Geekonomics
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by Nicholas Aaron Khoo, Singapore
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Should Facebook setup office in Southeast Asia?
Sep 21, 2009 22:56Although this geek is currently in San Francisco for the Intel Developer Forum, I decided to share some quick thoughts in response to Bernard Leong's blog post on why and how Facebook should come to Asia. Bernard checked the Alexa rankings to support his point that Facebook has completely taken over Southeast Asia. This geek did a quick cross-check on Google Trends:
(Facebook--Blue. Friendster--Red)
I zoomed in particularly to Friendster's strongest market Philippines where it also has the most number of staff outside of the US. All this while in the Philippines, Friendster's numbers have been stronger than Facebook. But early this month, it seemed Friendster lost its last stronghold according to Google Trends. This probably explains why Friendster has been shopping itself around Asia.
Interestingly, if you look at the sales document, Friendster used 2008's numbers to justify its valuation. A savvy buyer would look at its 2009 numbers and shake their heads. However, an even more savvy buyer who wants to take the social-networking space should have a good look at Friendster's patents in the social-networking space. Friendster owns almost all the patents out there for social networks since it was one of the first players. A big player like Google could find these patents very useful.
So back to the question, should Facebook set up office here in Southeast Asia? If Friendster's story is anything to go by, setting up offices in Singapore and the Philippines, then the answer should be no, just as Gang Lu told Facebook to forget about going to China. But I guess it's an eventuality for Facebook even if it is focusing on a rapid online growth strategy, to avoid capital expenditure on highly localized efforts like local offices and staff. Look, even Google is here now.
The big question is where should it take root in this highly fragmented region? Of course, as a Singaporean, I'd love for Facebook to base its regional office here, since a lot of regional decisions are made here and there's good government support. But I think if one considers the maturity and size of the developer community and advertising scene, Malaysia might also make a good choice. At half the cost, too.
What do you think? Where should Facebook base itself in the region if, say, it sets up here within the next six months?
- Talkback
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bleongcw says...
Hi Nicholas,
Thanks for your thoughts on my original post. It is interesting that you use Google Trends to survey how Facebook has superceded Friendster in Philippines as another indicator.
On another note regarding the patents, the best strategy is that Facebook or any one of the big 6 social networks in Asia will have the capital to acquire them without the user base. If I am not wrong, Facebook and Friendster share similar investors (someone can correct me on this).
Will be good to have Facebook here in Singapore. I won't definitely try to send my CV and get a chance to work in this innovative company. :)
Sep 21, 2009 23:17
Hi Nicholas,
Thanks for your thoughts on my original post. It is interesting that you use Google Trends to survey how Facebook has superceded Friendster in Philippines as another indicator.
On another note regarding the patents, the best strategy is that Facebook or any one of the big 6 social networks in Asia will have the capital to acquire them without the user base. If I am not wrong, Facebook and Friendster share similar investors (someone can correct me on this).
Will be good to have Facebook here in Singapore. I won't definitely try to send my CV and get a chance to work in this innovative company. :)
Sep 21, 2009 23:17
bleongcw says...
It should be:
Will be good to have Facebook here in Singapore. I would definitely try to send my CV and get a chance to work in this innovative company. :)
Anyway, good day. :)
Sep 21, 2009 23:18
It should be:
Will be good to have Facebook here in Singapore. I would definitely try to send my CV and get a chance to work in this innovative company. :)
Anyway, good day. :)
Sep 21, 2009 23:18
Geekonomics says...
For Google trends, one should also note that Google has a deal with Friendster and not with Facebook. So if their numbers say Facebook has overtaken Friendster, it's likely true.
Yes, I was playing with the evil thought of a chinese social network like Tencent (QQ) acquiring Friendster for their patents :) They have the cash and could pose a huge headache for Facebook.
You are right Friendster has not really been able to unlock the true value of their patents yet, even though a few of them have been awarded, partly because they share a couple of similar investors with Facebook the last time I checked (before IDG invested in them)
All the best, I'm sure you'd make one of the best hires for Facebook here!
