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Here's why Facebook's new office in Africa is vital to the company's future
(Robert Galbraith / Reuters and Wikimedia Commons)
Facebook is getting serious about making money in Africa.
The company just opened its very first office on the continent: An ad sales bureau in Johannesburg, South Africa.
Facebook also appointed a designated exec, Nunu Ntshingila-Njeke, chairwoman of the ad agency Ogilvy, to spearhead its Africa efforts.
Right now, more than 52% of Facebook's ad revenue comes from overseas.
About 80% of that international revenue comes from Asia-Pacific and Europe, meaning that about 20% comes from the "rest of the world," which includes South America and Africa.
The lower percentage from those regions comes in part because Facebook makes much less revenue per user in those parts of the world:
(Facebook)
The company can make $8.32 per user in the United States, $2.99 per user in Europe, and $1.18 in Asian Pacific, but only $0.80 per user in the rest of the world.
In its first quarter earnings, Facebook's said that it expected its future user growth to be concentrated in areas where its ARPU is currently lower — like Africa and South America.
About 120 million of Africa's more than 1 billion people currently use Facebook. That certainly does allow for a lot of potential user growth.
Hence, the new sales office, where Facebook reps will be working with businesses to find ways to make their ads more valuable (thus allowing it to charge more for them). More than 80% of African Facebook users connect from cellphones, so a big part of that is optimizing ads to be effective even on small screens with poor resolution and bad connectivity.
Unless Facebook can figure out how to do this, its new growth areas won't be as valuable as other parts of the world.
"We know that a one-size-fits-all approach won't work when it comes to building products and solutions that address diverse needs on the continent, which is why we are committed to creating solutions tailored to people, businesses and specifically for African markets," Facebook's director of the Middle East, Turkey, and Africa said in a statement about the news. "We will work more closely with businesses and agencies to understand the challenges, so that we can build solutions that help grow their business."
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