Banned since 2009 in China, Facebook Inc. has found a new way to cash in on the world’s most populous country.
The No. 1 social network is luring mainland telecom, e-commerce and travel merchants to advertise on the platform that boasts 1.23 billion users worldwide.
“We only have a small user base in China. What we now focus more on is helping out local companies build their brands and businesses internationally,” Jayne Leung, head of Greater China at Facebook, said in an interview in Hong Kong. “We have a team in Hong Kong that will reach out to mainland companies looking for overseas forays.”
Leung cited telecommunication equipment makers such as Huawei Technologies Co. Ltd. and ZTE Corp. (00763.HK, 000063.CN) as one of its three target industries. Also on the list are e-commerce and travel services firms that source much of their income from international consumers. She declined to disclose the company’s financial breakdown for the China region.
Since June last year, Facebook has teamed up with reseller Pzoom, China’s biggest search-engine-marketing company, to help companies buy ads on Facebook, which can be seen outside the mainland. The tie-up with the Beijing-based partner allows Facebook to gain some advertising dollars in a country where it is perceived as politically sensitive and prohibited.
Nasdaq-listed Facebook draws the bulk of its revenue from advertising. Mobile advertising has gained weight quickly, making up 53 percent of the company’s advertising revenue for the fourth quarter last year, up from about 23 percent over the same period in 2012.
The company’s growing reliance on mobile advertising mirrors its adaptation to changing user behavior.
“A year or two ago we started the mobile strategy, as part of which we infused our mobile development team into all of the product development teams. Mobile then came first in everything we do. Whenever we present to Mark Zuckerberg something new, we must demonstrate with a mobile device instead of a desktop,” Leung said, referring to Facebook’s co-founder and chief executive officer.
Facebook is going mobile to stay competitive, particularly in regions with high smartphone penetration. According to company data, 3.7 million, or 86 percent, of its 4.3 million monthly active users (MAUs) in Hong Kong access its website through their mobile devices. In Taiwan, the rate among its 15 million MAUs is 80 percent.
Apart from photos, Facebook is testing video ads in the United States in preparation for a global roll-out to challenge the TV advertising market. The platform’s targeting capabilities allow advertisers to home in on specific audiences by filtering out from options such as location, gender, age, likes and interests, workplace and education.
Investors have been concerned that teenage users may be drifting away from Facebook in favor of alternative online services such as Snapchat and WhatsApp, which the company recently acquired for US$19 billion. In August 2012, Facebook took over photo-sharing service Instagram for US$715 million in cash and stock.
“Multi apps is another strategy of ours going forward,” Leung said. “We recognize that in the digital era teenagers are unlikely to stick to just one application but use a variety of them.”
The company has no plans to capitalize on WhatsApp’s 450 million users at the moment.
“We are not in a hurry to work on any monetization plan. As in the case of our Instagram acquisition, our philosophy is to first build up the network and strengthen engagement. Monetization will only be determined later,” she said.
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