'We will get incremental growth from education and government in 2010'

Q&A: Shailesh Rao, MD, Google India

Thanks to the global slowdown, Google India saw a challenging first quarter in the calendar year 2009. But it soon recovered with the last three quarters going strong for the company. According to Google India Managing Director Shailesh Rao, the company is exiting 2009 with a positive outlook. In a chat with Kirtika Suneja, he talks about the company's plans and revenue drivers for 2010. Edited excerpts:

What was 2009 like for Google India? And what is your outlook for 2010?
India was a strong growth market in 2009. However, the first quarter was a challenging one because of the recession. But the last three quarters were strong. So, we exited 2009 with a positive outlook. This year will be one of experimentation, especially in the mobile space. In fact, we expect mobile internet to be a serious business when we exit 2010.

On the advertising front, we feel that it is still confined to online travel and websites, even though digital advertising is a high performance-low cost way of connecting with the customer. However, we do see a change with advertising becoming an integral part of every company's business strategy.

What new opportunities do you see in the coming year in terms of service offerings?
In India, search advertising is a big opportunity. Interesting experiments are happening on YouTube and video advertising. Also, social media, like Orkut, are gaining in importance. Internet penetration is increasing in small and medium enterprises (SMEs) that do not advertise in general. However, the internet is a natural cost-effective way of connecting and partnering with these SMEs in small towns.

Another opportunity is in the mobile search space, especially with the introduction of 3G and fall in the prices of smartphones and data plans. It is the changing nature of search that is leading to location-based advertising.

How are the different industry verticals shaping up for digital advertising?
For us, the biggest revenue driver continues to be search advertising in verticals like airlines, travel and banks. However, two sectors that have shown growth are education and auto and these could become core for business as the amount of revenue becomes material enough. Telecom, insurance and travel are seeing great uptake as adoption and innovation is happening in these sectors. There is still a lot of opportunity remaining. We can aggressively grow in FMCG, financial services and banking while education and government will drive incremental growth in 2010.

Will search continue to be the main revenue driver for Google in 2010?
Search is still the core of our business but we have started advertising through Orkut and YouTube that are attracting huge audiences. We are very bullish and confident about these two as this is what the consumer wants. YouTube is fast growing, while the power of Orkut is making the business bullish. On the other hand, ad revenues in 2009 were less than 2008, but still registered a strong double-digit growth, more so in India, which is one of the fastest growing revenue markets.

What sort of investments will Google India make in 2010?
Investments will mainly be in the form of people. So, we will hire aggressively for our software, advertising and marketing teams. We are growing our marketing team here to meet increasing demands. We are also adding people for search and display advertising. Currently, there are around 2,000 people and we are hiring both entry-level people and laterals (experienced hands).