A good indicator of their dominance in attracting marketers to their platforms is the equalisation levy the two companies pay the tax authorities in the country.
The two majors combined paid Rs 2,277 crore out of the total Rs 3,900 crore that the revenue department collected in FY22 as equalisation levy, accounting for nearly 58.4% of the total.
Google and
Facebook combined posted a 77% year-on-year jump in their ad sales last fiscal while the equalisation levy they paid soared 82%, as per their RoC (Registrars of Companies) filings sourced from Altinfo.
In 2020-21, the two firms had together gathered advertising worth Rs 23,212 crore from Indian advertisers and paid an equalisation levy of Rs 1,254 crore.
The equalisation levy is a 6% tax on global companies that generate online advertisements from Indian residents or non-resident companies with a permanent establishment (PE) in India.
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Local units of Google and Facebook work on a reseller model, buying ad inventory from their global subsidiaries and selling it in India.
These firms together paid Rs 38,265 crore to their respective sister companies or parent companies in FY22 for the purchase of ad inventory for onward sale to advertisers.
While Google and Facebook are expected to continue dominating the digital advertising space in the country, industry experts believe other digital players could chip into their share going forward.
The two companies are still a substantial majority and indicate a duopoly that could be commanding a 65% market share, but they could be strongly challenged by an entity like Amazon, said Amit Tripathi, managing director of digital-first marketing agency IdeateLabs.
“It’s our belief that the new threat to Google or Facebook will come from a marketplace like Amazon,” he said. “Purchasing journeys start on a marketplace. If they start opening up their ad platforms, they could become as powerful as Google’s ad engines are.”
Shashi Sinha, CEO of IPG Mediabrands India, said in the long run, there will be a fair share for everyone including over-the-top (OTT) content providers considering the growth of the digital segment.
“With OTT options coming into play and other social platforms at the macro level, there is competition,” he said. “I see the basket getting wider in the long run, and everyone will ride the wave.”
In the case of Google and Facebook, experts said their large user base in India, ability to target specific audiences, easy-to-use ad platforms, and high engagement of Indian users make them a compelling proposition for marketers.
Advertisers like the measurable element that the platforms provide, said Jehil Thakkar, partner and leader, media and entertainment, at Deloitte India, adding that digital advertisement will continue to evolve.
“In the last three years, digital advertising has moved away from search and display, and there is more visual and creative advertising content now that opens up new engagement vistas for marketers,” Thakkar said. “In the near future, 5G and fibre will further change the game.”
Google India Pvt Ltd clocked gross ad sales of Rs 24,926.5 crore in fiscal year 2022, a 79.4% jump over the previous year, while competitor Facebook India Online Services clocked gross ad revenue of Rs 16,189 crore in FY22, a 74% year-on-year increase.
When the pandemic struck, both Google and Facebook found themselves in an advantageous position as people spent more time online. With the increase in digital engagement among consumers, advertisers and agencies increased the digital focus in their marketing mix.
In an interview with ET last month, Ajit Mohan, former managing director of Meta India, told ET that the pandemic accelerated digital transformation and that Meta (formerly Facebook) is benefiting from the transition from offline to online, and that transition continues to be well underway.
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