White Faces, Missing Tigers

Spring 2011

One of the more popular themes doing the rounds this year has been the story of just how big social networking is in Asia and what an important role Facebook is now playing in this part of the world.

After all a reported 147 Million of 22% of the Facebook Nation now resides in the Asia Pacific region.

So nearly 1 out of 4 Facebook users is from Asia

To support this case we have seen a number of high quality infographic and slide show presentations in circulation (e.g. The Next Web's Social media in Asia-Pacific: It's big and Facebook dominates, All Facebook's Facebook is Asia's fifth largest country , We are social's Social Digital Mobile Asia and now Ogilvy and Mather's Facebook for business in Asia ).

At a mile high level the strategic future looks very bright for Facebook in Asia. But what about at the more granular level? What happens when we scratch the surface and take a look at what is happening on a country by country or even city by city basis? Does the "Facebook Dominates Social Media in Asia" mantra still stack up?

We'll begin the study by taking a quick look at the European market. Note that I have included China in the mix simply to provide a fixed point of reference for the two charts.

As you can see the advanced economies of Europe tend to be clustered in a group that could be described as above average adoption of the Internet and average adoption of Facebook.

Facebook adoption in Europe by nation

Now let's take a look at the Asia experience.

As you can see four distinct Facebook economies have emerged.

There are the advanced Asian "Flagship" economies with high levels of Internet adoption that have little or no interest in Facebook simply because the offering is fundamentally "late 2 market" compared to the established players.

Then there is the relatively small group of advanced economies who do have an above average interest in Facebook.

Then there are small group of developing economies with limited access to the Internet that have an above average interest in Facebook.

And then finally you have the "giant" Asian emerging economies that have limited adoption of the Internet and below average (and in some cases no interest - e.g. China) in Facebook.

Facebook adoption in Asia

This spread suggests that Facebook may be a player with in Asia but its overall market position is far from dominant.

The next question worth looking at is the case for Urban Adoption. With the high proportion of rural inhabitants across the developing Asian economies a number of commentators have made the case for Urban Adoption rates being the key metric for measuring success of Social Networks.

For example Forrester has suggest that the adoption rate for social networks services in urban India may be as high as 98% . So the relatively average position of Indian Facebook adoption as a nation may be significantly above average across the major Indian Urban centres.

To test this idea I expanded upon the data set from the last post with some supplementary data from Social Bakers analysis of Facebook cities (beta) to explore the spread of Urban Adoption across India.

This chart displays the Top 9 Cities for Facebook penetration across India.

Facebook adoption in Indian Cities

Again there appears to be no underlying correlation between high adoption of Facebook and the relative size of the Urban Centre. Indeed with the biggest Facebook city by user accounts having the lowest level of Facebook adoption by % of total population the limited data sample would probably challenge the underlying assumption that Urban adoption across India of social networking services is as high as 98%.

Should we be surprised that the headline story of "Big in Asia" =! "Dominates Asia"?

Not really. Any experience with data mining will teach you that just like exploring fractals new patterns emerge with each new level of granularity.

The headlines numbers are "nearly 1 out of every 4 Facebook user lives in Asia".

Does this make Facebook you one stop shop for doing business in Asia?

Hardly. Unlike the largely homogeneous market that is the USA and Canada, Asia is a complex market that requires a deep knowledge of the local "ways of doing business" if one is to survive and thrive. If you are thinking social then just like any other marketing and promotional activity each market, at the State, Regional, City and Locality level, needs to be understood and serviced on a case by case basis.

Put simply Facebook is no substitute for experience in Asia. But experience with Facebook may help in some cases.

If we remap the Asian dataset to include the American, European, Middle Eastern and African data we discover 5 distinct Facebook nations.

The Five Facebook Nations

The most dominant of these nations is the traditional Heart Lands that are made up predominantly of North Americans and Northern Europeans. With the Anglo Saxon nations (e.g. Germany) proving to be the more conservative sub-group within the mix. These are the nations that are highly connected socially. Not only via the Internet but also via Facebook.

Of the other 4 perhaps the most interesting group is the Socially Mobile. This group includes Indonesia, The Philippines, Mexico, Peru and Turkey. These nations appear to be overtly social in their activities and rely on the mobile phone to overcome the lack of Internet access.

Middle Earth consists of mostly Latin Nations (e.g. Brazil, Spain, Portugal and Italy) and a smattering of advanced African states (e.g. Morocco), Middle Eastern states (e.g. Saudi Arabia) and Eastern Europe (e.g. Poland, Romania) that represent the mostly likely candidates for migration into the Facebook Heart Lands.

The Other Connected are the key emerging markets that have developed their own Social Platforms (i.e. Russia and China). While the Highly Connected nations are the developed nations who have also developed their own Social Platforms (i.e. Japan and South Korea). In each of these markets Facebook is challenged by some significant barrier to entry.

India is the biggest nation of the emerging, but mostly Mostly Disconnected, group which also includes Egypt, South Africa, Nigeria, Pakistan, Vietnam, Thailand and the Ukraine. In these markets cheap Mobile Phone access to Facebook appears to be the most viable solution to overcoming the widespread problem of limited access to the Internet.

Now let's take a quick look at which Facebook nation represents the "cash cow" of the Facebook Revenue by replacing the potential market (i.e. the total number of Internet users) with a valuation metric based on the estimated number of Facebook users x the relative weighting of the total global advertising market share (including TV, Radio and Print) for that region with the USA representing the index value.

Once we do this we can see that the opportunities for Facebook's "global" advertising revenue engine are largely reside, today at least, within the traditional Heart Lands of North America and Western Europe. With the USA representing just under 47% of the overall global opportunity.

Asia on the other hand is less homogeneous. With opportunities, and in some cases significant barriers to entry, spread across all 5 of the Facebook Nations. Meanwhile the most significant growth opportunities at this stage appear to be the archipelagos of Indonesia and the Philippines.

The Five Facebook Nations