Social networking giant has successfully monetized in the emerging markets of Asia through social games, however, it now needs to focus on pushing advertising to marketers in the region.
Audrey Heng, market analyst for emerging technology at IDC Asia-Pacific, pointed out that Facebook had successfully monetized its social games business in Asia's emerging markets. "Social games are easy to learn and quick to play that are able attract new gamers and new internet users in these developing markets," she noted.
However, social games are only one aspect of monetization and the social network will need to address advertisements, said Heng. "Both online and mobile advertising remain low particularly in developing markets where traditional marketing continues to dominate," she said.
While users in the developing markets of Asia tend to stay connected online using their mobile phones rather than the desktop, Heng noted that the mobile platform and services only started to develop in the recent two years.
Many Web sites were designed for desktop browsing and this was replicated for access on mobile phones, she said. "Only recently in the past year, more emphasis was made to design a separate mobile Web site that was user friendly and considered the mobile's smaller screen size and capabilities," Heng added.
Challenges monetizing mobile
This is why it is "not surprising" that Facebook is facing challenges in monetization of mobile, she noted.
However, the social networking giant has been "aggressively" investing in mobile monetization strategies, such as by acquiring mobile apps such as Instagram and introducing advertising solutions like sponsored stories and App Centre, Heng noted.
Tackling monetization on the mobile platform is not a problem specific to Facebook. China's top social network Renren also saw its user base shifting from desktop to mobile.
In its second quarter results announcement Tuesday, Renren chaiman and CEO Joseph Chen noted that its strategy remains focused on mobile opportunities and will experiment on different monetization models such as mobile games, mobile advertising and mobile group-buying.
Singapore-based dancer Lola Smith said she accesses Facebook mostly through her mobile phone and feels that Facebook is doing fine as long as its mobile interface that is simple and easy to use.
However, marketing executive Nicole Nilar, also based in Singapore, said she accesses Facebook mostly on the desktop. She added that the social network "tries" to leverage the mobile platform but she feels that it is annoying for her to download two different apps for Facebook and the dedicated messaging app Messenger.
Pushing advertising in Asia
According to Laura Grigerova, director of communications at social media monitoring company Socialbakers, Asia represents a "high potential market" for Facebook. "Asia is the second largest continent on Facebook and its developing markets, such as India, Indonesia and the Philippines are among the 10 countries with Facebook's largest user base," she said.
However, Heng said online and mobile advertising are still nascent in developing markets. Thus there is a need to content providers such as Google, Microsoft and Facebook, to push drive the industry, she said. "These players should take calculated risk in acquiring the right mix of products and solutions and continue to offer these solutions to enterprises and users," she said.
"Most importantly, they will need to create market opportunities and educate marketers and ad agencies on the products and benefits. This is particularly so for developing markets that are still trying to make sense of these technologies," she said.
Heng added that Facebook will need to do more face-to-face and phone sales support in the emerging markets of Asia where physical relationship building is still important. Currently, the marketing of its online or mobile ad offerings appears to be more "low key" and rely on word-of-mouth and on Facebook's own profile pages such as "Facebook Marketing" and "Facebook Ads", she said.
Facebook ads more locally relevant
A research note from Strand Consult noted that Facebook ads in India were mostly by Western companies targeting a Western audience. It pointed out that Indian mobile operator Tata Docomo which is India's most popular brand, when measured by Likes, did not advertise on Facebook.
However, Heng believes that Facebook advertising has caught on among both local and global advertisers. She noted that in 2008 most online advertising campaigns were driven by global or regional headquarters but this had changed in the recent years with more advertisers being aware of the importance of localizing ad content to be relevant to the local audience.
Facebook ads also appeal to small and midsize businesses which do not have marketing budgets. Heng noted that it is often local SMBs that advertise on Facebook.
Companies in emerging markets do use the platform to target local audiences. Grigerova added that Malaysia was ranked tenth on the list of most "socially devoted" countries. The ranking lists countries and brands with the best customer care through Facebook, she added.
However, users like Nilar said she rarely looks at Facebook ads as most of the ads targeted at her look like scams or do not have an authentic feel. For another user Smith, Facebook ads are usually locally relevant. The advertisements are "not too bad" and she clicks on them only when she is free, she added.