Facebook is a social networking website that connects people with friends, relatives and associates. It is comparable to services like Friendster and MySpace. In February 2004, Harvard undergraduate Mark Zuckerberg and two of his roommates built the earliest version of Facebook as an alternative to Harvard's printed student directory. Facebook core service is free and supported by advertisements. The site allows individuals to create profiles that include information about anything of interest to them. This topic can include personal hobbies, pictures, games or club and business affiliations. A user can also view another person's profile or connect to a company's profile page in order to stay in touch with them and receive notifications when there is new activity.
Many users say that after creating a profile, they found themselves spending hours a day updating their pages, looking for people with shared interests, and reading others' profiles and looking at their photos-exactly the kinds of activities Facebook facilitates. A seemingly infinite web of connections, however, poses a risk for never-ending wandering, seeing who knows who, who likes what, and how it all fits together, with no particular goal in mind.
However, despite its popularity, Facebook has been less successful at generating revenue. Also, it failed to generate revenue by entering into banner advertisement through Facebook beacon program which met a backlash from users. Other problem is with Facebook connect platform not capable of developing on-line functionalities that is value-add to revenue. To generate more revenue Mark Zuckerberg (CEO) need to improve on the above critical problems that are crucial for contribution of facebook's revenue.
Recommendations
Year over year, Facebook's revenues have typically doubled, from $150 million in 2007 to around $300 million in 2008 and so on. The breakdown of revenue streams is fascinating; showing the extent to which well-targeted ads based on massive amounts of user data still drives how Facebook monetize the Web. Now according to the latest data Facebook, the ubiquitous social network made upwards of $700 million in 2009 and is expected to reach a phenomenal $1 billion in revenues in 2010.
"Vendors -- Google, Microsoft, Salesforce.com, and IBM -- are bringing social platforms to market all over the place for both business and personal environments". "Users are getting more sophisticated about wanting more control over their online personas as well as their personal data, comments, photos, video and history. Facebook is monetizing the online personas of their users, by doing them the favor of integrating the Facebook environment with other social platforms and Web services. "
I would recommend Facebook to go for online marketing in the web using Facebook connect platform covering wide area in web using newer online Facebook applications. When a user of Facebook opens his/her page all the third-party website applications should come onto news feed based on user profile, interests etc. so that user can select website or advertisements accordingly. Here I am comparing it with Google Adsense where in user gets money added to his/her account based on a click which is a good mechanism to improve advertising. Likewise, Facebook can use that strategy on different basis. It will generate lot of revenue. The process has to be taken place with permission from user to get information from his/her profile. This should be Facebook strategic move to own its customers and get the revenue these customers generate. "It is likely the first of a number of steps toward pushing social networking beyond what it is now. In fact, we may stop calling it social networking as it becomes an integral part of the Web experience." As I said earlier to get more revenue from banner advertising the placing of advertisements in user home page should be in such a way that it creates interest for user to click on that advertisement. The new tools let operators of other Web sites share user data with Facebook, providing the social networking firm with new online advertising opportunities. This will affect the future breadth and pervasiveness of social networking, extending it to many new areas of the Internet, including news and e-commerce sites.
The advertising option had the potential of tapping into a vast pools of money allocated to marketing budgets. However, this option was feasible only if Facebook increased the frequency with which members clicked on the ads. This recommendation would work as a blue ocean strategy to Facebook it is going to go where profits and growth are - and where the competition isn't.
A key question is whether Facebook users will see the moves as a favor or a flagrant misuse of personal information. Facebook users have a history of speaking up -- loudly -- about perceived threats to their privacy.
Recommendation for the above problem would be as follows:
Protecting your personal information on Facebook is a no brainy thing; all it requires is bit understanding of the network with the use of a little common sense. Sadly because many fail to learn the basics; they have exposed their personal information online. Understanding this combination will help any user protect their personal information on Facebook.
A lot of protecting your personal information begins with using some common sense. Common sense should dictate what you should and should not write or upload on your profile. For starters don't write social security, bank account, telephone / cell number, or your home address. This might seem like common sense but so many pass it on in comments online. In the same way you want to avoid uploading photos that depict personal moments or sensitive information. But using simple common sense is only half of the ways to protect information. The other half requires user to understand and know all the privacy options available on Facebook. Any online networking site offers its users a variety of security features that would protect ones profile.
Understanding your Facebook and using common sense will allow any user to enjoy networking online without having to expose their personal information to an unwanted individual or group. So this should be the message given to users to solve privacy issue. There are a few things I learned not only on Facebook, but other sites as well. One thing you should never do is give out your personal information to strangers. Just because you have been chatting with them on-line and they seem like nice people, it could all be a scam.
Social networking sites such as Facebook are no different than any other kind of online interaction. Facebook requires a lot of personal information in order to actively participate because its business model is based on real people as opposed to chat names or identities.
Recommendation for Facebook connect
Facebook is on top of its game right now but Facebook users reading this will agree that Facebook chat is not exactly the best instant messenger they have ever used. As a matter of fact, it could even be classified as one of the worst. So integrating with Skype is probably the best thing that could have happened to Facebook when it came to its chat service. Now with this integration, Facebook users will be able to call, SMS, or chat with their Facebook friends through Skype. This new affiliation gets Facebook all the capabilities of Gtalk or Google chat. Unless Google Me which is new product from Google has out-of-this-world features, Facebook seems set to be on top for some time to come.
