China is the second largest advertising market for Facebook, according to a study. Although the social network is censored, companies in the country see a great opportunity to export their activities.
Far from the eyes, near the wallet. Since 2009, the biggest social networks are banned from China. And yet, Facebook would achieve about 10% of its revenue, according to a study by Pivotal Research, taken over by the US media AdAge. Indeed, analysts estimate that Chinese advertisers should spend $ 5 billion (4.2 billion euros) on the year 2018. In comparison, Facebook has achieved more than 40 billion dollars in figures business last year. China is in second place, behind the US advertisers and their 20 billion dollars disbursed on the platform in 2017. “Our hypothesis is that one of the main sources of revenue is certainly China, a country where neither Facebook, Twitter, nor most other global network owners have users,” says Brian Wieser, one of the analysts who conducted the study.
To obtain these results, the researchers looked at the billing addresses of social network clients. These were available in the latest quarterly results published in April. Of the estimated 5 billion, analysts estimate that between 1 and 1.5 billion dollars come from Chinese mobile application developers. “Chinese companies want to reach customers abroad, be they businesses or consumers,” says marketing expert Saul Gitlin, interviewed by AdAge. In Facebook’s customers would also appear the Chinese propaganda organs. They would use Facebook to extol the merits of the government … which censures it though.
China conquers foreign markets
With more than 2 billion users, the social network is a unique gateway to reach almost the entire globe and especially Western Internet users. Therefore, analysts believe that China will increase its advertising spending in the coming years. “What our data highlights are that China offers an opportunity to increase advertising revenue, because of its spending to reach other countries,” says Brian Wieser. Chinese giants like Huawei or Xaomi may find themselves competing with American firms for the purchase of advertising space. Indeed, these brands strive to reach an audience outside their borders. The same goes for the e-commerce giant Alibaba or telecom operator Tencent, which are aiming for massive international expansion.
Despite its ban, Facebook is very interested in China. The company would even seek to open an office in Shanghai. With 700 million Internet users, the Chinese market represents a considerable opportunity. Last December, the social network recruited William Shuai, a former Internet giant Baidu, as responsible for his relations with the Chinese government. In addition, Mark Zuckerberg met with Chinese President Xi Jinping at the end of 2017. Moreover, despite the censorship, Facebook deploys strategies to infiltrate the Chinese market. In August 2017, the company even launched a photo-sharing application in China to discreetly test the market.