Business Model Of
Presented By-
Fahed Sami
Abhinav Pandey
facebook
Facebook is a social utility that helps people
communicate more efficiently with their
friends, family and coworkers.
HISTORY
§ In February 2004, Facebook was created by Mark
Zuckerberg (with Dustin Moskovitz, Chris Hughes and 2
other Harvard students).
§ Initially, the membership was restricted to students of
Harvard University.
§ Since September 11, 2006, it has been available for any
email address globally, but the interface is in English
only.
§ On May 24, 2007, Facebook launched the Facebook
Platform. It provides a framework for developers
(anyone) to create applications that interact with core
Facebook features.
§ As of Sept. 25th 2007, with 42 million active users,
FaceBook is the second largest social networking site
globally after MySpace Source.
§
§
HISTORY
§ In February 2004, Facebook was created by Mark
Zuckerberg (with Dustin Moskovitz, Chris Hughes and 2
other Harvard students).
§ Initially, the membership was restricted to students of
Harvard University.
§ Since September 11, 2006, it has been available for any
email address globally, but the interface is in English
only.
§ On May 24, 2007, Facebook launched the Facebook
Platform. It provides a framework for developers
(anyone) to create applications that interact with core
Facebook features.
§ As of Sept. 25th 2007, with 42 million active users,
FaceBook is the second largest social networking site
globally after MySpace Source.
§
§
Things you can do on Facebook
§
1. Keep in touch with your old friends and meet new
ones
§ Private and public messaging options .
§ Keep tabs on what your friends do via their News feed .
§ Find friends using the search feature.
§ User groups let you discuss with others who share your
interests .
2. Keep them informed about what you do
• Update your status.
• Share your pictures, blog messages and videos
• Promote events you are organizing or planning to attend.
•
•
•
§
3. Access a wealth of applications made for all purposes
§ Fun, interactive applications.
§ Applications that let you publish content (photos, videos,
notes,…).
§ Applications linked to other platforms (Flickr, Pownce,
Twitter,…).
§
§
4.Retain your privacy
§ Control what strangers and friends may see and read
about you.
FACEBOOK FACTS
1. General Growth
• More than 250 million active users
• More than 120 million users log on to Facebook at least
once each day.
•
2. User Engagement
• Average user has 120 friends on the site
• More than 5 billion minutes are spent on Facebook each
day (worldwide).
•
3. Applications
• More than 1 billion photos uploaded to the site each
month
• More than 10 million videos uploaded each month.
• More than 45 million active user groups exist on the site
•
4. International Growth
• More than 50 translations available on the site, with more
than 40 in development
• About 70% of Facebook users are outside the United
States.
5. Platform
• More than one million developers and entrepreneurs
from more than 180 countries
• Every month, more than 70% of Facebook users engage
with Platform applications
• More than 350,000 active applications currently on
Facebook Platform.
•
6. Mobile
• There are more than 65 million active users currently
accessing Facebook through their mobile devices.
• There are more than 180 mobile operators in 60 countries
working to deploy and promote Facebook mobile
products
BUSINESS MODEL
Business model is the mechanism by which a business
intends to generate revenue and profits. It is a summary of
how a company plans to serve its customers. It involves
both strategy and implementation. It is the totality of:
• How it will select its customers
• How it defines and differentiates its product offerings
• How it creates utility for its customers
• How it acquires and keeps customers
• How it goes to the market (promotion strategy and
distribution strategy)
• How it defines the tasks to be performed
• How it configures its resources
• How it captures profit
•
•
•
• Facebook fits into the network effects business model,
which was pretty common in the dot-com boom of the
late 1990s.
• This type of business model is based on the 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.
• Facebook fits this model because the more registered
users there are on the site, the more useful the site is.
How it will select its customers
• Facebook’s selection of customers is a very important
part of the company’s business model.
• Social networking sites have been on the rise in the last
decade and many are in existence today including
MySpace, Friendster, and LiveJournal.
• Most of these social networking sites are not very
specific and have a variety of users. This fact is what
makes Facebook’s selection of customers so important.
