Five things you need to know: Facebook-PayPal tie-up

1. Client base. Facebook has been extremely astute in making the site easily accessible for SME’s as a self-serve advertising option. This can be seen in the number of retailers marketing their services and products there. These companies don’t have the dollars to justify an intermediary like a media planning agency, but still have a requirement to reach a large number of people at low investment levels. Facebook delivers this for them, and in turn they deliver a huge market in terms of the volume of advertisers that are available. In this sense, they’re getting some of the market share that Google has been dominating and where other social media like Friendster have all but missed out. It makes sense for them to protect this revenue stream with an easy payment route like PayPal.

2. Distribution network. It looks like we are seeing a streamlining here in Asia of the distribution network for purchasing Facebook ads. It’s no secret that Facebook is looking to put in place its own team. It looks likely that we're going to see a simplified dual purchase approach: Firstly, PayPal purchased basic ads (Social ads etc) for SME’s and secondly, an internal team for integrated and bespoke requests from large brands with intermediary representation.

3. Retail. The most successful social networks here in Asia have a strong retail element. For QQ in China, reports tend to suggest that anything up to 90 per cent of their revenue is from retail purchases. Further integration with PayPal is a likely indication of Facebook opening up to the creation of further shop fronts where purchases are made within the platform without the need to move away from the site.

4. Local relevance. The point to stress here is that Asian users are already extremely comfortable with PayPal as their payment method of choice for online transactions. All those users in Asia-Pacific will be extremely comfortable using it for payments on Facebook.

5. User behaviour. Online apps and games are big news. Facebook RockYou, one of the world's largest creators of apps and games such as HugMe and ZooWorld across social media platforms, recently recorded numbers larger than Facebook itself! In places like Hong Kong and the Philippines, over 25 per cent of the online population use these games and apps on Facebook every month. PayPal allows them to trade real currency for online currency and fully engage in such platforms.