Facebook to open Johannesburg office to boost users in Africa

JOHANNESBURG: North America has a population of about 500 million, and two-fifths of them are on Facebook. In Africa, with more than 1 billion people, just 120 million use the social network.
That鈥檚 an opportunity Facebook can鈥檛 ignore, though the region poses challenges unlike those the company has faced in more developed markets.
To spur growth on the continent, Facebook next month is opening an office in an affluent suburb of Johannesburg.
The sales office will be headed by Nunu Ntshingila, 51, chairman of WPP Plc鈥檚 Ogilvy & Mather agency in South Africa, who will oversee Facebook鈥檚 business in the region.
The company will find that winning customers in Nigeria or Kenya is tougher than in Nebraska or Kansas.
Africa has few fixed Internet connections, so Facebook鈥檚 original website isn鈥檛 well known. And while mobile Internet is booming, data is expensive and smartphones are rare, with most people using cheaper, less capable devices called feature phones that can鈥檛 run Facebook鈥檚 full mobile application.
鈥淭his is one of the places where our next billion users are coming from,鈥� said Nicola Mendelsohn, Facebook鈥檚 vice president for Europe, the Middle East and Africa. 鈥淚t would be a massive missed opportunity. Africa matters.鈥�
To win over consumers concerned about the cost of data or who live in areas with bad signals, Facebook is partnering with mobile-phone companies to offer what it calls Internet.org, which gives people free airtime when they access Facebook and a few dozen other selected websites. And it will soon introduce Facebook Lite, a low-bandwidth app that uses just a fraction of the data of the standard application.
鈥淭here鈥檚 no point sending a video to someone with a 2G connection,鈥� Mendelsohn said in an interview. 鈥淵ou really want to make sure that you鈥檙e delivering the right messages to right devices in the right way.鈥�
For the world鈥檚 largest social network, Africa holds vast potential. Facebook has been blocked by China鈥檚 censors since 2009, and in Russia it trails local sites such as VKontakte and Odnoklassniki.
As sales growth slows, Facebook is working to broaden the reach of its advertisements, which generate more than 90 percent of its revenue.
A further challenge in Africa is the cost of smartphones, which are rarely subsidized with long contracts as they are in Europe and the US MTN Group and Vodacom Group, with a total of more than 225 million subscribers on the continent, are trying to change that by selling house-brand smartphones for less than $50.
Chris Gilmour, an analyst at Absa Asset Management in Johannesburg, said Facebook must be patient to succeed in Africa. While the potential is huge, the region is notoriously difficult for outsiders to crack.
鈥淔acebook has the capacity and skills and they will succeed, it鈥檒l just take longer,鈥� Gilmour said.
鈥淎frica is a fantastic prospect but it is a long-term prospect.鈥�
The shares have gained about 11 percent this year, valuing the company at $243 billion.
One way to keep data charges low is with what Facebook calls 鈥渕issed call ads.鈥� Advertisers place links in Facebook newsfeeds.
When those are clicked, the advertiser rings the user with a promotion 鈥� and foots the bill for the call.
鈥淲e were conscious of airtime, which is the problem of most of the population in Africa,鈥� said Gil Sperling, co- founder of Popimedia, a Facebook partner in Johannesburg that uses the technology. 鈥淵ou need a product that鈥檚 actually useful to them on a feature phone.鈥�
Ntshingila will take over the new Johannesburg鈥檚 office in September.
She joined Ogilvy & Mather in 1999 and was the agency鈥檚 South Africa CEO for seven years before becoming chairman in 2012.
Her mission is to persuade businesses and advertising agencies to promote themselves through Facebook.
鈥淚ncreasingly marketers are focused on what is the next frontier,鈥� said Carolyn Everson, Facebook鈥檚 vice president of global marketing.
鈥淭here鈥檚 going to be an incredible opportunity to develop a consumer base in Africa.鈥