Group Leader: Lee Ke Ying
Secretary: Koh Xinyi Wendy
Class: 1016
Facebook
Secretary: Koh Xinyi Wendy
Class: 1016
Facebook is one of the most popular social networking websites in the world with more than 1.15 billion of monthly users. Facebook made its first launch in February 2004 with membership made applicable to Harvard students only. Over the span of 2 years, Facebook expanded and its membership were extended to anyone who is 13 years of age and above with a valid email address. Since then, Facebook’s market worth has soar to more than $122 billion today.
Facebook is a “pure play” business model.
1. Value Proposition
Value Proposition statement: Facebook helps you connect and share with the people in your life.
2. Revenue
Facebook’s revenue model is advertising. In 2013. Facebook’s revenues increased by 38 percent over the first quarter in 20013. Overall, the company's advertising revenues climbed to $1.25billion. The main source of revenue was through mobile site advertisement. The mobile site advertisement revenue soared as more users are surfing Facebook through their smartphones than on desktops. In the first quarter, mobile advertising represented around 30% of Facebook’s advertising revenue.
Besides advertising, Facebook‘s revenue comes from payment of games on the site. The main payment comes from games created by Zynga. Facebook takes a 30% cut of Zynga's revenue, and a roughly similar cut from other games companies.
3.Market Opportunity
Across the US market, mobile advertising expanded by 178 per cent last year to more than $4.1billion, according to figures from the research firm eMarketer. With the increasing numbers of consumers spending more time surfing the net through mobile devices such as smartphones or tablets, advertisers will place more ads on Facebook’s mobile site to reach out to their targeted group of consumers.
Zynga may also create more mobile application games that are suitable for smartphones and tablets.
4. Competitive environment
Facebook has dominated the social media platform followed by Twitter. However, the pool of competitors is growing in size and number. As photo and video sharing has gained popularity, lesser known social apps like Snapchat and WhatsApp are growing as well. KaoKao talk has 100 million users is huge in Asia as well as the US. Besides sending message, KaoKao talk enables users to create games for free and play with their KaoKao friends. This had caused Zynga to lost a quarter of their users to KaoKao and this may reduce Zynga’s revenues and as a result lowering Facebook’s revenue. With the rising of new applications, users may spend lesser time using Facebook.
5. Competitive Advantage
Continuous improvement and innovation is one of the competitive advantages of Facebook. It changes it interface design yearly and innovatively to entice and retain users. Secondly, the ease of navigation has attracted many users from all walks of life to the website. Even users who are not IT savvy are able learn the ropes within a short period of time.
6. Market Strategy
Facebook first marketed itself mainly through word-of-mouth, business and technology press media. To reinforce a stronger and positive brand image, Facebook has recently hired its first CMO to work on its marketing effort. It is the first time Facebook has taken a pro-active role in controlling the marketing of its brand image.
7. Organisational Development
Facebook has a dual-class share structure, which means that the founder, Mark Zuckerberg, although owning about 18% of the company’s shares, has more 50% control of the voting power and he has the right to influence and make decisions.
8. Management Team
Mark Zuckerberg (Founder, Chairman and CEO)
Sheryl Sandberg (Chief Operating Director)
David Ebersman (Chief Financial Officer)
Mike Schroepfer (Chief Technology Officer and Vice President of Engineering)
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