[hodder]

"If they can improve international monetization then there is a lot of room for revenue growth it would seem."

A universal truth in the social network space. Unfortunately, not even FB can really extract much value outside of North America.

[dsl]

> A universal truth in the social network space.

In all of advertising. Non-US users remain extremely hard to monetize across the board.

[sharkweek]

ELI5 - are there any prevailing theories as to why this is?

[airstrike]

From my Latin American perspective, I'd say it's due to way less disposable income in emerging markets and less of a consumerism mindset.

America has the benefit of decades of intense consumerist propaganda to fend off the evil reds, while the biggest emerging markets are often very vocally against "Capitalism" (even if they would all love to own iPhones)

[GordonS]

What about Europe, especially Western and Northern - plenty of disposable income to go round there?

[airstrike]

Not really... wages suck and taxes are massive. They just have an absurd level of government welfare

[johannes1234321]

Even though there are "absurd" levels health costs in Europe are lower than in the U.S. leading to higher life expectancy.

[mruts]

Maybe, but America has relatively low taxes and high income.

This is an anecdote, but I was looking at developer jobs in Europe and the salaries are pathetic. 65k Euros for a senior engineer with a 50% tax rate? Are you fucking kidding me? I can make 250k in the US at a 35% rate. It’s absurd.

No wonder Europe has a brain drain problem...

[photonios]

Do keep in mind that Europe is not a single country. Within the European Union, salaries and tax rates vary greatly. For western Europe, that seems a bit low.

Besides the northern countries, the tax rate is not 50%. Most countries either have a flat rate that is well below that or have a system where you pay in boxes. Like %30 over the first 20k, then %47 over the remainder etc. On top of that, many countries have countless schemes that result in tax deductions. Like owning a house gets you a discount.

In almost all cases, the effective tax rate falls well below 50%.

[zepearl]

Developers earn 250k USD/year in the US?

Any reference to the european "brain dead"-problem?

[acchow]

The more digital your business is the better able you are to monetize digital (and any) advertising.

Digital advertising becomes more valuable the better you are able to track digital intents/impressions/sales through all your channels.

[sonnyblarney]

The first-order issues are:

a) Money. Most places do not have a lot of surplus wealth, and only a few places in Europe do. Consumers need to have extra money to spend on 'stuff' beyond the very basics, i.e. a consumer oriented economy for a lot of ads to work.

b) Fragmentation. This is a two-sided problem. Most countries are very small, have their own laws, regs, and networks for everything that are very established. So the unit cost of marketing to advertisers etc. is going to be higher. And things move slower in most places.

c) Behaviour. American culture is pop culture. Sometimes it's hard to explain that one. Americans move according to trends. Social mores change quickly depending on whoever has the biggest megaphone: news, broadcasters, even advertisers. It's a place where commercial interests drive aspiration, even morality - witness the amount of virtue signalling in ads, i.e. Nike's recent campaign etc.

W. Europe, the other lucrative market - they are really traditional in their ways. They already have their day full of things to do. Germans leave work at 5 and go and drink a specific kind of beer at the local pub. They play certain kinds of sports. They buy certain things. In the UK, I've been to 'rich people's' homes and they have these ancient toasters. But they work! They don't just 'buy new stuff' it's not part of their culture. It's the same in most of the rest of the world.

The rest of the world is really just not designed as a big commercial vehicle.

[nradov]

I thought the EU eliminated most of the fragmentation in laws and regulations?

[nradov]

The EU advertising industry is only slightly smaller than in the US on a per-capita basis. So obviously those consumers are being monetized, otherwise businesses wouldn't be spending so much on advertising.

[acchow]

US vs. EU advertising spend is about $200bn vs. 100bn euros. On a per capita basis, that is $611/pp vs. 200 euros/pp. I wouldn't call that "only slightly smaller".

[majani]

I think you simply fail to recognize just how far ahead North America is from the rest of the world financially.

[hodder]

I pointed out the obvious failing in every major social media company to generate revenue outside the USA. How is that me failing to recognize? I am quite explicitly recognizing just that.

