhatsApp is expected to share user profile, contacts and time spent Shradha Agarwal, strategy head and COO, Grapes Digital, an integrated communications agency, said the data on groups joined by users is expected to benefit advertisers.

"If a mother has joined fitness groups on WhatsApp, we can customise a nutrition related product ad for her. I also feel that the privacy policy is a step towards testing waters to bring advertising on WhatsApp which currently has the one of the biggest and highly engaged digital user base practically replacing SMS service," she added.

Social media giant Facebook India’s revenues grew 43% year-on-year to about 1,277.3 crore in 2019-20, while its net profit more than doubled to 135.7 crore. Its total income was 893.4 crore in the financial year ended 31 March, 2019, according to Registrar of Companies filing - shared by market intelligence firm Tofler.

The privacy policy change has legal implications both from user privacy to data transfer for commercial gain perspective.

Apart from raising pertinent questions on user privacy, the government must examine the impact of this decision on its own authorities, which have been using WhatsApp for official purposes, in violation of the Public Records Act, 1993 said Virag Gupta, a Supreme Court lawyer.

"Additionally, the government should determine the deemed value of user data of Indians which is being transferred for commercial gains. On the basis of this value, the government ought to impose GST and other taxes on the bulk transfer of data by the Facebook group companies. For this purpose, the government may bring special provisions in the finance bill in the next budget session," he added.

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