Facebook Is Expanding With First African Office In Johannesburg
The world's largest social network, U.S.-based Facebook is expanding with plans in July to open an office in Johannesburg — its first in Africa — to boost eroding international advertising revenue.
Nunu Ntshingila, 51, will be overseeing Facebook's business in the region. She recently resigned as chairman of WPP's Ogilvy & Mather agency in South Africa, according to MarkLives.
Advertising generates more than 90 percent of Facebook revenue, AdvertisingAge reports.
International revenue has always been important to Facebook. More than half the company's advertising revenue comes from outside the U.S. and Canada, but that percentage has been dwindling, Redcode reports. Facebook's ad revenue represented 52 percent of earnings in the first quarter of 2015, down from 56 percent in the first quarter of 2013.
Relying more and more on expensive ads in North America versus other parts of the world, Facebook could use a new office in Africa to help expand on its international business, according to Redcode.
Facebook has been working with big brands such as Virgin Mobile in South Africa and Coca-Cola in Kenya to create advertising tailored towards their audiences, CNBC reports.
Facebook also wants to work with small and medium-sized businesses credited with driving huge economic growth in Africa. Small business owners find it easy to set up Facebook pages for their businesses because they are already using the service personally, CNBC reports.
For example online restaurant guide Eat Out Kenya marketed its business entirely on Facebook and amassed 90,000 "likes" and 13 employees.
FunKids in Kenya makes furniture for children and built its business on Facebook. Owner Ciiru Waweru started with posts asking friends to share. When the posts resulted in sales, Ciiru started advertising on Facebook and has now expanded to export markets.
"We are inspired by the incredible ways people and businesses in Africa use Facebook to connect," said Nicola Mendelsohn, Facebook vice president for Europe, Middle East and Africa, in a CNBC interview. "This momentum in Africa comes on top of strong advertiser partnerships and excellent adoption of our products across all regions."
Facebook hopes to learn more about what kinds of advertising actually work in Africa, according to Redcode. Most of the continent is still without Internet access and those who have it get there via mobile. Facebook has 1.4 billion users worldwide, with 120 million from Africa, up from 100 million in Africa since September 2014. That's 20-percent growth in nine months — about three times the growth rate of Facebook's total user base.
Internet.org is one of the best-known known ways Facebook tries to reach African newcomers to the Internet. It offers free airtime for Internet services, including Facebook, in 14 countries — six in Africa — where Internet is not widely available. Internet.org is offered in Zambia, Tanzania, Ghana, Kenya, Malawi, and most recently, Senegal, ITNewsAfrica reported.
Facebook partnered with mobile-phone companies to offer Internet.org, winning over consumers concerned about expensive data or poor signals, according to AdvertisingAge. And it will soon introduce Facebook Lite, a low-bandwidth app that uses a fraction of the data of standard applications.
For the world's largest social network, Africa holds enormous potential over other emerging markets. In Russia for example, Facebook lags behind local sites such as Odnoklassniki and VKontakte. Facebook has been blocked by China since 2009. As sales growth slows down, Facebook is working to broaden the reach of its advertisements, according to AdvertisingAge.
Facebook will have to be patient to succeed in Africa, which is notoriously hard for outsiders, said Chris Gilmour, an analyst at Absa Asset Management in Johannesburg.
"Facebook has the capacity and skills and they will succeed, it'll just take longer," Gilmour said in an AdvertisingAge interview. "Africa is a fantastic prospect but it is a long-term prospect."
The new Johannesburg Facebook office will not include Internet.org employees at first, according to Redcode. Facebook plans to hire 25 employees there, all devoted to advertising and business. That number is expected to increase.