How Facebook plans to get to its first billion users

Facebook CEO Mark Zuckerberg said last month that it was almost guaranteed that Facebook would eventually hit 1 billion users. But with developed countries largely tapped and the social network’s growth slowing in both raw and percentage terms this spring, the company is eyeing emerging markets as a new source of users.

When you get to around 500 million users, much of the low-hanging fruit has already been picked. So where to next? To learn about how the company is adapting to foreign markets to capture its next 500 million, we talked with Javier Olivan, the company’s head of international growth. He joined the company three years ago when it had less than 40 million users.

One major prong of the expansion effort depends on the company’s mobile team, which is securing deals left and right for 0.facebook.com, a free, low-bandwidth version of the site for feature phones. Olivan said operators were carrying the expense of free data access for users, not Facebook. The company also signed two major deals in the last week with Bharti Airtel in India and Beeline and MTS in Russia to provide free mobile access for users. They add to similar deals with at least 50 operators around the world that will help bring in millions of mobile users in developing countries.

Facebook’s recent acquisition of Malaysian contact importing company Octazen Solutions will also feed into its growth strategy as there’s a long tail of e-mail services used in foreign markets that can be difficult to tap into piece by piece, he said.

Right now, Southeast Asia is leading the way in terms of Facebook’s fastest-growing countries, with Indonesia and India up front. The company holds the top position in several Asian markets with the exception of Japan, South Korea, India, Taiwan and China, where the service is largely blocked, according to Comscore.

Here’s what Facebook is up to in various markets:

Japan: Japan is one of the rare developed-country markets where Facebook lags behind the pack. Competitor and blogging platform Mixi boasts 20 million users, while Twitter receives 16 million unique visitors per month. Facebook, in contrast, has just an estimated 1.2 million users in the country.

Olivan said the company has sent some of its best engineers to Tokyo to develop a version of the software that works for the market, which has a distinct mobile phone culture. One key problem was getting the mobile web site version of Facebook right. While U.S. users tend to reach the site through apps, most Japanese users try to reach Facebook through either the feature phone or touch-optimized web sites.

“If you look at the product eight months ago, it was unusable,” Olivan said. Part of the problem was that many Japanese phones don’t recognize cookies, making it difficult to keep a user logged in through the service.

India: Facebook, with 10.5 million users and growing, is closing in on Google’s Orkut, which has seen its traffic stagnate. The company is gearing up to open its first large office in India and closed the Bharti Airtel deal on Monday.

Olivan said the company made lots of subtle, “under the hood” fixes to attract users in the country away from competing social networks. They compiled a comprehensive database of all of the high schools in India to prepopulate a list when users sign-up for the service so they can easily find their friends.

China: At this point, the country — although it has about 400 million Internet users — has largely been written off. Google’s troubles in the country plus the fact that Facebook is largely blocked in the country are a lesson to stay away for now. There are also entrenched incumbents like Kaixin001, RenRen, 51, and Tencent’s Qzone.

“Obviously, there’s an ROI [return on investment] calculation that goes into every country we consider entering,” Olivan said.

Vietnam poses a similar issue to Facebook; the service was growing quickly up until November, when traffic dropped suddenly. Users still linger at around 1 million. Although he had just visited the country last month, Olivan said he didn’t know why Facebook was being cut off. “Someone is definitely proactively blocking it,” he said.

Russia: Despite the two recent mobile deals, Facebook confronts a steep uphill climb here with just 1.2 million users to Vkontakte’s 75 million. The company’s investor, Russia-based Digital Sky Technologies, which has deep experience in building social networking products in emerging markets, should help with connections here. (Then again, DST also holds a stake in Vkontakte.)

Indonesia: The world’s fourth most populous nation is in a position to become Facebook’s second largest market. It trails the U.K. by just 500,000 users at 25.9 million monthly active users.

Brazil: Latin America’s most populous country, which is another of Google Orkut’s last bastions, is growing at a fast clip with 4.7 million monthly active users. That’s about one-fourth of Orkut’s monthly unique visitors.

Olivan says Facebook’s product will speak for itself against homegrown competitors and, of course, its Google-backed rival.

“We compete by not competing,” he said. “We focus on having a great product, and we try to basically break away all the barriers that stand between people using it everywhere in the world.”

[Photo: jolieodell]


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