• Zuckerberg developed a personal niche for his site in
making it specifically for high school (recently), college
and university communites, primarily in the United
States.
How it defines and differentiates its product
offerings
• The second aspect of a business model is how the
company defines and differentiates its product offerings.
• One of the key elements to Facebook’s success is
differentiation, particularly from the other social
networking giants.
• Facebook is the only brand of these sites that is for
students and students only.
• Its main features are:
• News feed
• Mini-feed
• Share
• Wall
• Lexicon
• Mobile
• Public listing search
How it creates utility for its customers
• The utility that Facebook creates for its customers is
essential in creating traffic.
• Online social networking companies like Friendster have
failed in the past for being too one-dimensional and
unreal.
• Facebook was able to recognize these mistakes and
capitalized greatly in forming a very real online social
network.
• Facebook is useful in a variety of ways including:
• Forming study groups
• Keeping in touch with friends at distant schools
• Finding others with like interests
• Keeping up with social events
How it acquires and keeps customers
• Facebook is able to easily acquire and keep customers
due to its increasing popularity.
• Networking is very important in college and Facebook
helps students to establish these with little effort on their
part.
• Facebook acquires customers as students realize their
personal need for online networking, a need that is
becoming more and more necessary everyday.
• When students meet they often tell each other to
facebookthem as a means of furthering a friendship.
Someone without an account misses out on this
completely.
•
•
•
• contd….
•
• Keeping the customers is a very easy task once they are
on Facebook.
• Users continue to visit the site to partake in one of the
newest activities, “facebooking.”
• Facebooking defined is the act of simply browsing
though facebook.com with no specific purpose.
• More specifically, the verb “facebook” (as in “to
facebook”) is used across campuses for the looking up of
a certain individual and a) adding him/her as a friend, b)
sending him/her a message, c) ‘poking’ him/her, or d)
writing on his/her ‘wall.’
• These features bring about major opportunities for the
communication that college students are looking for .
How it goes to the market
Distribution Strategy
• Zuckerberg’s distribution strategy is the key element
behind his idea, the internet.
• Facebook provides a service that connects college
students through a few clicks of the mouse. This strategy
is new as it’s not used by many social networking sites.
Promotion Strategy
• Promotion hasn’t been a major issue due to Facebook’s
instant success.
• Facebook has not funded any major advertising
campaigns in order to increase awareness because the
awareness was there from the start.
• The promotion of the site has been mostly by word of
mouth.
How it defines the tasks to be performed
• The tasks to be performed were very simple from the
beginning in creating Facebook.
• Essentially, it would be an online directory comprised of
college students for their use and benefit .
• Through classes, groups, interests, and friends the site
notifies the user how he/she is connected.
• Another major task was setting social network site apart
from the others. In order to demand traffic a site must be
unique in one way or another.
• This task was performed by making the site exclusive to
ones college, forming a more intimate community .
How it configures its resources
• The major resources of Facebook are the servers that
keep the site running despite the heavy amounts of
traffic.
• These servers are very essential because the services and
operations of Facebook depend solely on the website.
• Facebook is the second most-trafficked PHP site in the
world, and one of the largest MySQL installations
anywhere, running thousands of databases.
• Facebook has built a lightweight but powerful multi-
language RPC framework that allows the company to
seamlessly and easily tie together subsystems written in
any language, running on any platform
How it captures profit
• The big question behind Facebook and many other free
online networking sites is: how do they actually make
money?
• The answer is mainly advertising. Advertisements on
Facebook are very valuable considering the amount of
traffic the site is able to generate.
• Facebook offers three different ways to advertise:
• banner ads,
• sponsored groups, and
• text announcements
Conclusion
• Facebook has a very specific and strong business model
that will bring the company continued success in the
future.
• The site is growing every day in many categories and is
drawing more and more attention.
• Major corporations are seeking out the Harvard dropouts
for a possible deal, but these guys are just having fun for
now.
• Their main concern is providing a useful service.
Thank
You
