Firms ignore ban and run Facebook ads
When it comes to tapping into the world's largest social media website, with 845 million potential customers, mainland advertisers aren't going to let a little obstacle like government censorship get in their way.
The potential for profits by reaching out to Facebook's legions of regular users outweighs the risks and hassles of advertising with an online behemoth that is blocked on the mainland. That's the thinking of companies such as adSage, a Beijing-based online advertising firm that began a commercial partnership with Facebook in 2010.
Late last year, adSage started helping mainland firms open Facebook accounts, while also offering the firms guidance on managing advertising campaigns on the networking site. Beijing has banned Facebook, largely out of fears it could be used as a rallying point for dissidents.
Facebook can be accessed on the mainland by using special software that allows internet users to circumvent the 'Great Firewall'. 'China is a large potential market for Facebook,' the company said on February 2 in its US Securities and Exchange filing for an initial public offering. 'We continue to evaluate entering China.'
This is not the first time the company has publicly shown interest in the mainland market. Facebook chief executive Mark Zuckerberg, 27, visited Beijing in 2010 and toured top internet companies in town. The trip was widely seen as a move to seek business opportunities.
'We can start to figure out the right partnerships we would need to succeed in China on our terms,' Zuckerberg said later in a speech at Stanford University.
The company could not be reached immediately for comment.
Based on the number of user visits, Facebook is the world's second-most-popular website, trailing only Google, according to the Alexa web-information company. China's Baidu ranks fifth.
Businessmen such as adSage boss Tang Zhaohui see the potential, even now, of reaching out to people on Facebook.
'Most Chinese advertisers [on Facebook] are from the gaming, education and tourism industries,' Tang told the Sunday Morning Post. 'The number of advertisers has tripled since the business started last year.'
He said about 3,000 companies used adSage's Facebook services, though he declined to name them. The company's media manager, Chen Tingting , explained that 'putting advertisements on Facebook is still a sensitive issue' on the mainland', adding that 'they want to keep a low profile on this'.
However, Tang said one of their largest advertisers on Facebook, from the computer gaming industry, might spend more than US$1 million a month to advertise on the site, making the company 'one of the largest advertisers globally on Facebook'.
None of the advertisements posted by mainland companies had anything to do with politics - they were simply aimed at Western customers, he said.
'The education companies want to attract more people to learn Chinese, while the tourism firms want Americans to use their service to book flights and hotels; and that's why they come to us.'
Acknowledging Facebook's difficulties in entering the Chinese market, Tang said 'commercial co-operation [with mainland firms] could be a good start'.
'Facebook takes the Chinese market seriously,' he said. 'They can't do marketing out in the open, but they frequently visit big advertisers in private with us.'
Facebook opened a sales office in Hong Kong early last year, giving the company its second office in Asia after Singapore. The office is strategically located to serve both the Hong Kong and Taiwanese markets, and potentially mainland China.
Because it offers its service free to users, Facebook's income comes largely from advertising revenue, which it said reached US$943 million in the fourth quarter of last year, accounting for 83 per cent of the company's total revenue in that period.
Mainland companies don't have a big impact on those numbers, but analysts predict that could change as the advertising market continues to boom on the mainland.
Joining adSage in recognising the benefits of doing business on Facebook is DHgate, an online trading platform with offices across the mainland. Hu Hao , a marketing specialist for DHgate.com, noting Facebook's size and global penetration, said his company's core markets included the United Sates and Britain, making the website the perfect platform to reach customers.
DHgate started advertising on Facebook in 2010, hiring a team of social media professionals to explore user trends on Facebook in order to devise strategies to raise brand awareness and engage consumers directly.
The company now has more than 22,000 'Likes' on its Facebook page.
'Facebook serves as an alternate channel for the company's PR,' Hu said. 'We have key individuals within the community who were actively answering the questions of other community members on behalf of us. It is a great dynamic.'
But like adSage, DHgate needs special software to access its own Facebook page on the mainland.
'Our Facebook users are all overseas buyers based outside China, so domestic policies were never a factor for us,' Hu said.
In October 2010, during his address at Stanford, Zuckerberg raised a key question that has yet to be answered. 'How can you connect the whole world if you leave out a billion people?'