The jump in gross ad sales signals an accelerated shift towards digital advertising by advertisers, after the pandemic bolstered usage of connected devices.
It paid local tax authorities an equalisation levy of Rs 1,370.7 crore for the fiscal year ended March 31. This was 6% of the Rs 22,845 crore that the Indian unit paid to Google Singapore Pte to buy the advertising inventory.
Google India acts as a third-party reseller of advertising space through the Google Ads programme and other Google advertising products and services.
Apart from ad sales, Google India also makes money by rendering information technology services and IT-enabled services (ITeS) to its group companies globally.
According to its revenue recognition policy, the tech giant reports net sales (gross sales minus purchase price) from the sale of advertising space, enterprise products, and the direct costs of sales that are associated with them.
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During the financial year 2021–22, Google India reported a total turnover of Rs 9,286 crore (net revenue from operations) and a net profit of Rs 1,238.9 crore.
The company, which often tops workplace surveys in India, spent Rs 2,821 crore on salaries, bonuses and other allowances to employees and doled out Rs 1,883.5 crore in share-based payments.
As per the filings with the Ministry of Corporate Affairs, the net revenue included Rs 2,137.8 crore from IT and ITeS services provided to Google Ireland and Rs 4,978.5 crore from Google LLC for the services provided to it. The net sale of advertising gathered another Rs 2,080.9 crore, while the sale of enterprise products brought in Rs 88.8 crore.
The enterprise products are services such as Gmail and Google Docs that are billed to customers.
“Digital is becoming a very important touch point in consumer journeys across products and services. Business leaders are now understanding its importance and allocating money accordingly,” said Prasad Shejale, founder and CEO of Logicserve Digital.
Amit Tripathi, managing director of IdeateLabs, said while other social media platforms operate as push-based advertisers, Google brings in pull-based advertising that kicks in when a person has an intent to buy a product or content based on his or her immediate need.. “Anywhere in the world, need-based advertising is the most preferred format. Google Search and YouTube control 95% of the search traffic between them. They have the best intent-led audience,” he added.
But the tech giant has also been facing its own challenges on the regulatory front. Last month, the Competition Commission of India ordered the company to pay Rs 936.44 crore and Rs 1,337.76 crore as penalties in two separate cases for allegedly abusing its dominant positions with respect to its Play Store policies and the Android mobile operating system.
Google’s competitor Facebook India’s online services had clocked gross ad revenue of Rs 16,189 crore for fiscal year 2021–22, a 74% year-on-year increase, ET reported last month.
During the January–June 2022 period, digital ad insertions surged 109% compared with the same period last year, according to a report by TAM Media Research.
Google India was incorporated on December 16, 2003, as a private company.
The third-quarter results of Google’s parent company, Alphabet, showed that its revenue growth had slowed to 6% from 41% a year earlier as the company dealt with tough economic conditions in the US and Europe. Alphabet reported overall advertising revenue of $54.48 billion during the July-September, a marginal uptick from the prior year.
