Facebook’s new users are overseas, where it can’t make much money off them

Facebook is reporting quarterly earnings today, and the news is generally good: More revenue, more users, higher margins, lower costs. Its slide deck, though, highlights a bit of a challenge for the company going forward.

Growth in North America is leveling off. And it's really hard to make money anywhere else.

Here's the growth chart for number of unique visitors on the site every day:


Good growth - just not in these parts. (Facebook)

The number barely grew for people in the U.S. and Canada, but looks really healthy everywhere else. And actually, that's been a big part of the company's strategy in recent years: It's gone aggressively after phones, even those that aren't smart. It recently launched Internet.org, which is all about spreading the web globally so that more people can use Facebook. It also acquired Onavo, a start-up that compresses data so people can access the site in bandwidth-poor regions.

The problem is, people in other countries are a lot harder to monetize, in large part because they have less money to spend than people in the U.S., making them less valuable for advertisers (and also because mobile ad rates are so much lower than web ads, though the gap is narrowing). The revenue per user for people outside the U.S. and Canada is a fraction of what it is here:


Right now, the average revenue per user in North America is $4.85 -- that's six times the amount Facebook gets for users in Asia, and 7.2 times what people in South America, Africa, Australia, and the Middle East generate. So Facebook's going to have to grow a lot in those places in order to offset flat growth closer to home.

Lydia DePillis is a reporter focusing on labor, business, and housing. She previously worked at The New Republic and the Washington City Paper. She's from Seattle.
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Lydia DePillis · October 30, 2013