Facebook (NASDAQ:FB) was founded on 4th February 2004, almost 11 years ago and is one of the most popular tech companies among investors today. Surely, the company has grown and expanded remarkably ever since its inception and has not posted a disappointing quarter to date.
Superficially, the company functions as a single entity and while investing, investors only focus on the reports that the company generates and releases at the end of its every quarter. However, the business structure operating within Facebook is far more complex and hints at a divided strategic stance within the corporation regarding its business policies.
According to analysts, recent reports show that the social media networking giant has two major sides to its business that make up the crux of the policy-making process conducted by superiors at Facebook. One aspect of the business caters to the primary revenue market of Facebook, which is present in US, Canada, and the European countries. The other side of its business focus deals with the fast growing user base the company enjoys from the rest of the world.
This means, instead of having one core strategy to forward the business, Facebook has to diversify its policies to cater to user needs of both segments of its global market.
Facebook has always followed a single strategy; first generating a considerable user base, then monetizing it through advertisements. Its western market is ready to be monetized, and Facebook has been reaping ad revenues from it for any years. However, the rest of the world is still premature, using Facebook on mobile phones or the Facebook Zero (text-only) version of the service, which makes it difficult (rather impossible) to monetize the user base, because most ads use video or image content which these users avoid (due to data bandwidths or other factors).
Last quarter has been great for Facebook, as the company reported revenues worth $3.85 billion from over 1.4 billion per month active user base all over the world. From the western countries, the average revenue generated by Facebook was $9 per user, whereas the same for Asia-Pacific region averaged around $1.27 per user. User growth figures in these two areas were, however, quite the opposite. Where user base for Facebook grew by only 1% in US and Canada, it grew by over 5% in the rest of the world.
Now, with the Internet.org agenda that Zuckerberg has been pondering over for quite some time now, it has become more and more essential for Facebook to monetize its mature markets further. The more the user base grows in the Asia-Pacific region, the more burdensome it becomes for Facebook to sustain it, considering how little revenue the region brings in compared to its mature markets.
Hence, Facebook strategy and business structure is now divided into two aspect. One aspect of it is to further monetize its currently mature markets in the US and Canada, and the other is to bring more internet connectivity (part of the internet.org program) to maturing markets in the developing world in order to enable them for monetization purposes. The only way Facebook can maintain its growing earnings report is by expansion, and to have sustained growth, users in US and Canada seem to be the primary target for monetization by the company.