Summary
By early 2009, Facebook had clearly emerged as the largest and the fastest growing on-line social network with its unique business model as discussed above in the recommendations. To generate more revenue, to deepen Mark Zuckerberg commitment to advertising this site has to turn towards more of online marketing, improve the functionalities associated with Facebook connect platform. The advertising option had the potential of tapping into a vast pools of money allocated to marketing budgets. However, this option was feasible only if Facebook increased the frequency with which members clicked on the ads.
The other issue is privacy of Facebook users which can be resolved by giving simple knowledge to the users about the privacy settings, how network functionality works when it comes to online social networking sites and finally a bit of common sense that should be from users side. There are a few things I learned not only on Facebook, but other sites as well. One thing user should never do is give out their personal information to strangers.
Business Plan Template (Do this second)
What is your mantra (3-10 words on why your company should exist)?
Facebook is a social networking website that connects people with friends, relatives and peers.
What is the overall mission of the business (1-3 sentences on what your company does or will do)?
"Facebook's mission is to give people the power to share, discuss and make the world more open and connected."
How will you make money in terms of product differentiation and/or being the low cost producer?
Ads- This is the big secret behind Facebook's revenue
Facebook gifts- Simply writing 'happy birthday' suffices for some, the 'send a gift tab' on your friend's wall encourages others to send a virtual gift - paid for online. All the money almost always goes to the company.
Facebook Apps- Performance advertising is how it is differentiated from other social networking sites. Take an example of Farmville, which is reasonably doing well in Facebook. Now the application is provided free for the users of Facebook and the parent company (Zynga) is getting a lot of traffic because of the game popularity in Facebook. So Facebook is making bit money here too.
What are your goals & objectives over the next 3 months to year (2-6 phrases on precise performance intentions)?
Over next 3 months the goals and objectives would be:
To monetize on target advertising.
Improve privacy options for users for Facebook platforms.
Developing more Facebook applications as well as improving their performance.
Choosing an option of online marketing to cover more space on web.
Making the option of online marketing a blue ocean strategy
What tactics will you use over the next 3 months to a year to reach your objectives and mission (2-6 phrases)?
Online marketing in the web using Facebook connect platform covering wide area in web using newer online Facebook applications.
Creating a survey of "fans" and friending customers. It will be one of the tactic that appears to work in both B2B and B2C.
Organizational and Industry Analysis Template (Do this first)
Give a brief description of your business model including what products or service you are producing or will produce?
Facebook is a network effects business model. This type of business model is based on network effect which causes a good or service to have a value to a potential customer dependent on the number of customers already owning that good or service. It's a social networking site that connects us with friends, relatives and companions.
Describe your customers?
Students of high school, college and university communities- to connect and realize their personal need for online networking
Networking Professionals and relationship seekers
List and describe your current competitors?
MySpace (A place for friends)
Twitter (Social networking and micro blogging service, enabling its users to send and read other users' messages called tweets.)
Orkut (Connect with friends and family using scraps and instant messaging. Discover new people through friends of friends and communities)
Tagged (Tagged is all about social discovery. Tagged claims that they are the social network to meet people)
List and describe your potential competitors?
The main competition is from Google Me, a supposed social networking platform being developed by Google (Yet to be released)
MySpace could be another potential competitor in attracting number of users in this social network.
Who will you purchase materials, components or other inputs from?
Facebook gifts, Red-Bull, Third-party applications from Zynga, Slide apps, Advertising terms and conditions and profile credits.
SWOT (consider human resources, R&D, marketing, procurement, manufacturing, distribution, engineering, IT, finance, accounting, and legal)
What are your strengths (products, R&D, supply chain, brand, pricing core competencies, resources, infrastructure, scalability & interfaces)?
Fan base, wall posts, newsfeed and photos
Online growth covering more space of web
Unique features and loyal customers
Millions of users leadership
What are your weaknesses (products, R&D, supply chain, brand, pricing, core competencies, resources, infrastructure, scalability & interfaces)?
Violating privacy of users.
Not possible to judge users by first impressions
No shortcuts allowed on profile page
Not possible to customize.
What are the opportunities (growth, market share, product lines, Blue Ocean, complimentary products, lock-in, brand, & first mover adv.)?
Product and service expansion (Network)
Online growth
Building proper instant messaging, calling and web chat
What are the threats (substitutes, emerging technologies, new entrants, economic climate, government regulations, and social/culture issues)?
Competition: MySpace and Google
Controls what people see on their profile page
Minimum tagging controls
Spamming/spam news
Strategy canvas for existing products compared to competitor or industry
Very High
MySpace, Orkut
MySpace
High
MySpace
Google Adsense
Average
MySpace
Low
Very Low
Orkut
Tagged
Tagged
Attributes
Socializing/Networking
Privacy
Customization
Advertising Revenue
If appropriate, complete strategy canvas for new product compared to competitor or industry
Very High
LinkedIn, MySpace
GoogleAdsense, MySpace
High
Facebook, LinkedIn
Facebook, Orkut
Average
MySpace
MySpace
Orkut, Twitter
Low
Tagged
Very Low
Orkut
Attributes
Socializing/Networking
Privacy
Customization
Advertising Revenue
