Dive Brief:

• Facebook is shifting how it records advertising revenue to a local selling structure, which means that instead of recording ad revenue in its global headquarters in Dublin, it will record that income at its local companies in the countries where the ads were sold, per a company news post.
• The move is a bid to provide more transparency for governments and lawmakers who have asked Facebook and other digital platforms for more visibility into the revenue associated with locally supported ad sales in those countries. Facebook is one of the first to respond. 
• The policy change will be implemented throughout 2018 and the news post stated the goal is to complete the shift for all offices by the first half of 2018. The company's international HQ will remain in Dublin and the U.S. headquarters will continue to be in Menlo Park, CA.

Dive Insight:

Changes by Facebook in how it records and reports ad sales on its platform is likely a direct result of pressure from governments that large digital marketing platforms pay taxes for income generated by selling ads locally. The pressure has grown as digital ads sales have started to grow quickly outside of North America, where they've been strong for a while. Asia-Pacific sees 43.1% of total media spending going to digital, North America 38.4%, Western Europe 36.1%, Central and Eastern Europe 35%, Latin America 20.6% and Middles East and Africa 15.7%, according to research from eMarketer. 

There may also be another reason why making a move to better localize its business makes sense for Facebook at this time. The growth in digital globally has increased customer expectations around relevancy, something local brands are still best at and putting pressure on global brands to remain competitive locally, according to a blog post by Thomas Husson of Forrester.

Several trends are likely to accelerate the demand for local relevancy, including global fragmentation, empowered consumers, local innovators, mobile's role in local offline marketing and conversational interfaces. As marketers look to close the gap locally, it makes sense for Facebook to have stronger local operations focused on helping brands engage with experiences most relevant to a specific region's population.