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Facebook to Target Ad Revenue with New Dubai Office
As we predicted in February, Facebook is indeed entering the MENA region, planning to open an office in Dubai now that its IPO is complete.
Facebook will join Google, Microsoft, Yahoo, Intel, and Cisco in Dubai Internet City, adding Dubai to its list of 30 offices worldwide in a bid to secure more advertising revenue, sources report.
Facebook worked with Cairo-based advertising company Connect Ads in 2010, in order to reach advertisers in the region, The AP reports, yet the move to secure more ad revenue in the region now couldn't be more timely. General Motors, one of the social network's biggest ad clients, withdrew its $10 million budget this year thanks to concerns about its long-term prospects, the National notes.
With its disappointing IPO following in the footsteps of Groupon's disaster, debuting at $38 a share last Friday, rising to $40 during the day, plummeting quickly to around $34 this Monday, and now trading at $32 at time of print, Facebook will need all the newfound confidence it can recover. (It also pulled Zynga down 13.4%with it on Friday; ZNGA is now trading around $7 a share).
Opening new revenue streams will be critical. Investors are furious, now filing lawsuits against Facebook, Inc., Morgan Stanley, Goldman Sachs, and JPMorgan with accusations that forecasts of revenue growth concealed "a severe and pronounced reduction" in revenue, thanks to increasing use of Facebook's app and website through mobile devices, Reuters reports. Lowered forecasts were allegedly revealed to preferred investors but not general investors before the IPO.
While Facebook attests that the suit is without merit, it's a reality that the social network has failed thus far to effectively monetize the mobile app; perhaps a move to Dubai will entail refocusing their mobile advertising strategy.
Either way, it will mean more jobs in the MENA region in the decade to come, as the social network expands. The UAE currently boasts the the highest penetration rate in the region, at 36%, and one of the lowest use rates in Arabic, at 9%, As Facebook use in the region, currently at 43 million, continues to rise, it will be interesting to see if the social network considers opening a developer office in, say, Cairo or Amman. More details on the Dubai office will be released on May 30th.
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