The social networking platform is the most talked about platform in the online space both in India and Worldwide. In India there has also been a difference of views and opinions among Venture Capitalists on the future and potential of social networking. As of today India has 1 funded social network in minglebox and upcoming social networks like reliance’s big adda and ofcourse there is orkut which continues to be one of the most popular social networks in India.
We at WATConsult has put this presentation together sometime back to get insights into what makes a social network tick in India.
Well we had written about why and how Minglebox got the 7 million $ funding in an article here and also got some revealing comments from our readers here. The article also talked about Advertising being the primary revenue source for social networks. But what the article doesn’t cover is the total market size in terms of potential revenue for social networks in India. So how big is the social networking space in India? and how big can it be 5 years down the line? Here is our attempt at answering those questions..
There are no direct statistics that are available regarding the online advertising spend on social networks in india but there is this report by emarketer which states the US and non US advertising spend on social networks helps in putting the figures with respect to India.
Here is a look at the numbers..
If you are a social network then the above numbers tell an interesting story. Lets assume as of 2007 India holds 10% of the market share from the Outside of US online advertising spend on social networks (I know people will have contradicting views on the % but i think 10% is fairly positive:)). That puts the 2007 revenue for social networks at 30 million $ which looks pretty good unless you read the fine print and see that this includes all the social networking activity across large portals like google, yahoo, msn and indian one like rediff and others as well. So if you are an individual social network your share of the 30 million pie could be considerably less unless you have a loyal and interactive userbase that keeps coming back to your site.
Now lets just increase the market share and move 5 years ahead at 2011 and we see that at 15-20% of the outside of US numbers the Indian online spend on social networking could be pegged at 150-200 million dollars! That sounds amazing! It mean a market leader with 30% share would have revenues close to 50 Million $! Wow.. Yes yes.. though this sounds exciting its important for current social networks to note that sustaining and growing for 5 years isn’t the easiest (even the US market has seen phases where one social network was prefered over another in a span of 2 years) as the indian online market grows far and wide you can expect different and very dynamic user preferences.
Also as far as leaders are concerned here is an excellent article i read sometime back on social networking which talks about the catch and keep and the catch and release model for social newtorking. Basically catch and keep is the one which has the stickiness factor. This what made orkut the most popular social network in India within just 2 years out of which the last 8-10 months has the seen the maximum indian users growth for orkut. It is quite possible that none of the current social networks manage to be the leader by 2011 as it could be a social network released in 2008-09 that does the catch and keep trick to get users and grow faster than others by 2011.
It will be very interesting to see how the social networking structure develops itself in the years to come and what strategies are played by the players to lure the indian youth.
great presentation
Nice work Rajiv. Are you consulting any Social Network currently?
your 10% assumption is way off mark!!!! Let me reason.
Total Indian online ad marketsize is projected to be $300m in 2011. In 2006, US social networking had $350m/$16b(total online ad spend) or approx 2% market share. Assuming that India is 5 years behind US in internet adoption, we can assume 2% market share in india 2011. For your sake, lets assume it will be 10%(!!!) which even then makes it $30m(10% of $300m) in 2011.
AD spend on indian social networks is next to nil in india. Most of them are surviving on Google Ads as of now.
But international social networks like Hi5 and Orkut, show you contextual Indian ads…so I guess we can count a little of that as ad-spend in the Indian social networking market…
@Anon – Please note the above figures were arrived at by considering online ad spend on social networks and not total online ad spend. I agree numbers can be skewed when looked at from different point of views. And 10% is my optimistic view of social networking share. You are right in having your point of view. I hope you got my point now
Also checkout Socify – http://in.socify.com another social networking site for Indians.
A nice presentation Rajiv, thank you for sharing.
It could certainly be of use to anyone seriously interested in Web 2.0 / Social Networking space in India.
http://www.JeetegaKaun.in
You can also check http://www.rhyo.com a new social networking platform for idians in united states