Internet search leader Google Inc., which derives more than 95 percent of its revenue from online advertising, is betting on five segments to expand its India business.
The company, according to India managing director Rajan Anandan, wants to increase its YouTube and mobile Internet users while simultaneously sharpening its focus on social media, cloud computing and solutions for small- and medium-size businesses (SMBs) and enterprises.
"India is a very strategic country for Google. India ended 2011 with 120 million Internet users. By 2014, the country will have 300 million users, and will surpass the US (currently estimated to have around 250 million users). With most of our products like search, email, YouTube, maps and browser (Chrome) being successful in their respective segments, we are well equipped to take advantage of the rise in Internet users," said Anandan.
To begin with, Google, according to Anandan, is in the process of building YouTube as a go-to destination for entertainment--be it music, sports, television, cricket or movies. "On a daily basis, six million Indians access online video. You may recall that even the Indian Premier League was streamed live on YouTube," said Anandan, who pegs YouTube India users at 31 million.
"User-generated content is increasing. To ensure that more people access YouTube, we are working with telecom carriers to distribute content. We are also trying to increase our content footprint. Today, we have 500,000 full-length movies on YouTube," he said.
"YouTube is, without doubt, among the largest TV channels in India," concurred Mahesh Murthy, founder of digital marketing firm Pinstorm, adding that the online video site has eight million logged-in devices viewing it daily in India. "That's a GRP (gross rating point) or TV rating of 7 every day, day after day. No TV channel in recent times--including Star Plus and Colors--has come anywhere near delivering these numbers with such consistency. And it's doubtful if any TV channel ever will. Of course, YouTube by itself isn't yet making the big bucks, but just give it time."
David Twigg of Online Marketing Consultants Pty Ltd, in a 21 May release, emphasized that "online video is now becoming a fundamental communication tool for businesses, whether it be a simple way of distributing news or as a sales tool".
"Face to camera has been shown to get more views than leveraging slide presentations like PowerPoint or Keynote," he said.
Another innovation, Anandan explained, is around TrueView (where the user has the option of rejecting the ad within the first five seconds). "If a large number of consumers do that, then Google will not display the ad," he added.
But Murthy said, "It's too early to talk of the impact of TrueView."
Mobility is the second growth driver for Google India, with the focus on Android (Google's operating system for mobile phones). Globally, it hits 900,000 activations per day, according to Andy Rubin, the founder and head of Android, the mobile software division. He gave the figure in a tweet to scotch rumours that he was planning to quit Google.
"We have done well in India too," said Anandan, but did not give any numbers. Of the 120 million Internet users in India, around 20 million are mobile-only Internet users, and around 10 million of these access the Internet only through smartphones, pointed out Anandan, adding, "Hence, we need lower-cost devices, and the magic point is around '4,000."
He qualified that smartphones for videos and maps will need high bandwidth, hence, data pricing is important. "Globally, we are working with original equipment manufacturers for lower-cost devices and also partnering with carriers to reduce (prices of) 3G data plans. In India, we will announce some plans on this front soon," he said.
Anandan said the strategy was to take all of Google's existing products such as search, video, email and social media, and make them mobile-compatible. He added that mobile advertising was also becoming a viable medium for advertising, giving Google an added source of revenue.
"Google is by far the leader in mobile search with AdMob. InMobi is a strong No. 2 here. In India, mobile data usage has recently pipped desktop-based data usage. But the yields and cost per impression (CPM) on mobile ads are much lower than that on desktop sites. So, while Google has won this battle, it might be a Pyrrhic victory unless it can improve yields and CPM in the mobile space," said Murthy.
The third priority is to promote the use of social media. "Making the Web social--for example, Google+, which is the company's social networking site--is important. We launched Google+ last June and have around 100 million users globally. In India, too, we have received a good response," said Anandan, adding that the company was working on integrating social media with all its other products such as search, email and videos.
"Google+ numbers seem to have grown well past the 12 million-mark in India, bringing it on par with Twitter and LinkedIn (which crossed 15 million in May) in India," noted Murthy.
Google India is also focusing on promoting cloud computing (technology that helps individuals and businesses access software and tech infrastructure from any place using the Internet, thus reducing capital expenditure). "Given that we have around eight million SMBs, but less than 200,000 that have packaged software, we want to make India a cloud-first IT (information technology) market," said Anandan. "Last, but not the least, Google enterprise solutions and geospatial solutions (including maps and Google Earth) can be customized for enterprises."
"Being the first to the market with their cloud-based enterprise application services, Google is reaping the pioneer's dividend. While the immediate gains have come from SMBs, a natural market for adoption of cloud-based services, a roster of large enterprises have started coming on board, too. This adoption by big labels is providing legitimacy to Google's cloud-based enterprise services and it is expected that this in turn will cause the market diffusion and open many more doors," said Alok Shende, principal analyst and co-founder of Ascentius Consulting.
"Overall, I think Google has done a commendable job in bringing online media centre stage in India. Once upon a time mocked by big media buyers and agencies, Google now has revenues larger than that of large general entertainment channels and newspaper groups. And it has brought about this leadership not just through search, but also through display advertising and video advertising," said Murthy.
But there are challenges, too. Globally, Apple Inc. has unveiled its own mapping application that will end its dependence on Google Maps. In the social media space, Facebook Inc. is the leader with 51 million users in India as of end-May.
Google faces privacy issues, both globally and in India. "We take privacy very seriously. I know that some changes have unsettled people. But most of them are back-end (serverrelated) changes. I reiterate that we do not sell data. It is only used to improve user experience," Anandan said.
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