Sep 21, 2009 23:25
For Google trends, one should also note that Google has a deal with Friendster and not with Facebook. So if their numbers say Facebook has overtaken Friendster, it's likely true.
Yes, I was playing with the evil thought of a chinese social network like Tencent (QQ) acquiring Friendster for their patents :) They have the cash and could pose a huge headache for Facebook.
You are right Friendster has not really been able to unlock the true value of their patents yet, even though a few of them have been awarded, partly because they share a couple of similar investors with Facebook the last time I checked (before IDG invested in them)
All the best, I'm sure you'd make one of the best hires for Facebook here!
Sep 21, 2009 23:25
Geekonomics says...
Some interesting responses I'm getting:
@Craftsman72 : Singapore. But I'm not sure if it'll be successful (from my twitter account)
@Colin Ong : My heart says Singapore - but my mind says Vietnam .... its online community is very vibrant (from my Facebook account)
@Brennan Neoh : It would be sufficient to have Facebook's office in the US. In this day and age of the internet, we're always connected anyway. (from my Facebook account)
Sep 21, 2009 23:35
Some interesting responses I'm getting:
@Craftsman72 : Singapore. But I'm not sure if it'll be successful (from my twitter account)
@Colin Ong : My heart says Singapore - but my mind says Vietnam .... its online community is very vibrant (from my Facebook account)
@Brennan Neoh : It would be sufficient to have Facebook's office in the US. In this day and age of the internet, we're always connected anyway. (from my Facebook account)
Sep 21, 2009 23:35
beisr says...
Firstly, I agree with the view that having a local presence is not necessary to the success of Facebook or any other social network for that matter. User would prefer better customer service and product innovation, rather than a local presence.
That said, an investment into any market cannot be made by traffic numbers alone. Surely opening an office is a business decision, which needs to be made by financial reasoning.
As I've said in discussion with @bleongcw over twitter, the whole of SEA is a 100M-200M ad spend market. Extremely small. Facebook has local presence (sales office) in countries such as Australia, Sweden and Canada. All three are billion dollar ad spend markets.
Sep 21, 2009 23:56
Firstly, I agree with the view that having a local presence is not necessary to the success of Facebook or any other social network for that matter. User would prefer better customer service and product innovation, rather than a local presence.
That said, an investment into any market cannot be made by traffic numbers alone. Surely opening an office is a business decision, which needs to be made by financial reasoning.
As I've said in discussion with @bleongcw over twitter, the whole of SEA is a 100M-200M ad spend market. Extremely small. Facebook has local presence (sales office) in countries such as Australia, Sweden and Canada. All three are billion dollar ad spend markets.
Sep 21, 2009 23:56
thechannelc says...
I have to agree with beisr. I don't see a compelling reason to support Facebook's presence in SEA.
Sep 22, 2009 00:07
I have to agree with beisr. I don't see a compelling reason to support Facebook's presence in SEA.
Sep 22, 2009 00:07
Geekonomics says...
@beisr - Thanks for dropping by. You mean 100M-200M for digital only, right? Coz last I heard, it was a billion dollar ad spend market just for Singapore alone. The problem is that digital takes less than 20% of that still. The question for folks working in the digital space is how to convince brands to spend more on digital as opposed to traditional. I believe one of the key answers lie in cracking the measurement puzzle for social media.
Sep 22, 2009 00:12
@beisr - Thanks for dropping by. You mean 100M-200M for digital only, right? Coz last I heard, it was a billion dollar ad spend market just for Singapore alone. The problem is that digital takes less than 20% of that still. The question for folks working in the digital space is how to convince brands to spend more on digital as opposed to traditional. I believe one of the key answers lie in cracking the measurement puzzle for social media.
Sep 22, 2009 00:12
Geekonomics says...
@thechannelc - hey nice of you to drop by too and was nice to meet you in KL! We used to argue that Facebook needs to setup here in order to beat Friendster. Well, see where that argument went..
Sep 22, 2009 00:14
@thechannelc - hey nice of you to drop by too and was nice to meet you in KL! We used to argue that Facebook needs to setup here in order to beat Friendster. Well, see where that argument went..
Sep 22, 2009 00:14
thechannelc says...
