Facebook, Meet the Locals

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"Some of these [sites] have a good foothold because it took the American sites a while to get a good local-language version," says Rebecca Jennings, a London-based analyst at Forrester Research (FORR) who has studied the social media habits of European consumers. She says that once a site like Hyves has become the norm in a local community, upstarts "have to provide an incentive for them to move."

MySpace and Facebook, the largest social networks in the world, have differing approaches to infiltrating foreign territory. MySpace has opened 18 overseas offices focused on developing local-language versions in markets with the most moneymaking potential. It also hires native speakers not only to translate the site into other languages, but to publish original content like the online-only series Candy Girls, exclusive to German MySpace users, about four party-hopping, twentysomething girls living in Berlin. "Translating the site is not the most important part," says Travis Katz, MySpace's general manager of international. "We have to ask, 'How do we make sure it reflects the culture?'"

Facebook leaves much of the customization to users themselves, providing tools that let people translate the site into their native tongues. Adopted by users with enthusiasm in many countries, the tools have helped Facebook quickly gain a toehold in some markets. On Mar. 10, about 4,000 Francophiles helped translate the entire site to French from English in 24 hours, a new Facebook record. The Palo Alto (Calif.)-based site also encourages foreign developers to create apps with a local flair. "Facebook Platform has helped us provide a truly local experience to our global user base, by using the expertise and knowledge of local developers," says Javier Olivan, international manager at Facebook. One example: A German developer created an app called Schnick Schnack Schnuck, a local version of rock, paper, scissors.

How Tuenti Targets Advertising

For Zaryn Dentzel, an American entrepreneur living in Spain, as Facebook has become more of a "social operating system" for people in all countries, it has lost some of its power as a meeting point for local communities. So in 2006 he launched the Madrid-based Tuenti, a Spanish-language social network that gives members a limited number of friend invitations. Users handpick close connections, usually best friends from very specific real-world networks, such as college dorms or favorite hangouts, as well as the more general categories, including city of residence or university attended, on which Facebook networks are based.

Since Tuenti launched, Facebook and MySpace have ramped up efforts to add users in Spain. So far, the local site has remained in the lead. In November, it had 5.1 million unique visitors, while Facebook's Spanish-language site had 3.5 million. Still, in recent months Facebook is growing more quickly. It has more than tripled its user base since May, when it had just over 1 million Spanish users. Tuenti doubled over the same period, from 2.5 million.

Eventually, Dentzel says Tuenti may compete in other countries and languages, but for now he's focused on making money from his Spanish base. Already, the myriad local networks on Tuenti are giving Spanish advertisers insight into real-world behavior that can help them tailor ads to specific audiences. A recent ad for a concert targeted at users in a specific geographic area yielded as much as a 40% click-thru rate—much higher than a traditional banner ad on most Web sites, which is usually less than 1%. Building on this strategy, Dentzel hopes to improve on his 2008 revenue of around €600,000 to €700,000 by as much as 10 times this year. Facebook, which doesn't release revenue figures, is understood to have generated 2008 revenue of $250 million to $300 million.

Advertisers Spread Their Bets

When it comes to advertising, country-specific sites lack a key edge held by the major players. Sites like Facebook are able to sell ads from major brands across a broad international platform. "Our global reach gives us a lot of advantage over the local guys on monetization," says MySpace's Katz. "We are a single platform that can support large ad buys in localized languages, but executed from a single point."

That's not keeping major advertisers like Coca-Cola (KO) from flocking to regional sites like Belgium's Netlog, where the beverage maker has around 30,000 "friends" signed up to its "brand page."

Coke also has fan pages on Facebook, of course, reflecting how many advertisers—and users—want to see and be seen on more than one kind of network. "What we'll find is that people will have two or three social networking sites at the same time," says Forester analyst Jennings.

Still, for holdouts in some locales, a local feel is all that a network really needs. Says Evert Bopp, a Dutch user of Hyves, Facebook "has all the bells and whistles that I don't really want."

For more on international social networking sites, see BusinessWeek.com's slide show.

Douglas MacMillan is a staff writer for BusinessWeek.com in New York.