(FROM THE WALL STREET JOURNAL ASIA 3/30/15)
By Alyssa Abkowitz
BEIJING -- In China, Facebook is banned -- and ramping up
efforts to make money.
Facebook Inc. is hiring in Hong Kong, has tapped a second local
partner to reach advertisers and is waging a charm campaign to draw
more business from Chinese companies, even though Chinese users
can't access its service. The aim is to pitch Chinese companies to
the benefits of reaching Facebook's 1.39 billion active monthly
users beyond China's borders.
Other companies whose services are blocked are also intensifying
competition on the mainland. Google Inc., which pulled some of its
services out of China five years ago over censorship concerns,
unveiled a Chinese-language developer channel on YouTube last month
and recently opened up its Google Play store to Chinese app
developers. This month, Twitter Inc. opened its first Hong Kong
office with an eye toward gaining more advertising business in
China.
Facebook is seeking more clients such as Youzu Interactive Co.,
a Shanghai online game designer. Youzu says it more than doubled
the number of registered daily players for its popular "League of
Angels" game after spending most of its about 10 million yuan ($1.6
million) ad budget on the social-media network.
"Half of our players come from Facebook," says Liu Wanqin, a
Youzu manager involved in overseas advertising. "Facebook is our
most important ad tool right now."
The ramp-up comes as Facebook intensifies its efforts to someday
enter China. Beijing has banned Facebook, Twitter and other foreign
social-media services.
Still, experts say Facebook stands a chance of thriving if
Beijing ever relents. China has its own vibrant social-media
services, but Chinese consumers have shown an appetite for new
services, too. "The baseline evangelism is already there," says
Thomas Crampton, global managing director of Social@Ogilvy, a part
of advertising firm Ogilvy & Mather.
Mark Zuckerberg, Facebook's chief executive and a co-founder,
has raised his profile in China in recent months. In October he
spoke in passable Mandarin to a Chinese audience at Tsinghua
University in Beijing. He also met with local tech titans including
Alibaba Group Holding Ltd. chief Jack Ma and Lei Jun, the chief
executive of Chinese smartphone maker Xiaomi Corp. In December he
showed the country's top Internet regulator, who was visiting
Facebook's headquarters, that he keeps a book of Chinese President
Xi Jinping's thoughts on his desk.
It isn't clear whether the push is resonating in Beijing.
Chinese officials have tightened their grip on cyberspace in recent
months, including a renewed push to force Internet users to give up
their anonymity and to suppress content that they deem to be
rumors. The Cyberspace Administration of China didn't respond to
requests for comment.
Chinese companies that use Facebook appear unfazed by the
government's stance. "Companies here look at advertising from a
pragmatic perspective and say, 'Is this the way to accomplish our
business goal?'" Mr. Crampton says. "If it is, let's do it."
Facebook doesn't disclose revenue by country, but analysts
believe Chinese advertisers play a growing role in Asia ad revenue
for the company. Its fourth-quarter Asia ad revenue totaled $531
million, up 67% from a year earlier.
Google, which has 500 employees in Beijing and Shanghai, sells
mobile and display ads on the mainland. Google China earned
estimated ad revenue of 1.6 billion yuan during the third quarter
of 2014, up 19% from a year earlier, according to market-research
firm iResearch.
Light in the Box, a Chinese online retailer that sells
everything from wedding dresses to baby monitors, started
purchasing ads on Facebook in 2013, in addition to advertising on
Google, to help create demand, says Chief Executive Alan Guo.
"Google is more text based," Mr. Guo says. "Facebook ads have a
lot to do with pictures and bigger presentation space." He says his
firm also likes Facebook's ability to target users in certain
demographics.
Light in the Box says it now manages its own Facebook ads.
Initially it used Beijing Zoom Interactive Media, also known as
PZoom, one of two authorized resellers that have helped Facebook
boost its ad revenues in China.
MeetSocial, an affiliate of ad agency Shanghai TianQing Info
Tech Co., became the second mainland Facebook reseller last year in
a process that was "a lot like dating," says Lynn Chou, social
media marketing manager at MeetSocial, referring to how the
collaboration was limited at first and then grew into a
partnership. The company says its more than 100 clients, which
include Chinese business schools who want to recruit international
students and mobile developers, spend anywhere from several
thousand dollars to more than $1 million a month on Facebook
advertising.
MeetSocial and PZoom get commissions from Facebook and charge
service fees to clients that are usually based on a percentage of
the company's ad spending. Facebook partners usually earn anywhere
from 10% to 15%, depending on the work level involved, according to
people familiar with the industry.
---
Kersten Zhang contributed to this article.
Access Investor Kit for Youzu Interactive Co., Ltd.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=CNE1000007K4
Access Investor Kit for Facebook, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US30303M1027
Access Investor Kit for Google, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US38259P5089
Access Investor Kit for Google, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US38259P7069
Subscribe to WSJ: http://online.wsj.com?mod=djnwires