Hey hey, it was great to be able to press the flesh with you in KL finally.
About your comment a little below this. I have to ask, is Facebook going to fill a void for folks to pay their utility bills online? If not, wouldn't it be counter productive for them to get in and threaten the livelihood of current service providers?
In Malaysia, the problem isn't a lack of online payment options but a lack of access to the internet and the ability to pay with a credit card. Micropayments services without the need of a credit card like what Nokia is embarking on makes a lot of sense. It also supports their mobile business but for Facebook to take this on would be a huge departure from their core business. And if it comes down to a shootout with Nokia, my money would be on Nokia. Partnering with Nokia would be a wiser move but all this doesn't really require a presence here so I'm still looking for that compelling reason.
And one more thing, if Facebook sells more ads, I'm leaving. Just like I left msn when ads started popping up all over the place.
Sep 22, 2009 14:06
Hey hey, it was great to be able to press the flesh with you in KL finally.
About your comment a little below this. I have to ask, is Facebook going to fill a void for folks to pay their utility bills online? If not, wouldn't it be counter productive for them to get in and threaten the livelihood of current service providers?
In Malaysia, the problem isn't a lack of online payment options but a lack of access to the internet and the ability to pay with a credit card. Micropayments services without the need of a credit card like what Nokia is embarking on makes a lot of sense. It also supports their mobile business but for Facebook to take this on would be a huge departure from their core business. And if it comes down to a shootout with Nokia, my money would be on Nokia. Partnering with Nokia would be a wiser move but all this doesn't really require a presence here so I'm still looking for that compelling reason.
And one more thing, if Facebook sells more ads, I'm leaving. Just like I left msn when ads started popping up all over the place.
Sep 22, 2009 14:06
Geekonomics says...
BTW I'm not suggesting that Facebook should setup here within the next 6 months. But the 6 months is to frame a context for discussion as things change pretty fast in digital and we won't know what happens in say 12-18 months. Come to think of it now, maybe that's why Facebook haven't setup here yet :p
Sep 22, 2009 00:19
BTW I'm not suggesting that Facebook should setup here within the next 6 months. But the 6 months is to frame a context for discussion as things change pretty fast in digital and we won't know what happens in say 12-18 months. Come to think of it now, maybe that's why Facebook haven't setup here yet :p
Sep 22, 2009 00:19
bleongcw says...
@beisr (or Ben Israel),
I have a counter argument to the online advertising argument. My point of contention is that Facebook should not try to focus on online advertising in Asia. It is reported in VentureBeat and Ben Joffe's analysis of QQ that revenues generated from microtransactions to online ad sales goes in the form 8:1, i.e. for every 1 dollar of online advertising, I get 8 dollars from the users using virtual gift sales, digital music sales and other forms of micro-transactions in the social networking platform.
Hence, that's a better argument to get Facebook to set up here and not look at just market size of online ads spending.
Sep 22, 2009 00:29
@beisr (or Ben Israel),
I have a counter argument to the online advertising argument. My point of contention is that Facebook should not try to focus on online advertising in Asia. It is reported in VentureBeat and Ben Joffe's analysis of QQ that revenues generated from microtransactions to online ad sales goes in the form 8:1, i.e. for every 1 dollar of online advertising, I get 8 dollars from the users using virtual gift sales, digital music sales and other forms of micro-transactions in the social networking platform.
Hence, that's a better argument to get Facebook to set up here and not look at just market size of online ads spending.
Sep 22, 2009 00:29
Geekonomics says...
Good point Bernard. Facebook should come here not just for sales, but to understand the local markets in this region and tie up with micropayment providers. This would be their best shot to go up against China social network giants.
Sep 22, 2009 00:39
Good point Bernard. Facebook should come here not just for sales, but to understand the local markets in this region and tie up with micropayment providers. This would be their best shot to go up against China social network giants.
Sep 22, 2009 00:39
Geekonomics says...
I believe Facebook can drive a lot more sales here if they provide a lot more methods for users to pay like through their local mobile phone bills, utility bills, eNETS, China Union Pay, buying point cards from 7eleven stores, bus stops, etc. Even just to receive cheques from local companies would make it a lot more compelling for local SMEs to try out Facebook ads.
