June Issue 2010

By | Business | News & Politics | Published 12 years ago

Despite the uproar that Pakistani internet users created over being denied access to Facebook, it is vital to remember that the 2.5 million users in Pakistan don’t just comprise the young and bored. Many businesses, too, have come to depend on Facebook for a portion — if not all — of their revenues. The prospect of reaching hundreds of thousands of people within a matter of a few seconds has led many entrepreneurs to avail Facebook as their primary marketing strategy. Numbers speak, and as Facebook’s popularity grows, so do these companies profits. But with the ban on Facebook that caught everyone by surprise, how did these businesses cope after being disconnected from their market.

Abid Beli is one merchandiser whose business took a blow since the Facebook ban. Beli runs an online store called Beliscity, which offers various gift and electronic items to be delivered all across Pakistan. Although he advertises his store on nearly 183 other social networks, Facebook provides him with the most traffic, especially from Pakistan and the UAE. His ads on Facebook give him nearly 200 clicks per day, a substantial score, given the current financial crisis of our times. “Facebook sent me my weekly report during the ban, and i was down to 16 clicks per day,” said Beli. “The only reason I didn’t take my ad off the website was because the Apple iPad is one of my top-sellers these days, and I was hoping to get some international orders on it if I could.”

Zehra Khan’s business also suffered due to the infamous ban. A home-based cupcake connoisseur, Khan recently launched her business on Facebook by the name of CuppyKakes, after friends and family pressed her to go public with her delectable desserts. Following the suggestion, Khan started a group on Facebook in February 2010 and within the first month, she acquired a fan base of more than 300 people. “I was already getting orders from those who had heard of me by word of mouth, but my new clients were able to place orders based on the pictures they saw in my group,” says Khan. “Following the ban, I developed my techniques even more, but since I could’nt post any new pictures, my fans had no way of knowing about the new stuff I was offering.” Being new in the market, Khan was largely reliant on Facebook to increase her clientele. But for now, her growth has slowed down markedly, Khan was left to rely on her old clients to keep spreading the word for her.

Aside from profit-seeking businesses, a plethora of charity organisations that also rely on Facebook for support and donations. The networking site serves as a cost-effective and far-reaching medium for NGOs to spread the word about their cause. “The easiest way to spread awareness and collect funds for our varying causes is through Facebook. It’s our lifeline,” says Ali Abbas, chairman of Pakistan Youth Alliance, a volunteer-run fund-raising organisation that aims to provide a platform for the youth of Pakistan. “We started our group on Facebook in late 2007 and used the site to create socio-political awareness. To date, we have nearly 4,500 fans on our page, and have been able to raise more than 75 lakh rupees for our various campaigns.” The organisation’s philanthropic efforts were put on hold, however, during the ban. About to launch two new campaigns — one to raise funds to open a school for slum children in Islamabad, and the other to open an educational facility for children in the juvenile jail of Lahore — Abbas is regretful that the donations are taking much longer to collect than usual thanks to the limited access group’s members had to Facebook.

But did Facebook share the financial pain? While many Pakistanis believed the company was incurring huge losses from the lack of traffic from Pakistan, the 2.5 million members in Pakistan only comprise 0.5% of Facebook’s entire population. Thus it’s unlikely that the ban put even a dent in Facebook’s wallet. A supposed BBC News article did the rounds on the Internet claiming that in the first two days of the ban, Facebook incurred losses of €2 billion. The article further went on to state that if the ban continued for a further seven days, the losses could amount to over €40 billion. However, these figures haven’t been validated by any Facebook officials, nor is there any evidence that the article is in fact legitimate. In fact, those numbers seem 100% fabricated to make it seem like Pakistan has struck a good blow to Facebook. According to BusinessInsider.com, 2009 revenues for the popular website were estimated to hit $550 million. Spread evenly across its members, Pakistan’s 0.5% of business would equate to $7,500 of lost revenue per day. Thus an 11-day ban would have lost Facebook a meagre $82,500. Another estimate says Facebook’s revenues are closer to $1 billion annually, which means that for each of its almost 500 million members, Facebook earns $2 annually — making the 11-day losses total an amount of $150,600. Pakistan’s impact is most likely the equivalent of a rounding error in Facebook’s financial journals.