Facebook Expands Its Efforts to Connect With Emerging Audiences

Updated from 2:25 p.m. to include analyst comments in the ninth paragraph.

NEW YORK (TheStreet) -- Facebook (FB) is launching a new app for Google (GOOG) (GOOGL) Android phones, called Facebook Lite, in an effort to expand its user base in emerging countries.

Facebook is one of several companies that are looking to break into and capitalize on new audiences that will become available once accessibility in emerging countries increases, said Arvind Bhatia, an analyst with Sterne Agee CRT. "It's part of Facebook's desire to reach as wide an audience worldwide as possible," Bhatia said. 

Bhatia also noted that launching an app in emerging countries is the right move Facebook for both now and in the future.

"I think this is less about revenue because as you can imagine developing countries with lower GDP make it less about revenue today," Bhatia said in a phone conversation. "It's really more about revenue down the road, so this is more about continuing to increase their user base and continuing to increase engagement in countries that may otherwise might not have had access for it."

Facebook Lite now is available in countries across Asia, and will expand into parts of Latin America, Africa and Europe in the coming weeks.

In the first quarter, Facebook reported $3.3 billion in revenue from advertising worldwide. Of that, $524 million came from the Asia-Pacific region and $346 million came from areas outside of the United States, Canada and Europe. Facebook said average revenue per user in the United States was seven times higher than those for users in the Asia-Pacific region and more than ten times higher in areas outside of the United States, Canada and Europe.

Of the nearly 936 million Facebook daily active users worldwide, 270 million are in the Asia-Pacific region and 280 million are in areas outside of the United States, Canada and Europe, according to the company's first-quarter earnings. While these numbers appear large, they are no where near the total population of these areas, with Asian populations alone totaling nearly 3 billion people. This number excludes those people living in China, since Facebook is not available in China.

The company announced in Sept. 2014 that it had over 100 million active users in Africa, which was 50% of the population that has access to Internet, but that number is also small in comparison to the nearly 1.1 billion people currently living across the African continent.

S&P Capital IQ analyst Scott Kessler said Facebook's acquisition of WhatsApp might help it establish some credibility as it tries to break into emerging markets. Kessler, who covers Facebook for S&P, said WhatsApp will be beneficial because of its strong presence in both abroad and in emerging markets, citing the fact that "a lot people end up hearing of or using WhatsApp from someone that is traveling abroad."

When Facebook purchased WhatsApp in Feb. 2014 for $19 billion in cash and stock, it had more than 450 million using the service. It recently surpassed 800 million monthly active users, according to a Facebook post by co-founder Jan Koum.

The new app requires less than 1MB making it fast to install and quick to load, according to the company. This amount is significantly less than what is needed to download the original Facebook app on an Android phone in the United States. A LG Flex required 41.13MB to download the app, while a Samsung Galaxy S5 showed the app required 42.16MB to download.

"In many areas, networks can be slow and not able to support all the functionality found in Facebook for Android," Vijay Shankar, product manager for Facebook Lite, said in a statement yesterday. "Facebook Lite was built for these situations, giving people a reliable Facebook experience when bandwidth is at a minimum."

Facebook Lite will have the same basic components as the original Facebook app such as the News Feed, status updates, photos and notifications. The release made no mention of the new app having video capabilities, however, an area Facebook has been pushing recently.

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