Face­book incog­nito in China

Part­ner’s ad sales gen­er­ate big cash

Arkansas Democrat-Gazette - - BUSINESS & FARM - PAUL MOZUR AND LIN QIQING

SHEN­ZHEN, China — Face­book’s apps and web­sites have been blocked in China for years. The com­pany has no of­fice in the coun­try that sup­ports its so­cial net­work­ing ser­vices. And its at­tempts to open a sub­sidiary have been quickly snuffed out.

But in the south­ern Chi­nese city of Shen­zhen, Face­book has man­aged to qui­etly build a pres­ence with the help of a lo­cal part­ner.

In Shen­zhen’s Fu­tian dis­trict, on the ninth floor of a con­crete tower, there is an open-air sales floor that works as a sort of cor­po­rate em­bassy for the so­cial net­work. The 5,000-square­foot space is run by the lo­cal part­ner, called Meet So­cial, but has been de­signed with Face­book’s guid­ance. It func­tions as an ex­pe­ri­ence cen­ter for the Sil­i­con Val­ley gi­ant — the only one of its type in the world.

Its small size be­lies a cru­cial, and of­ten over­looked, part of Face­book’s busi­ness. The cen­ter — which looks as if it fell out of Sil­i­con Val­ley, with sten­ciled paint­ings of chat boxes on the walls, a lit-up heart icon and a pris­tine bil­liards ta­ble — hosts prospec­tive clients and cu­ri­ous cus­tomers who wish

to ad­ver­tise on Face­book to reach the net­work’s 2.3 bil­lion users, most of whom live out­side China.

The de­sire by Chi­nese com­pa­nies and other en­ti­ties to get in front of peo­ple in­ter­na­tion­ally has turned China into one of Face­book’s largest sources of ad­ver­tis­ing rev­enue, even though the so­cial net­work it­self is not avail­able in the coun­try. Charles Shen, chief ex­ec­u­tive of Meet So­cial, said his com­pany an­tic­i­pated do­ing $1 bil­lion to $2 bil­lion in ad sales on Face­book and In­sta­gram this year. Each day, he added, Meet So­cial’s soft­ware puts up about 20,000 Chi­nese ads on Face­book.

In to­tal, Face­book’s rev­enue from Chi­nese-based ad­ver­tis­ers reached an es­ti­mated $5 bil­lion in 2018, or about 10 per­cent of its to­tal sales, ac­cord­ing to Piv­otal Re­search Group. That would be enough to rank Face­book some­where around the sev­enth-largest listed In­ter­net com­pany in China.

The ex­pe­ri­ence cen­ter is also a strange tes­ta­ment to the bor­ders that China has drawn across the In­ter­net. With its “Great Fire­wall” of In­ter­net fil­ters that China used to block Face­book in 2009, the Chi­nese govern­ment has cut the dig­i­tal ab­strac­tions of a global in­for­ma­tion net­work along geo­graphic lines. That has ne­ces­si­tated Face­book’s cre­ation of the cen­ter, where Chi­nese who have hardly any ex­pe­ri­ence with the so­cial net­work can learn about it and fig­ure out how to ad­ver­tise on it.

“The ex­pe­ri­ence cen­ter is for invit­ing po­ten­tial clients to see how Face­book ads work,” Shen said in an in­ter­view, adding that Face­book pro­vided much of the ma­te­ri­als in the of­fice, while his com­pany staffed it.

Meet So­cial, an ad­ver­tis­ing agency, worked with Face­book to open the cen­ter in the spring. While many Chi­nese have not used Face­book, that does not pre­vent them from know­ing about it, Shen said. He said his com­pany got plenty of in­bound in­ter­est from clients, even though it does lit­tle ad­ver­tis­ing about it­self.

“Most of the time, it’s them who come to us,” Shen said. He said his firm had set up a sys­tem so that Chi­nese clients didn’t have to leap the Great Fire­wall to reg­is­ter an ad­ver­tis­ing ac­count on Face­book. To do so, it uses a ser­vice pro­vided by a state-run tele­com com­pany to legally jump the In­ter­net fil­ters.

Face­book em­ploy­ees come to the cen­ter to give talks, Shen said. Since many Chi­nese can­not ac­cess face­book.com — even if they type it into their phones while in the ex­pe­ri­ence cen­ter, the site re­mains blocked — Meet So­cial pro­vides videos on gi­ant phone-shaped screens so peo­ple can get a bet­ter sense of Face­book’s ad of­fer­ings. Ex­am­ples of paid posts from Chi­nese brands are framed on the walls. Train­ing in mar­ket­ing and ad­ver­tis­ing strate­gies on Face­book’s plat­forms is also of­fered.

Jef­fery Hong, a sales di­rec­tor at a wig com­pany, which he de­clined to name, said he first thought of ad­ver­tis­ing on Face­book when he went to a sa­lon run by Meet So­cial in Shen­zhen in 2015.

Hong pre­vi­ously had mostly done over­seas sales through Alibaba, China’s big­gest ecom­merce site. In the years that fol­lowed, he at­tended train­ing ses­sions and talks by Face­book em­ploy­ees, in­clud­ing at the ex­pe­ri­ence cen­ter, on an ar­ray of sub­jects in­clud­ing how to of­fer a good user ex­pe­ri­ence and how to make ads.

Now Face­book ads at­tract buy­ers to his com­pany’s site that ac­count for about 10 per­cent of sales. While the com­pany man­ages its own Face­book site, it also al­lows Meet So­cial to take over the page and to trou­bleshoot dif­fi­cul­ties and keep up with ad trends.

“We want to es­tab­lish our brand, let more and more peo­ple know about us,” Hong said. “It’s pretty ef­fec­tive to put ads on Face­book; the site has a lot of traf­fic. Many peo­ple in the West use Face­book.”

Meet So­cial is one of seven of­fi­cial Face­book ad­ver­tis­ing re­sellers in China. Oth­ers serve much the same role. Of­ten their pres­ence is wel­come be­cause even for tech so­phis­ti­cates, do­ing busi­ness across the Great Fire­wall can be tricky.

Ben Liu, 35, an en­tre­pre­neur and a for­mer Alibaba em­ployee, said the Face­book page he had set up for his elec­tric skate­board com­pany, Maxfind, was blocked in 2017 by the so­cial net­work. He sus­pects that his em­ploy­ees signed in and out of the com­pany’s Face­book ac­count from per­sonal ac­counts, and all of that ac­tiv­ity caused the com­pany’s page to be flagged as sus­pi­cious.

Now Liu uses a Face­book agent sim­i­lar to Meet So­cial. Maxfind spends around $100 to $200 a day on Face­book and has con­sid­ered shelling out more for a U.S. ad agency to spiff up its brand build­ing, he said.

Ad­ver­tis­ing on Face­book has also shown him how much of a cul­tural gap can ex­ist be­tween China and the rest of the world.

One of Maxfind’s Face­book ads fell afoul of copy­right claims for mu­sic it used in the ad, he said. And Liu said he was sur­prised when an­other of his ads on the so­cial net­work was blocked by the com­pany for be­ing dis­crim­i­na­tory. The ad had used the term “fat.”

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