Facebook plans to spur Africa growth
Cheap phones, new app target customers
North America has a population of about 500 million, and two-fifths of them are on Facebook. In Africa, with more than 1 billion people, just 120 million use the social network. That’s an opportunity Facebook Inc. can’t ignore, though the region poses challenges unlike those the company has faced in more developed markets.
To spur growth on the continent, Facebook next month is opening an office in an affluent suburb of Johannesburg. The office will be headed by Nunu Ntshingila, 51, chairman of WPP PLC’s Ogilvy & Mather agency in South Africa, who will oversee Facebook’s business in the region.
The company will find that winning customers in Nigeria or Kenya is tougher than in Nebraska or Kansas. Africa has few fixed Internet connections, so Facebook’s original website isn’ t well known. And while mobile Internet is booming, data is expensive and smartphones are rare, with most people using cheaper — and less capable — devices called feature phones that can’t run Facebook’s full mobile application.
“This is one of the places where our next billion users are coming from,” said Nicola Mendelsohn, Facebook’s vicepresident for Europe, the Middle East and Africa. “It would be a massive missed opportunity. Africa matters.”
To win customers concerned about the cost of data or who live in areas with lousy signals, the company is partnering with mobile-phone companies to offer what it calls Internet.org, which gives people free airtime when they access Facebook and a few dozen other selected websites. And it will soon introduce Facebook Lite, a low-bandwidth app that uses just a fraction of the data of the standard application.
“There’s no point sending a video to someone with a 2G connection,” Mendelsohn said in an interview. “You really want to make sure that you’re delivering the right messages to right devices in the right way.”
For the world’s largest social network, Africa holds vast potential. Facebook has been blocked by China’s censors since 2009, and in Russia, it trails local sites such as V Kontakte and Odnoklassniki. As sales growth slows, Facebook is working to broaden the reach of its advertisements, which generate more than 90 per cent of its revenue.
A further challenge in Africa is the cost of smartphones, which are rarely subsidized with long contracts as they are in Europe, Canada and the U.S. MTN Group Ltd. and Vodacom Group Ltd., with a total of more than 225 million subscribers on the continent, are trying to change that by selling house-brand smartphones for less than US$50.
Chris Gilmour, an analyst at Absa Asset Management Ltd. in Johannesburg, said Facebook will need to be patient if it hopes to succeed in Africa. While the potential is huge, the region is notoriously difficult for outsiders to crack.
“Facebook has the capacity and skills and they will succeed, it’ ll just take longer,” Gilmour said. “Africa is a fantastic prospect but it is a longterm prospect.”
One way to keep data charges low is with what Facebook calls “missed call ads.” Advertisers place links in Facebook newsfeeds. When those are clicked, the advertiser rings the user with a promotion — and foots the bill for the call.
“We were conscious of airtime, which is the problem of most of the population in Africa,” said Gil Sperling, cofounder of Popimedia, a Facebook partner in Johannesburg that uses the technology. “You need a product that’s actually useful to them on a feature phone.”