Tuesday 7 July 2015

Facebook Looks to Grow User Base and Ad Revenue From South African Office

Facebook’s ever-expanding reach turns to Africa with last week’s opening of a sales office in Johannesburg. The company plans to focus on Kenya, Nigeria and South Africa before branching out to 9 other countries across East, West and Southern Africa.

In the words of Nicola Mendelsohn, Facebook’s Vice President of Europe, the Middle East and Africa:

Facebook, Africa, South Africa, ad revenue, exploitation, emerging markets “We are inspired by the incredible ways people and businesses in Africa use Facebook to connect. This momentum in Africa comes on top of strong advertiser partnerships and excellent adoption of our products across all regions. In Q1 2015‚ 52% of our total ad revenue came from outside the US and Canada. But we’re just getting started.

“Africa is important to Facebook‚ and this office is a key part of our strategy to expand our investment and presence across EMEA. Facebook is already a central part of people’s lives in Africa‚ and with more than a billion people in Africa‚ we want to do more to help people and businesses connect.”

According to Reuters, Facebook’s first quarter revenue ($3.5 billion) was nearly all advertising ($3.3 billion), 70% of which was from mobile advertising. Facebook’s first-ever Africa office reflects the company’s growing push to capitalize on revenue beyond the United States and Canada; in the last year, international advertising revenue increased 36%.  

Currently, 120 million of Africa’s one billion residents are Facebook users, already an increase of 20 million as compared to 9 months ago. That there is a growing market is unquestionable, but considering half the continent's inhabitants are offline, tapping into it will take some effort.

As such, recent Facebook developments imply that the company is determined to succeed in this endeavor. Facebook now offers its services via Facebook Lite, a stripped down version of the platform, and Internet.org, a low-cost, controlled version of the internet. Nearly simultaneous with the opening of the South Africa office, Facebook unveiled a new, simpler logo, specifically designed to be mobile-friendly, the platform of choice in Africa and other emerging markets. The company has even begun to explore the possibility of utilizing drones to bring the internet to those who would otherwise go without.

In short, Facebook will not rest until it can claim the entire earth’s population as users. In light of this fact, it is rather disconcerting that the company altogether abandoned its pretense of altruism this week. Whereas Internet.org’s website decries the importance of giving “the unconnected majority of the world the power to connect,” Facebook’s newfound presence in Africa appears to be revenue-driven.

The Johannesburg office, headed by Nunu Ntshingila, is strictly composed of business and advertising sorts looking to grow Facebook’s all-important ad revenue. Facebook knows that African ads will not carry the price tag of North American ads and also hopes to better understand the African market in order to encourage well-known international brands to reach out to a new audience, according to Re/code. Yes, Facebook has arrived with a workable business plan.

It is an understatement to say that Facebook has altered the way users approach the internet. In the current climate of data breaches and cyber espionage, we would expect to be sharing less of ourselves on the internet, yet Facebook has convinced us to share more. Facebook’s presence in Africa will provide an entirely new set of users to recruit, data to collect and revenue to enjoy.

Facebook’s arrival in Africa is yet another example of the tech industry outpacing government. In this case, because African governments have been unable to adequately connect their populaces to the internet, they will find themselves overly reliant on Facebook in the years to come.

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