Facebook Readies For Take-Off In Japan
A recently launched sales office in Hong Kong may have stirred speculation about Facebook’s plans for mainland China, but the market to watch in 2011 may be Japan – another large digital market where Facebook has yet to make a serious impression.
Blake Chandlee, Facebook’s VP and commercial director for Asia-Pacific, Latin America and Emerging Markets, says the site is starting to reap the rewards of a special office set up in Tokyo last September to accelerate user adoption.
As a consequence, the number of exchanges taking place between Facebook users within Japan has started to outpace connections with other countries – a signal observed in other markets that Facebook penetration is about to take off.
“We saw that six months ago in Korea, we’re in that steep curve right now in Korea,” Chandlee adds, speaking in an interview with Asia Media Journal. “We’re starting to see early indicators of that in Japan, which is great. Japan is a very big market which we really have been working on.”
Facebook is also making huge strides in key markets such as Brazil and India, where it is in the process of toppling the incumbent, Google-owned Orkut. Having surpassed Orkut in India, Facebook is poised to repeat the feat in Brazil within four months, Chandlee says.
However it is the prospect of an increased profile in Japan (arguably a tougher market to crack due to a more guarded social networking culture) that is generating the most excitement, he adds.
Facebook has enjoyed phenomenal organic growth to amass an audience base of over 500 million users worldwide, often based on word-of-mouth referrals alone. In markets where adoption is less enthusiastic, the company sometimes opens special growth offices, working with local firms in the entertainment, software and telecommunications fields to help foster greater interest in what Facebook has to offer.
The ploy succeeded in Germany and Spain – Western Europe was the main focus for international growth up to 2009 – and now appears to be working in Japan, the only growth office so far in Asia.
Facebook also pursued a global first in Japan – tweaks to the user experience, such as adding blood-type to a user’s profile, a notable diversion for a company that leaves it to third-party developers to create locally relevant tools and services.
Despite success in Japan however, Chandlee feels the move to localize will be the exception rather than the rule.
“It’s a little bit against our DNA,” he explains. “We like to create global platforms, and let other people build up on that. I think we as a company realize there are some local nuances we at least need to be aware of, but we’re not about to go out and build lots of different experiences around the world.”
Facebook still faces growth challenges in Japan. The country has a well-established social media culture of blogging and social networks, but one in which users prefer to share non-personal information, running contrary to Facebook’s central ethos of extending real-world identities online.
Nonetheless, Chandlee says Facebook knows Japan well, and is confident the company is on the verge of a steep growth trajectory. “We don’t look at competitors and make decisions on that stuff,” he says. “At the end of the day, we believe Facebook touches a different need.”
Greater China opportunity
Chandlee has little to say on mainland China beyond noting that Mark Zuckerberg’s recent visit, in which he met with domestic digital leaders Baidu, Sina and Taobao, was a personal one.
A sales office in Hong Kong could help Facebook tap mainland advertisers as well, though the focus will be on Hong Kong and Taiwan, a sizable digital ad market more than twice the size of Hong Kong according to estimates of net advertising from Media Partners Asia, publisher of Asia Media Journal.
Chandlee also downplays the possibility of Facebook partnering with another player to further its reach. Facebook’s distinctive architecture makes plugging a large company into Facebook, or vice versa impossible, he says.
Such factors also count against a possible purchase of microblogging giant Twitter, named as an acquisition target in a recent Wall Street Journal article. Acquisitions, such as the purchase of a two-person engineering business in Malaysia last year, thought to be Facebook’s first employees based in Asia, are geared toward picking up talent rather than companies, Chandlee explains.
Elsewhere in Asia-Pacific, Chandlee reaffirms Facebook’s plans to build on its existing network, comprising sales offices in Australia, Hong Kong and Singapore, as well as an operational center in India to handle Asia-Pacific user queries, without providing further details.
The company will continue to make most of its money from advertising for the foreseeable future, though it is keen to develop alternative revenue streams, Chandlee points out. Today these take the form of a revenue share, reportedly 30%, with developers on consumer purchases using Facebook’s virtual currency, Facebook Credits.
Places and Deals, among Facebook’s first forays into mobile-specific services, respectively enabling users to announce their location and for retailers to provide store-specific special offers, will start appearing in Asian markets this quarter.
The rollout has started with Places, which is already available in Japan and recently went live in Hong Kong and Singapore. Deals, which has already launched in North America and Western Europe, should follow soon.
There is currently no charge to use Deals, though Facebook could introduce a parallel premium paid-for service in the future.
Meanwhile, to assist the sales pitch to brands, Facebook has also started working with some major advertisers in the region (about five in Australia and five working with its office in Singapore) on bespoke research investigating how Facebook can drive different brand attributes as well as drive offline sales.
Facebook carries out similar studies with Nielsen in Europe and North America, though these use household consumption information and electronic point-of-sale data that are often unavailable in Asian markets, forcing a fresh approach here.
“We are building different types of measurement functionality for Asia,” Chandlee remarks. “We’re doing a little bit with Nielsen, we’re doing some of it outside the Nielsen relationship as well, but core to where we think the world is going is definitely research.”