[majani]

It's not a failing if the global revenue is representative of the global economy.

[aclsid]

If that was the case, then China would be the top market. This has more to do with the fact that Americans are used to pay for software at a personal level, something that not even Europe is fully used to.

[bigj0n]

Why would China be the top market? America has a far bigger GDP and several times larger GDP per capita

[aclsid]

Their economy is larger, and yes, bigger GDP than America. Per capita, US still leads, but since I'm not interested in a piss competition here, let me clarify.

The point of my reply was that saying that the US has more money does not explain the fact on why people in the US pays more for software than in the rest of the world, which I believe is the key issue when it comes to a social network ability to monetize international markets. You have rampant software piracy in Latin America, Asia and Europe. At least in the EU, things are better for business software. China is so notorious for piracy that a former head of Microsoft R&D for China said: "In China we [don't] have problems with market share. The issue is how do we translate that into revenue.".

Nowadays software companies in China have found success by giving away free games and selling coins and whatnot. So my whole comparison was that if China has a bigger economy (or smaller/similar if you feel offended by that fact), then how do you explain that even large companies like Microsoft are struggling in that market.

[cheriot]

> bigger GDP than America

Source?

http://worldpopulationreview.com/countries/countries-by-gdp/

United States 21,410,230

China 15,543,710

[aclsid]

Please check https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP) where the World Bank, IMF and the CIA, they all agree China is on top now. But I'm truly impressed how that fact seems to offend people here based on the downvotes these replies get.

[deepVoid]

"America has a far bigger GDP" It depends on how you calculate it. According to PPP, China has a GDP of 25 trillion vs the US of 20 trillion[1]. Yes, China has a bigger market and bigger GDP. If you calculate nominal GDP, China has ~14 trillion vs the US 20 trillion. US is bigger nominally, but not far bigger.

[1] https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)

[mruts]

PPP isn’t at all relevant in this discussion. People like to just bring up PPP like it’s magic, but it’s not. You have to understand the situations in which PPP is relevant and the situations in which it means nothing at all.

Moreover, you have to understand why PPP exists in the first place. Let me give you a hint: it has to do with arbitrage.

[why_only_15]

In the context of talking about how much money you can earn from international markets, PPP doesn't matter.

[skinnymuch]

PPP doesn’t matter at all for a web company trying to make money from different countries. If a GDP is going to matter. It’s going to be the one based on an actual real number.

Being 40% bigger can qualify as “far bigger”.

[pdovy]

Yeah, if they can't pull that rabbit out of the hat, it looks a bit bleak. With US MAU's stalled for the last four quarters, they are faced with extracting more revenue from the same set of users - i.e., show everybody more ads and presumably water down the user experience in the process.

[chubot]

Is that true? What about Europe? I thought that Europeans have similar behavior to Americans as far as the Internet goes.

For example, about 10 years ago, Google higher market share in Europe than in America. It was something like 95% in Europe and 90% in the US. I wouldn't be surprised if that's still the case.

Of course Google's not a social network, but my very limited understanding says that Internet products generally translate well from America to Europe. I'd be interested to know where that's not true!

[pj_mukh]

Why is that?

[dvfjsdhgfv]

> Unfortunately, not even FB can really extract much value outside of North America.

Unfortunately for whom?

[filoleg]

For companies that are trying to monetize outside of North America.

[dvfjsdhgfv]

That may be unfortunate for FB, but very fortunate for the citizens of these countries.

[filoleg]

How is it fortunate for citizens of those countries?

If the company monetizes, but in ways that the citizens don't like, they can choose to not use services provided by the company. If they agree with the monetization practices being adequate in exchange for the services provided, they can use the services. Whereas if the company doesn't monetize in the region, they can't afford to provide services anymore, then even those people who are totally cool with the monetization strategy cannot use the services.

TL;DR: if you don't agree with the way a service is monetized, you are free to not use it (obvious limitations apply for things that are essential to living in modern society, like internet or banking; FB doesn't fall under this). Just because you are not ok with the cost associated with using that service, that shouldn't serve as a solid ground for denying service to those people who accept the cost.