Here's why Facebook cares so much about making its ads work in emerging markets

Wall Street loved Facebook’s strong Q3 earnings report this week, which saw revenues swelling a healthy 41% year-over-year.

The company managed to make 50% more ad revenue from every user in the US than it did a year ago.

But a look at some of the company’s other stats reveals just how important it’s becoming for Facebook to make sure that it can make money from users in emerging markets like India and Africa too.

Right now, most of Facebook’s revenue comes from North America and Europe. Even though the Asia-Pacific region and the rest of the world accounts for 65% of its monthly active users, only about 25% (or $US1.1 billion) of the money it makes comes from those areas.

That’s because the average ad revenue per user in those regions is still tiny, compared to in the US — $US1.36 and $US0.92, respectively, versus $US9.86 and $US3.33 in the US and Europe.

It’s also growing more slowly: Ad revenue grew 17.6% from last year in Asia Pacific and a 10.9% in the rest of the world), Facebook continues to look for ways to move make its ads more valuable in other parts of the world.

The report comes not long after Facebook’s press push around its efforts in emerging markets, and how it’s optimising both its content and, importantly, its advertising to work well in areas of the world with spottier internet connections.

Just last week, Facebook launched a new kind of ad format to bring a video-like experience to emerging markets where people often don’t have the bandwidth to watch real videos. Facebook says that the new “Slideshow” ads will be more engaging for users.

As more an more of Facebook’s growth is driven by emerging markets — it’s percentage of mobile-only users passed its percentage of mobile-and-desktop users for the first time ever this quarter — the company will have to keep iterating on ad format ideas like Slideshows.

Here are some other ways Facebook is trying to make more money from users in emerging markets:

  • It launched a Creative Accelerator program to help advertisers think of unique ways to connect with regional audiences and work with the local infrastructure. For example, in India, Facebook has created a “missed call” ad product where people can avoid using their data plan by having the advertiser pay the data costs of sending them some sort of content, like music or a celebrity message.
  • It opened a sales office in Johannesburg to help it expand its reach in Africa.
  • It’s constantly adjusting its ad products to make them better, like allowing advertisers to target uses based on their connection, or with this week’s introduction of slideshow ads, which create a video-like experience for low bandwidth.

NOW WATCH: We tried the ‘Uber-killer’ that offers flat fares and no surge pricing

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.