FACEBOOK CASE

Group-5 Section-B1

1. WHY DO PEOPLE USE FACEBOOK AND WHAT DO THEY DO WHEN THEY ARE THERE?

People use Facebook to fulfil two basic social needs:

The need to belong

The need for self-presentation

What do they do?

Share information with friends and take advantage of its functionalities

Update their profile pages, posting pictures and other information

Use Facebook platform to develop and build applications including games

View profiles of other users, and communicate with each other publicly or privately

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1. WHY DO PEOPLE USE FACEBOOK AND WHAT DO THEY DO WHEN THEY ARE THERE?

What do they do? (contd.)

Create user groups to discuss with others who share their interests

Share pictures, blog messages and videos

Message/Chat privately/publicly

Keep tabs on what friends do via their News feed

Find former schoolmates/friends using the search feature

Publish content through different applications (photos, videos, notes)

Access other platforms (Flickr, Twitter)

Control what strangers and friends may see and read about them3

2. EVALUATE THE SUCCESS OF ADVERTISING ON FACEBOOK

Facebook launched Facebook Ads which gave it revenue due to users clicking on the ads and the advertisers offering higher prices for frequent ad displays ( Fall 2007)

Introduced Social Advertising(2010)- displaying ads to friends of the people who liked the company page

Social Ads-allowed companies having Facebook Page to target friends of fans of that page(Exhibit 11)

Sponsored Stories and Ads for Applications performed 2 to 10 times better than the standard Facebook Advertising

Mobile Sponsored Stories received 12 times the click through rates on mobile compared to desktop Ads(Exhibit 13)

Mobile sponsored Ads accounted for 14% of Advertising Revenue Promoted Posts- allowed companies to reach out to larger fan base for a fee

(upto $500) (May 2012) Advertisers purchase a large banner on the Logout Screen to reach 37 million

users everyday for a price of $700,000(Exhibit 12) (Feb 2012) 4

2. EVALUATE THE SUCCESS OF ADVERTISING ON FACEBOOK

85% of the revenue came from advertising and it accounted for 28% of US online display ads

Average users clicked only 5 out of 10000 Ads- very low click through rate Facebook had no effective mobile ad strategy despite half of users accessing it

through smart phones and tablets Facebook tested its own mobile Ad network, third party apps and websites to

deliver traditional mobile Ads based on user’s Facebook data but was sparked with Privacy concerns.(Sept. 2012)

Highly successful –generated 10 times more clicks than regular advertising Facebook decided not to include ads during Graph Search Rollout Big advertising companies like General Motors(GM) pulled out the entirety of

its paid advertising as the management felt that $10 million did not impact their sales as promised

3. EVALUATE THE SUCCESS OF FACEBOOK FAN PAGES

Fan pages are free custom Facebook pages used to build a closer relationship with the audience and customers of:- Companies Institutions Communities Artists, Bands and Public Figures Entertainment

Companies use Fan Pages for:- Advertising Conducting survey Promoting deals and new products

3. EVALUATE THE SUCCESS OF FACEBOOK FAN PAGES

Advantages:- Integrated right into a user’s news feed, if a company updates

their status, uploads photos and videos, a fan will see it and know about it

When a fan promotes(likes) a page, the page is shown on his/her friends news feed as well, making it more likely for your friends to promote(like) the page

Facebook insights – Facebook offers great analytical tools for its fan pages

Promotions on fan pages performed 2-10 times better than standard Facebook advertising

4. EVALUATE FACEBOOK PLATFORM AND FACEBOOK FOR WEBSITES

Facebook Platform Launched in 2007, Facebook platform was a set of tools that enabled 3rd

party developers to develop applications inside the Facebook environment

Increase in the user engagement and growth in site’s trafficSocial Gaming Facebook’s platform to integrate social elements into gaming Increase in popularity of social gaming by 8% Rise in the number of users playing online games like Farmville, Cityville Facebook derived monetary benefits from outside developers Introduced Facebook Credits, a virtual currency that could be

exchanged for virtual goods in applications across Facebook

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4. EVALUATE FACEBOOK PLATFORM AND FACEBOOK FOR WEBSITES

Facebook for websiteso Launched Open Stream API to incorporate Facebook’s activity streams of

user’s inside 3rd party applicationo 3 different functionalities:

Users could save time by clicking the “Connect with Facebook” button and third party site pulled their personal data from their profile to establish an account

Users could interact with their Facebook friends in the context of third party website

A third party website could send information on a user’s activities on the website to Facebook for his or her friends to see

o Introduced the “Like” button for websiteso Sites that used this saw a 30%-200% increase in registration on their siteso 15%-100% increase in user engagement which is measured through

reviews o By 2012, Facebook for websites had been integrated into 24.3% of the

global web

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5. WHICH OF THE THREE OPTIONS SHOULD FACEBOOK EMPHASIZE AS IT SEEKS TO MONETIZE ?

Advertising on Facebook: Pro:• Innovative advertisement ideas like ads on the logout screen, thereby not

disturbing users Facebook experience. Good fee of $700,000 charged• Very popular among businesses as a wide range of consumers can be targeted at

once• Generates 10 times more clicks than regular advertising• More impactful advertising because of posts when a ‘friend’ uses an application• Extremely powerful ‘mobile advertising’. With the advent of 3G and 4G

technologies and with users always on the move people are rapidly shifting to using Facebook on their phones

Cons:• Low click rate of 0.05%• Privacy concerns of individuals: People don’t want to share which applications or

pages they are visiting• Facebook did not have enough experience in the emerging mobile data driven

advertising segment

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Best option to invest

o Advertising on Facebook

Although Facebook had no effective mobile ad strategy, despite half of users accessing it through smart phones and tablets, but this market has immense potential

A lot of revenue can be generated if Facebook invests in this market by building its mobile ad network along with maintaining its successful revenue generating corporate ads, social ads and promoted posts

5. WHICH OF THE THREE OPTIONS SHOULD FACEBOOK EMPHASIZE AS IT SEEKS TO MONETIZE ?