In-depth: Is removing ads enough for Meta to make users pay for subscriptions?

Meta, the parent company of Facebook, Instagram and WhatsApp, is mulling the launch of an ad-free subscription plan in India by 2024. Opinions in the industry are divided on its viability as some industry players argue that after years of free usage, Meta may struggle to attract paid subscribers, especially at this early stage in the Indian market. Others see it as an intriguing move that could potentially benefit the advertising industry.

Meta has plans to roll out ad-free versions of Instagram and Facebook priced at $14 a month in the European Union, according to last week’s news reports. Meta has been actively engaging in discussions to deploy global monetisation strategies for its platforms, including operations in India.

The corporation is steadfast in its commitment to adhering to data protection regulations, notably the newly enacted Digital Personal Data Privacy (DPDP) Act.

As per news reports, Meta is poised to initiate a trial for a paid, ad-free subscription offering for Indian users, mirroring a test run conducted in the EU. This launch is expected to materialise in the middle or latter part of 2024.

While speaking with various industry players, BestMediaInfo explored the viability of Meta's ad-free subscription plan in India, we also examined the potential opportunities for brands and advertisers, and much more.

Meta's ad-free subscription plan's feasibility and appeal in the Indian market

Rehan Dadachanji

Rehan Dadachanji, Co-founder, The Starter Labs, believes that while the concept of an ad-free Instagram and Facebook is picking up steam in Europe and North America, the factors that drive that are more privacy and compliance-driven versus profit-driven. The ad revenues that Meta generates in the Indian market is growing rapidly year on year. Established international subscription companies like Netflix and Spotify are already struggling to grow their user bases in India.

"After using Meta platforms for free for years, Meta will struggle to get a significant amount of paid subscribers to the platform. X (formerly Twitter) is a testament to this," Rehan added.

Priyam Dadia

Striking a similar tone, Priyam Dadia, Head of Media Planning, Schbang pointed out that it's in nascent stages and there are rounds that it might not be the best time to roll this out in a market like India.

“Our's is a price sensitive market, hence the fee will be the breaking point. Also, the value proposition of having this in the first place will need to be explained thoroughly for people to actually buy into it,” she added.

Sahil Chopra

Sahil Chopra, Founder and CEO- iCubesWire emphasised that Meta needs to cater to a diverse and price-sensitive market.

"While there's a rise in users who prefer a seamless and ad-free experience, a vast majority are familiar with free and ad-supported models. An ad-free subscription might appeal to everyone. However, pricing it right for the users may ensure success for the company," he added.

Niddhi Vala

Similarly, Niddhi Vala, Senior Media Strategist at Django Digital, emphasised that as India is a price-driven market, the feasibility and appeal of an ad-free subscription service would depend primarily on the pricing and the value proposition offered. Meta would need to carefully assess these factors and tailor its service to meet the specific needs and preferences of the Indian user base.

Hitarth Dadia

On the other hand, Hitarth Dadia, CMO and partner, Nofiltr believes that with Meta contemplating the introduction of an ad-free subscription plan in India, it's an intriguing move that could potentially benefit the ad industry.

"Users in India might find the option appealing, especially if it offers an enhanced, ad-free experience. This presents an opportunity to explore creative and influencer-driven advertising strategies, as traditional ads on Facebook and Instagram may decrease. However, the feasibility will depend on factors like pricing, value and user adoption. It's a reminder that the advertising landscape is evolving and adaptability will be key for agencies and brands to stay effective in engaging consumers in this changing environment," he added.

What Meta can learn from YouTube's subscription model in India?

Hitarth believes that Meta can learn valuable lessons from YouTube's experiences when rolling out a subscription plan for Facebook, Instagram and WhatsApp in India. Firstly, pricing should strike a balance between affordability and perceived value. Offering exclusive content or features within the subscription can enhance its appeal. Clear communication on user privacy and data protection compliance is vital. Meta should ensure a seamless user experience during the transition to an ad-free model.

"Additionally, leveraging insights from YouTube's content creator partnerships can help Meta create exclusive content that attracts subscribers. Learning from YouTube's successes and challenges will be key to tailoring the subscription plan to the unique dynamics of the Indian market and ensuring its success," he added.

Dadachanji believes that while there are parallels, YouTube inherently makes more sense for subscriptions as compared to Meta. People get far more annoyed by YouTube ads versus Instagram ads, which can be scrolled past.

"I believe Meta will struggle far more than YouTube Premium as the Indian consumer is far more tolerant towards Meta ads versus YouTube ads and they dislike having too many subscriptions," he added.

Similarly, Dadia highlighted that YouTube's appeal has always been massive reach and that has stayed the same even after the subscription model has come into play. Experimenting with pricing is going to be key to getting the right mix between affordability and profitability.

Chopra said, “Simply eliminating ads might not be a compelling enough proposition for users to pay. Understanding the ask of the audience is crucial to setting the subscription model apart. For Meta to succeed where YouTube struggled, it must offer a distinct and tangible value addition beyond just an ad-free experience like access to exclusive content.”

Vala said, "Pricing is also going to be an important factor, setting a competitive and affordable price point that aligns with local economic conditions will be key. A tiered pricing would cater to a broad range of users. For example, a lower-priced plan with limited features and a higher-priced plan with more extensive benefits."

Implications for advertisers

According to Dadachanji, there is a common, and somewhat untrue perception that you can’t target ‘premium’ customers on YouTube as they will have YouTube premium if they are regular users. This could potentially happen for Meta as they have far more active daily users than YouTube in India.

“Meta removing ads will cause a huge shift in two ways: a) More spending diverted towards Google and other social platforms like Snapchat, LinkedIn, X etc. b) A stronger focus on content creators, influencers and media platforms on Instagram and Facebook. This might cause more harm than good for the platform as ads are called out as ads. But with no facility to run ads, reliance on content creators will increase, with all of us seeing a lot of influencer-driven ads on the platforms, which will potentially annoy us far more than ads that are called out as ads. Meta won’t pull the trigger on ad-free platforms in India in 2024," he added.

Echoing similar sentiments, Hitarth said that Meta's move to introduce an ad-free subscription option could significantly impact advertisers, much like the case of YouTube. It might reduce the visibility of traditional ads on Facebook and Instagram, requiring advertisers to adapt.

“This could open up opportunities for influencer marketing and creative content that engages users authentically. The challenge lies in reaching users who opt for ad-free experiences. Brands and agencies should diversify their strategies, focusing on quality content and exploring alternative advertising channels. Staying updated on Meta's developments and user adoption rates for the subscription plan will be crucial. In this evolving landscape, flexibility and innovation will be key for brands aiming to connect effectively with their target audience,” he added.

Dadia pointed out that if it does come into play, we won't see a massive shift at least in the first six months and it all depends on the price point. There are talks that it would be approximately $14 per month which turns out to be expensive for an average user. The user's reach will not be impacted significantly.

According to Chopra, advertisers might initially be concerned about losing visibility among premium users.

“However, this could also mean that the users who remain on the ad-supported version are more receptive to advertisements, leading to potentially higher engagement rates. Brands might need to focus on more engaging ad formats, like leveraging influencer partnerships more effectively,” he added.

Vala believes that the introduction of an ad-free subscription option on Meta platforms would definitely lead to reduced reach and increased competition for the ad space.

“However, it also offers opportunities for advertisers to explore exclusive partnerships to cater to the potentially smaller but more engaged/premium audience. Advertisers will need to adapt their strategies to navigate these changes effectively and continue to engage with their target audience on these platforms,” she added.

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