Facebook's emerging market tales: Brazil promising, Russia tough to crack

Localizing is key when expanding into emerging markets. The problem is that the local rivals can be clones of Facebook and match features.

Facebook's international expansion worked well in Brazil and has struggled in Russia as it aims to tackle emerging markets for growth.

Speaking at a Morgan Stanley investor conference on Wednesday, Facebook CFO David Ebersman said the company's expansion into Brazil has been promising, but Russia has been harder to crack.

Ebersman said:

What we've learned in markets like Brazil where we've been extremely successful is first of all the most important thing is that the product is good, that the features of the product enable people to have the experience that they want to have, and for it to be simple and easy for them to use and get the outcomes that they are after. So the product is, of course, the most important thing in winning out in a country like Brazil or elsewhere.

The second thing that is interesting is the importance that comes from our ability to bring the rest of the world to the problem. So one of the things that makes Facebook attractive to a user in a country like Brazil who is thinking about using it is that you can connect with the people that you know and are friends with and are interested in around the world, because Facebook brings that global footprint in a way that most of our competitors aren't able to do. And I think that has been extremely important in a number of markets.

Then the third thing that we do is we do spend a fair amount of time trying to figure out how we market the product, how we communicate about the product, how we create the conditions for the kind of viral growth that really makes Facebook successful.

For what it's worth, Facebook knocked off Google's Orkut in Brazil. In many respects, Facebook was competing with Google, which had different features and approach than its social rival. 

Russia has been a different story. Ebersman said:

Russia has been, relative to Brazil, a more challenging market for us, where we've come in. And the entrenched player in Russia, who has a product that looks a lot like Facebook with some different features -- and it's a good product and it has done well -- has been harder for us to usurp and compete with.

But we keep working on it, and we are growing in Russia, and we have more users there now than we did a year ago. And we will keep trying to figure out what the right set of actions and tactics are to enable us to really try and tip that market and become the leading player there over time.

In Russia, Facebook is competing with vKontakte, which is a well-funded Facebook-clone in many respects, as well as Odnoklassniki.

This chart indicates why Facebook needs some international mojo. Europe growth is so-so and you can mostly blame Russia and VK.com. U.S. users may have hit the saturation point. Rest of the world and emerging markets are Facebook's best growth engine.


And this screenshot highlights why Russia is so difficult for Facebook. The company is practically competing with itself.