Facebook is ‘friending’ Latin America

LIMA, Peru — Latin America, where 1 in 3 people already have Facebook accounts, will increasingly drive the social network’s global profits.

That is according to Alexandre Hohagen, Facebook’s vice president for the region, in an exclusive interview with Reuters’ Spanish-language service, in which he highlighted both Latin America’s already heavy use of the website and its potential for growth.

On Wednesday, shares in the world’s largest social network finally surpassed their value when they debuted on the stock exchange in May 2012, powered by major growth in smartphone advertising revenue.

“We [Latin America] have had an important role in the growth of those company results,” Hohagen, a 45-year-old Brazilian, told Reuters. “And we are still far from the ceiling. We are a region of 600 million people where 250 million people have still never connected to the internet.”

Mobile phones have proven a challenge to many internet companies, with the small screens — compared with laptops and desktops — leaving little room for advertising.

But Facebook appears to have solved that problem in a big way, with its second quarter results rocketing 53 percent thanks to a 73 percent rise in global revenues from smartphone advertising.

That positions the network’s Latin American operations perfectly. Most internet users have yet to adopt the new technology but that’s now expected to change rapidly.

Numbers cited by Reuters project that 42.4 percent of mobile devices sold in the region this year will be smartphones. And smartphones are expected to account for the majority of cellphones purchased in 2014.

Altogether, that means Facebook, already wildly popular around the region, still has huge room to grow its profits here.

With 84 million user accounts — roughly half the population — Brazil now vies with India as Facebook’s No. 2 market, after the United States. Meanwhile, Mexico has a similar ratio, with 50 million users, while Argentina has 24 million and Colombia 19.8 million. Peru, Venezuela and Chile each have roughly 11 million accounts.

“It is difficult to find a tech company where Latin America plays such a big role,” added Hohagen. “Brazil, Argentina, Mexico, Chile and Colombia are the countries where we are the most concentrated today. The subtlety is in going where the companies with the most awareness for the growth of the business are.”

With reporting by Reuters' Esteban Israel in Sao Paulo, Brazil.