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Why Globe’s Free Facebook is a money-making machine

Yesterday, Globe Telecom made a consolidated push for their Free Facebook campaign by making it possible for any subscriber in their network to have access to FB for free at varying user-experience.

Globe is almost synonymous to “free Facebook” when they pioneered this effort two years ago, an effort that Facebook CEO Mark Zuckerberg himself praised during his keynote address at the Mobile World Congress in Barcelona back in 2013.

Globe’s free Facebook promo isn’t all philanthropic but actually has a sound business model that can be akin to the freemium model. That is, offer a certain basic service with mass adoption in the hopes that a certain percentage of the market pays for the premium experience.

The same can be said of the free Facebook promo. While the walled garden is free, a click to a link outside of FB will trigger an automatic charge.

There are a number of ways how this affects subscriber growth:

1) Non-data users will be encouraged to try connecting to mobile internet via the free Facebook offer and then convert to a paying subscriber later on.

2) Current subscribers get free Facebook on top of their data allocation, allowing them to use their paid data on other more important uses which could prompt them to increase their usage as well.

3) Existing subscribers who have limited paid access continue to log on to the network since they still gain free allocation via Facebook. This will encourage subscriber retention.

So we asked Globe VP for Content, Jil Go, who is footing the bill on their free Facebook promo and she quickly responded that Globe is shouldering the entire cost of bandwidth. This is in contrast to the usual negotiations that Facebook have with other telcos in other countries where Zuckerberg pays for the bandwidth used to provide subscribers with free Facebook.

For the longest time, since the popularity of smartphones and internet messaging services, core service (calls and text) revenues of telecom companies have slowly declined. We can see this in their quarterly or annual ARPU or average revenue per user.

Globe Postpaid ARPU:

Q3 2012: Php1,173
Q4 2012: Php1,208
Q1 2013: Php1,105
Q2 2013: Php1,274
Q3 2014: Php1,187
Q4 2014: Php1,179
Q1 2015: Php1,148

Globe Prepaid ARPU:
Q3 2012: Php148
Q4 2012: Php148
Q1 2013: Php141
Q2 2013: Php141
Q3 2014: Php128
Q4 2014: Php132
Q1 2015: Php126

The challenge becomes two-fold — first is to increase the total number of subscribers and, second, to increase the ARPU for each subscriber. Globe claims that the free FB promo has provided them with a positive ROI (as indicated in #2 and #3). This could be proven by the company’s net income of Php13.4 billion for 2014 which is 170% higher than the Php5 billion they made in 2013. Globe has also maintained a higher revenue market share of 58% (vs. the 42% of Smart and Sun combined) from their postpaid plans.

Senior Advisor for Consumer Business Dan Horan has promised that free Facebook is here to stay. That will remain true as long as the usage cycle continues to generate more revenue for Globe.

Abe is the founder and Editor-in-Chief of YugaTech. You Can follow him on Twitter @abeolandres.

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12 Responses

  1. anon says:

    In other news, the Philippine telecom battles are a war of who can violate net neutrality more at this point.

  2. abuzalzal says:

    Hampas-lupa Plan?

  3. aries says:

    labanan ng mg ganid at magnanakaw kasama na ng kasinungalingan…

  4. abe says:

    Ayos, bili ulit ng globe sim.

  5. marc says:

    araw araw tumatawag naman para magbenta mga agent nila.. mga pota ang kulit. minura ko kanina.

    • ryan says:

      Madalas talagang tumawag yung mga agents ng globe, sinabi sa akin ng isang agent nila na marami pa raw tatawag sa akin para magbenta ng postpaid plan kasi raw hindi pa raw ako nag-confirm sa offer nila. In short, di ka nila tatantanan hangga’t di ka kumukuha ng plan nila.

    • MATADOR says:

      Ikaw ang dapat murahin. Kung ayaw mo bumili, sabihin mo ng maayus kung pulubi ka. Kala mo pogi ka?

  6. clashofclanner says:

    wala ba free clash of clans??

  7. berebekwa says:

    Or…. Kakainin ang extra regular load mo as soon as i-on mo ang mobile data mo kahit ang sadya mo ay mag free fb. (Kahit walang app na gumamit ng data and naka off lahat ng sync ko)

    • kiddo says:

      FYI.. SURFALERT ON> 8888

      Protect yourself from unexpected mobile internet charges! Get regular alerts for free when your phone or device connects to the internet and you don’t have a surf promo. Dial *143# and go to MyAccount or text to 8888:
      SURFALERT ON – Turn on alerts SURFALERT HOLD – Turn off alerts for the day SURFALERT OFF – Turn off alerts permanently Regular browsing rate will apply if you’re not on a surfing promo while SURFALERT is turned OFF.

      Siguro naman naintindihan mo kung anung purpose nyan?

  8. Zobel says:

    If this is such a cash cow, then why do they pull it off the market after several months, only to return it? Then they remove it again. tapos ibabalik na naman. Trust me, I know. I’ve been using their free data since November 2013. Last February yung pinakahuling promo that I’m aware of. Saka mabilis lang yan pag madaling araw.

    • Abe Olandres says:

      I actually asked that same question and they answered that since this is a promo, they had to get permission from DTI which gives them approval of start date and end date. Then they apply for another one again once it expires.

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