Sep 22, 2009 00:44
I believe Facebook can drive a lot more sales here if they provide a lot more methods for users to pay like through their local mobile phone bills, utility bills, eNETS, China Union Pay, buying point cards from 7eleven stores, bus stops, etc. Even just to receive cheques from local companies would make it a lot more compelling for local SMEs to try out Facebook ads.
Sep 22, 2009 00:44
beisr says...
@geekonomics, yup 200M for online ad spend
Sep 22, 2009 11:51
@geekonomics, yup 200M for online ad spend
Sep 22, 2009 11:51
beisr says...
@bleongcw, @geekonomics
whether you call it advertising, sales or micropayments; at the end of the day Facebook needs to justify income to invest into any market.
I think the way to go for Facebook is hyperlocal. Letting that small dentist in Teluk Intan reach targeted consumers within his area. But to do that he DOES NOT need local representation.
Yes @geekonomics, I agree better payment avenues would work. But Facebook has already developed that platform. And again, local developers can use that even without Facebook having local offices.
Local businesses can tap into the Facebook ad network and monetization platform without going into a physical office and filling up a physical form. So why the need to spend the money renting a office space?
I would work on empowering local developers (and i mean developers as a collective global community) and using them as my local advocates.
Sep 22, 2009 11:51
@bleongcw, @geekonomics
whether you call it advertising, sales or micropayments; at the end of the day Facebook needs to justify income to invest into any market.
I think the way to go for Facebook is hyperlocal. Letting that small dentist in Teluk Intan reach targeted consumers within his area. But to do that he DOES NOT need local representation.
Yes @geekonomics, I agree better payment avenues would work. But Facebook has already developed that platform. And again, local developers can use that even without Facebook having local offices.
Local businesses can tap into the Facebook ad network and monetization platform without going into a physical office and filling up a physical form. So why the need to spend the money renting a office space?
I would work on empowering local developers (and i mean developers as a collective global community) and using them as my local advocates.
Sep 22, 2009 11:51
beisr says...
@geekonomics, back to the 200M question.
I think the way to increase the ad spend, is to make it accessible to more people. i.e. allowing people to purchase ads, without the need for the middle person. I'm pissin' off a lot of people here. But print newspaper survived on classifieds - which allowed ANYONE to call up the paper and place a 2cm x 4cm (e.g.) ad without spending more money on an ad firm
We need a model like that for online. Facebook already does this. But local sites, e.g. online sites for major news publications need to look at providing this as well.
Sep 22, 2009 11:55
@geekonomics, back to the 200M question.
I think the way to increase the ad spend, is to make it accessible to more people. i.e. allowing people to purchase ads, without the need for the middle person. I'm pissin' off a lot of people here. But print newspaper survived on classifieds - which allowed ANYONE to call up the paper and place a 2cm x 4cm (e.g.) ad without spending more money on an ad firm
We need a model like that for online. Facebook already does this. But local sites, e.g. online sites for major news publications need to look at providing this as well.
Sep 22, 2009 11:55
Geekonomics says...
@thechannelc - I mean to pay for your online Facebook purchases through your utility bills like how they used to do it in China as an example. But hey, paying for your utility bills on Facebook may work too :)
One of the compelling reasons for going hyperlocal would be mobile tieups with mobile network operators (MNOs). Nokia Pay would work too.
On ads, enabling more micropayment channels can be for more than just ads, as @bleongcw has already pointed out that in China, a lot of the revenues don't come from ads, but from micropayments like sending gifts to friends, etc.
Sep 22, 2009 21:29
@thechannelc - I mean to pay for your online Facebook purchases through your utility bills like how they used to do it in China as an example. But hey, paying for your utility bills on Facebook may work too :)
One of the compelling reasons for going hyperlocal would be mobile tieups with mobile network operators (MNOs). Nokia Pay would work too.
On ads, enabling more micropayment channels can be for more than just ads, as @bleongcw has already pointed out that in China, a lot of the revenues don't come from ads, but from micropayments like sending gifts to friends, etc.
Sep 22, 2009 21:29
Geekonomics says...
