Facebook is opening a permanent office in Africa next month, as the company looks to tap into the potential of the continent as a market for user growth.
The population of North America is around 500 million, and 200 million of these people are on Facebook. In Africa, the population is over 1 billion people, but only 120 million people are on the social network. This represents a unique opportunity that Facebook is not ignoring, despite certain challenges in the region that are unlike any that the company has previously faced in developed markets.
The Facebook office in Africa, which will be located in an affluent suburb in Johannesburg, South Africa, will be an advertisement sales bureau that will have Nunu Ntshingila oversee the business of Facebook in the region. Ntshingila is the chairwoman of the Ogilvy & Mather advertising agency in South Africa.
Facebook will find it difficult to win over customers in certain regions of Africa due to fewer fixed and stable connections to the Internet, which means that in some areas, Facebook is not well known.
Mobile Internet is expanding, but data charges are prohibitive and smartphones are uncommon. In fact, most users have devices called feature phones, which are cheaper and less capable compared to smartphones. Feature phones are not able to run the full mobile app of Facebook.
"This is one of the places where our next billion users are coming from," said Facebook VP for Europe, the Middle East and Africa Nicola Mendelsohn. "It would be a massive missed opportunity. Africa matters."
To be able to attract more people to sign up with Facebook, the social network is teaming up with mobile phone companies for Internet.org, which will give customers free access to Facebook and several other websites. The initiative will address concerns of consumers regarding data charges and accessibility in certain areas in Africa.
Facebook will also soon be introducing Facebook Lite, which is a low-bandwidth version of the social network's mobile app, which will use data at only a fraction of the amount that the standard app uses.
The company is looking to further ramp up its advertising revenue, of which 52 percent comes from outside the United States. Around 80 percent of Facebook's international revenue is from the Asia-Pacific region and Europe.
The lower percentage of revenue coming from the other parts of the world, which include South America and Africa, is partly due to the fact Facebook makes less revenue per user in those regions. Facebook made $8.52 per user in the United States in the first quarter, while it only made $0.80 per user in the other parts of the world.
The new office in Africa will allow Facebook to work with businesses in finding ways to increase the value of their advertisements, which would help increase the social network's revenue in the region.