Facebook launches Dubai office amid IPO woes

Facebook opens an office in Dubai as it looks for a sweet advertising boost from the Middle East and its performance on the Nasdaq turns increasingly sour.

From left, Joanna Shields, Facebook’s vice president and managing director for Europe and Mena; Jonathan Labin, the head of global marketing solutions for Facebook Mena, and Christian Hernandez, the dShow more

Facebook is looking for new friends in the Middle East, as its performance on the Nasdaq turns increasingly sour.

The social network yesterday opened an office in Dubai, in a bid to boost advertising sales across the region, where it reports a user base of more than 45 million people.

Facebook reported revenue of US$3.71 billion (Dh13.62bn) last year – but some local advertising executives say it could earn as little as $20 million in the Middle East and North Africa (Mena) this year.

Its move into Dubai Internet City comes at a difficult time for the company, as its shares have fallen by almost 25 per cent since listing on the Nasdaq in New York on May 18. Facebook’s initial public offering now ranks as the worst-performing in a decade, calling the company’s $104bn valuation into question.

Joanna Shields, the vice president and managing director for Facebook in Europe, the Middle East and Africa, said that Facebook’s office in Dubai is its first in the Mena region. About 5 per cent of Facebook’s total user base of 900 million people is in this region, she said.

“We really believe that this is a growth opportunity for the company,” said Ms Shields. “The user growth is already there, and what we’re trying to do now is make sure that we match that.”

Jonathan Labin, a Facebook executive, will manage the company’s office in Dubai, which will initially be staffed by just three people.

Companies such as PepsiCo and Emirates are among Facebook’s advertisers in this region, he said.

“We will service the entire region from here,” said Mr Labin. “We work with many, many advertisers in this region already.”

Facebook yesterday held an event at the lavish Armani Hotel at the Burj Khalifa in Dubai, where advertising executives gathered to hear of the launch.

Elie Khouri, the chief executive of Omnicom Media Group in the Middle East and North Africa, was among them. Omnicom controls 15 to 20 per cent of advertising spending in the Mena region – and Mr Khouri said it was already recommending Facebook to clients.

“We were not waiting for Facebook to open an office,” said Mr Khouri. “We have been part of the Facebook story for two years”

But the launch of Facebook in Dubai was still significant, he said. “I think it’s a commitment from Facebook to the region, that they’re serious about the region and they’re looking at this part of the world as a place where they will grow.”

Facebook executives declined to specify how much advertising revenue the company makes in the Mena region. However, Mr Khouri estimates it at $20m – a figure he expects to double in the next few years.

“Our estimates put them at $20m this year,” he said. “This will grow phenomenally fast.”

Facebook’s launch in the Middle East comes amid significant declines in its share price.

Shares in the company on Tuesday fell by 9.6 per cent, to hit a new low of $28.84. It had inched up to $29.13 yesterday during early-morning trading. Facebook’s IPO produced the worst five-day return among the 10 largest United States deals of the past decade, according to Bloomberg.

One problem identified during the IPO process was Facebook’s relatively slow inroads into mobile advertising. Mr Khouri agreed that this was an issue.

“It is a problem, because people are moving their social lives, and their social interactions, on to the mobile platform,” he said. “Monetising mobile has been a challenge for the industry for years.”

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