On April 16, 2019, at the 2019 China-India Internet Conference hosted by Baijing Chuhai, Facebook and Baijing Chuhai jointly released the “Indian Market Entry Strategy White Paper”, which details the latest situation of the Indian mobile network and application market. This white paper is divided into two parts. The first part will analyze the Indian market from the dimensions of India’s economic population, mobile Internet market, and overseas enterprise ecology. In the second part, Facebook will share the latest data and cases to help overseas developers use Facebook’s matrix applications and advertising systems to achieve efficient advertising and monetization in the Indian market.
Summary of Facebook & Baijing Chuhai’s “2019 Indian Market Entry Strategy White Paper”
1. Indian Internet Market
1. Indian Population and Economy
Population and economic level are the two basic indicators that companies will first consider when entering a market. In the mobile Internet field, they represent the user scale and user income potential. India is one of the few markets that can currently achieve the level of 100 million users. By 2025, it will surpass China to become the world’s most populous country. The young population structure also shows the overall vitality of the Indian market. The population under 35 years old accounts for 62.8%, totaling 843 million, with a median age of only 29.8 years old.
In terms of economy, World Bank data shows that in 2017, India’s GDP was 2.6 trillion US dollars, surpassing France to become the world’s sixth largest economy. Before 2021, the average annual GDP growth rate was 7.5%. The per capita GDP growth rate was 5.386%, higher than the global 1.957%.
Although the urbanization process is slow, according to McKinsey’s forecast, by 2025, 49 urban clusters will be formed in India, contributing 77% of India’s GDP growth before 2025. By 2025, the urbanization process will reach 36.2%, with a total population of 525 million. The growth in consumer spending by the middle-income and above classes will drive India to become the world’s third largest consumer market by 2025.
2. Indian Internet Market
2.1. Internet users, network speed and tariffs
The latest report released by the Telecom Regulatory Authority of India (TRAI) in January 2019 shows that as of September 2018, the number of Internet users in India exceeded 560 million, with a penetration rate of 41.8%, of which 538 million were mobile wireless Internet users, accounting for more than 96%; 388 million were 4G users, accounting for 72.12% of mobile Internet users.
Although 4G data charges have been reduced to a very low level, with 2GB of 4G high-speed network service available for about 20-25 RMB per day for 28 days, India’s network speed is still a challenge at this stage. In a recent survey conducted by OpenSignal, India’s 4G network speed ranged from 3.7 to 14.6Mbps, ranking second from the bottom among more than 20 countries including Southeast Asia and the Middle East. In addition, the differences in network speed in different cities and at different times of the day are also very obvious. Slow Internet speed is an important reason for low user conversion rate.
2.2. Device situation
According to eMarketer data, in 2018, the number of mobile phone users in India was 775 million, smartphone users were 337 million, and the total number of feature phone users was 438 million, which was larger than the smartphone market. In terms of smartphones, Xiaomi has firmly ranked No. 1 in the Indian smartphone market in 2018, with annual shipments of 41.1 million, accounting for 28.9%. Samsung, vivo, OPPO and Transsion followed.
In terms of feature phones, the Indian market shipped 181.3 million feature phones in 2018, accounting for 56% of the total mobile phone shipments, higher than smartphones. Jio occupied 38% of the market share, followed by Samsung (13%), iTel (8%), Nokia HMD (7%) and Lava (7%).
2.3. User Behavior
India skipped the PC era. The use of devices determines that Indian users allocate 88% of their online time to mobile apps. However, the large number of low-end and feature phones has led to a high number of visitors to mobile web pages. Online, Indian users like socializing the most, followed by watching videos.
2.4. Venture Capital Ecosystem and Hot Tracks
In 2018, Indian startups completed more than US$7 billion in PE&VC financing. The top three industries in terms of financing amount were local life services, travel & hotels, and B2C, accounting for a total of 49.9% of the financing amount. Typical cases include Alibaba’s two investments of US$410 million in Zomato, an Indian food delivery platform, in one year. As of the beginning of 2019, there were 20 unicorn companies in India, compared with 10 in 2017. From the perspective of industry distribution, e-commerce and consumption are the areas with the most unicorns.
From the perspectives of financing, downloads and revenue, and promotion efforts, Baijing Chuhai has selected several popular tracks in India and interpreted their data, including e-commerce, media and entertainment, and digital payments.
E-commerce
The penetration rate of e-commerce in India is very low, and there is a lot of room for growth. From 2017 to 2021, the compound annual growth rate of the Indian e-commerce market will be as high as 32%. Information on the age, geographical distribution and user behavior of Indian consumers can be found in the full version of the white paper.
Media and entertainment
On March 12, the Federation of Indian Chambers of Commerce and Industry (Ficci) and Ernst & Young (EY) jointly released a report stating that the Indian media and entertainment (M&E) industry had revenue of US$23.9 billion in 2018 and is expected to exceed US$33.6 billion in 2021 at a compound annual growth rate of 11.6%. Among them, digital media and online games have become the two major growth engines with CAGRs of 28% and 35.4% respectively.
3. Chinese Internet companies going global to India
Looking at the Google Play Top 100, there were only 18 Chinese apps in the Top 100 in 2017, and the number reached 44 in 2018. After sorting out these 44 apps, it was found that Chinese companies going global have relative advantages in tools, short video social networking, video chat, live broadcasting, e-commerce, games and other tracks.
But at the same time, companies going global also face various problems in India, such as content review and low ROI of short videos; low customer unit price of e-commerce, unfriendly policies, high logistics costs, etc. For some industries that require in-depth localization, have cultural barriers, or have policy risks, investing in or cooperating with local companies is the main entry mode adopted by Chinese companies.
2. Facebook placement and monetization
In this section, Facebook shared the latest data on Facebook matrix products, and helped developers going global to establish marketing strategies from the perspectives of creative materials, user positioning, bidding and exposure optimization.
In terms of monetization, with the continuous development of the mobile application industry, the market size and monetization opportunities of mobile applications have emerged. According to shared data, in 2019, global in-game advertising revenue will reach 6.9 billion US dollars, an increase of 97% in 5 years, and the trend of non-game applications is also the same. In response to this trend, Facebook Audience Network continues to optimize and innovate in advertising experience and form to help developers improve the value of App and achieve efficient monetization.
In terms of advertising experience, in order to maximize the advertising revenue of developers, the platform will not simply use bidding as the standard for display or not, but use the indicator of advertising relevance coefficient to continuously optimize the user’s advertising experience and try to push ads of interest to users. In terms of advertising form, it is also constantly innovating to ensure user experience while providing developers with more monetization opportunities.
Incentive video is a very popular advertising form in recent years, providing users with some kind of reward to encourage them to watch videos. On this basis, Facebook Audience Network will give users a second chance to choose one of the two incentive ads they are interested in. At present, this advertising form is still in internal testing. In addition, for news publishers, Facebook Audience Network has launched an advertising experience led by readers.