Wednesday, February 05, 2014

Buying likes is not a valid business model: Kirthiga Reddy, FB India head.

The Economic Times

Buying likes is not a valid business model: Kirthiga Reddy, FB India head

Shelley Singh & Chaitali Chakravarty, ET Bureau Feb 4, 2014, 09.42AM IST
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('Fans are important, but…)
The world's biggest social media platform Facebook has its second largest user base, after the US, in India and it's growing fast. At 93 million users as of December 2013, it's a huge leap since Facebook set up operations in India in 2010, when it had only eight million users.
Back then Kirthiga Reddy, 42, joined as head of Facebook India. Reddy, the first employee of Facebook India. Now faces the daunting task of monetising the platform. The user base is galloping but are the advertisers buying it?
In an exclusive interview with ET Reddy, says she would like advertisers, marketers and brand managers leverage the power of the platform with targetted messages and campaigns and reach out to the expanding user base. Edited excerpts:
How much time do Indians spend on Facebook?
ComScore - an American internet analytics company - has done studies with us which show that on the internet, people spend most time on Facebook than on Google, YouTube, MSN, Yahoo or any other internet property. In terms of activity pattern, students and homemakers are most active. In general, we see peak use in the late evening just like prime time (TV) hours.
Now there is a medium on mobile to reach people all the time. From a brand and consumer perspective it's about being able to reach your consumer all day, every day. Brands don't have to wait for prime time to reach their audience.
Facebook is personal space where users may not want to be intruded by ads and brand messages. How do you cope with the challenge of connecting people without being intrusive?
There are millions of friend requests and interactions every single day. There are also millions of brand interactions every single day. People are sharing with friends their choice of restaurants, cameras they use, movies they see and so on. These are as much part of their lives as their friends. The beauty of the platform is it lets you deliver messages to a targeted audience. If I am not interested in sports, the advertiser will not deliver that message to me. It is a wasted impression. Our technology ensures if I am cancelling out a particular message, the system knows not to show it again. That's key part of our engagement — to give the user only relevant content. Zuck (Facebook co-founder & CEO Mark Zuckerberg) spoke about this in his last earnings call. We constantly monitor what happens to user experience and we see user engagement increase with the right content.
How does Zuck see India?
He sees India as a strategic market. India is important from a user base perspective, the growth that we have, the kind of numbers that we have. Second we have core operations offices in India, that is what India does for Facebook globally. Third, from monetisation perspective, India is a large market. It is a lead for emerging markets monetisation. We constantly ask what is it that we can learn from India and implement in other emerging markets.
Last month, the emerging markets ad products team came visiting. They met with clients, agency partners, did focus groups, consumer groups, to understand how Indian consumer interacts with brands. Those are some of the pillars that we look at in India.
How many brands advertise on Facebook in India?
There are over a million advertisers on Facebook globally, a very significant milestone for us to reach. We don't share country-specific numbers. But I can see different genres of advertisers coming. To give you some examples, Coca-Cola India did significant launches with us last year. Yepme is an example of an online fashion retailer, that used Facebook with 4.5 times returns on ad-sales dollars. Small businesses like Pigtales and Ponys - two college students in Bangalore started this hair accessories company — leveraged Facebook and it became a business on its own.
There are large brands, direct response (DR) advertisers, home businesses, the small and medium businesses and developers that we enable. We have a strong product solutions portfolio to drive mobile apps.
The FMCG companies, mobile companies and several others are clued into what Facebook offers, but what about the back end companies like Reliance, L&T etc?
There are several shifts that we are looking to make. FMCG companies see us as a social media company and there's lot of work going in terms of fans, fan engagements etc. They think of us as social media. But given the kind of numbers that we have they must think of us as mass media in order to leverage the power of the platform. That's the trend that I see, that's the shift that I see, that's the kind of conversation I have with CEO, CMOs.

How competitive is Facebook vis-a-vis other media?
We don't share numbers but every situation is different based on what the media campaign is, what the brands want to do on Facebook. We are conscious that every dollar they spend on Facebook is a dollar they can spend on any other medium. We are effective and efficient for our ability to do targeted ads. For example, when Samsung did its Note 3 launch last quarter, they used a different creative for men and women on Facebook. Brands can't do this on television or on print. Another example is the launch of Nokia 205. Using Facebook, the company targeted only the feature phone users with a customised message because they were most likely to upgrade to the new model.
Its the ability of the platform to drive a message in a particular way with zero spillage that drives return on investment (RoI). We are results focused. We ask brands what are your biggest brand and business objectives? We are measured on this and what we deliver fuels the next stage of growth.
What do companies seek from Facebook?
Firt thing that companies want to know is how to use the platform. They want to be educated. Lot of companies have been using Facebook for fan engagement and that is valuable in itself. We have studies that show fans buy 1.9 times more than non-fans, however, fans are small percentage of the target audience.
If the strategy is to target fans, then companies are really missing the point of being on Facebook. For me conversations like these are a way to help clients. We work with clients and do sessions with marketing teams and ad agencies on how best to use the platform. There are many CEOs and CMOs who tell me, "Oh you have 93 million users. We didn't know that. We must do something together....,''
Often, CEOs, CMOs heads of marketing tell me they have reached 5 million fans. Fans are important, but I hope they tell me the next time that Facebook is an integral part in driving market penetration, new branding etc. That is the shift in conversations we are looking at. It's a trend in the making.
Is Facebook a must buy for media planners?
The trend that we see is that it will be a must buy. There are advertisers, brands and marketers today for whom it is a must buy. But is it a universal truth at this point? No, but that's the trend that we see. They will buy where the consumer is, where mobile is.
Companies can buy 'likes'. And there are fake likes as well. But that can be misleading for users. Does Facebook encourage it?
Buying likes is not a valid business model, we are a real identity platform. We have a whole team making sure we keep that trust. We certainly don't allow or encourage that.
Though brands do invest in building their fan community — which happens in both paid and organic way. It's about your like, nobody is automatically liking anything. It's all within the users control, with complete ability to unlike a page.