@beisr - I think we actually agree on the same point that Facebook needs to go hyperlocal, but that doesn't necessary mean that they need to setup an office here, yet.
For better payment avenues, I'm talking about even say paying for your online facebook purchases, whether directly to Facebook or to the 3rd party developers, through various channels including say, at your local 7elven or SingPost where you pay for everything else. Both @bleongcw and I have observed that this seems to be the one thing that the Chinese social networks are doing way better and the revenue numbers show.
I hear you on the need for local players to sell ads direct to users/customers online. I suspect one can actually burn in hell to suggest cutting out all the sales agent and planners but hey, Google and Facebook have done it :p May the force be with you! This can actually make a pretty good business model if it's provided by a sales agent for the newspapers. Something akin to Facebook's developer strategy, newspapers can empower their resellers/agents to provide this service and help promote it :)
Sep 22, 2009 21:48
@beisr - I think we actually agree on the same point that Facebook needs to go hyperlocal, but that doesn't necessary mean that they need to setup an office here, yet.
For better payment avenues, I'm talking about even say paying for your online facebook purchases, whether directly to Facebook or to the 3rd party developers, through various channels including say, at your local 7elven or SingPost where you pay for everything else. Both @bleongcw and I have observed that this seems to be the one thing that the Chinese social networks are doing way better and the revenue numbers show.
I hear you on the need for local players to sell ads direct to users/customers online. I suspect one can actually burn in hell to suggest cutting out all the sales agent and planners but hey, Google and Facebook have done it :p May the force be with you! This can actually make a pretty good business model if it's provided by a sales agent for the newspapers. Something akin to Facebook's developer strategy, newspapers can empower their resellers/agents to provide this service and help promote it :)
Sep 22, 2009 21:48
Geekonomics says...
I was just hanging out with some folks from the Virtual Goods Conference in San Jose and realised that Facebook does have a sales team to engage brands in the US. In this part of the world, they have actually appointed an exclusive media agency to represent their sales too. Hmm...
Sep 24, 2009 16:26
I was just hanging out with some folks from the Virtual Goods Conference in San Jose and realised that Facebook does have a sales team to engage brands in the US. In this part of the world, they have actually appointed an exclusive media agency to represent their sales too. Hmm...
Sep 24, 2009 16:26
Geekonomics says...
Friendster gets awarded yet another patent, maybe Facebook should buy them over www.geekonomics.us...
Oct 06, 2009 15:42
Friendster gets awarded yet another patent, maybe Facebook should buy them over www.geekonomics.us...
Oct 06, 2009 15:42
techguy says...
@Geek: So anyone who infringes on any of these patents means lawsuits and is equivalent to more money for Friendster. Right Nick? :)
Oct 06, 2009 20:56
@Geek: So anyone who infringes on any of these patents means lawsuits and is equivalent to more money for Friendster. Right Nick? :)
Oct 06, 2009 20:56
Geekonomics says...
@techguy - supposedly, yes. But it's not so simple because of long drawn and expensive lawsuits which Friendster may not even win. Furthermore, some of Friendster's shareholders also own other social networks like Facebook and Myspace so they may not even want Friendster to start any lawsuits which is why it's best a giant buy Friendster out for these patents to realise their value.
Oct 07, 2009 04:22
@techguy - supposedly, yes. But it's not so simple because of long drawn and expensive lawsuits which Friendster may not even win. Furthermore, some of Friendster's shareholders also own other social networks like Facebook and Myspace so they may not even want Friendster to start any lawsuits which is why it's best a giant buy Friendster out for these patents to realise their value.
Oct 07, 2009 04:22
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About Nicholas Aaron Khoo
Nicknamed "Gadget Boy" by friends at age 18 because he used to scribble Grafitti on a PalmPilot faster than most would type, Nicholas Aaron Khoo is web developer turned technopreneur and Singapore tech blogger who also pretends to do strategic advisory for tech startups and 'un'Fortune 500s (when he's not pretending to be the gadget-loaded Batman). A digital nomad, his tech interests range from gadgets, games, tech trends, social media, security, and just about anything that runs on 1s and 0s. See his industry affiliations here.
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