3. Introduction
Social Network Sites
A Definition We define social network sites as web-based
services that allow individuals to construct a public or semi-
public profile within a bounded system, articulate a list of
other users with whom they share a connection, and view
and traverse their list of connections and those made by
others within the system.
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4. FACEBOOK
Start
launched the site as a Harvard sophomore on February 4, 2004
Now
Now, eleven years later, the site has become one of the biggest web sites in the world, visited
by 1.35 billion people a month.
Vision
People use Facebook to stay connected with friends and family, to discover what’s going on in
the world, and to share and express what matters to them.
Mission
Facebook’s mission is to give people the power to share and make the world more open and
connected.
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6. PESTLE
Bureaucracy Issue
If your organization is assessing the possibility of operating
in the Middle East or in some parts of Asia then the political
dimension can be the most serious consideration of all.
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7. PESTLE
Economical
If your organization is assessing the possibility of operating
in the Middle East or in some parts of Asia then the political
dimension can be the most serious consideration of all. The
organization’s entry into the new territory may not be
straightforward
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8. PESTLE
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Social
Social factors and cross-cultural communication play a
critical role in international and global markets, and your
success will depend on the depth of your research in this
area. Getting this wrong is costly and may not come to light
until considerable investment has been made by your
organization.
9. PESTLE
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The pace of change in technology is becoming more rapid,
and often changes that impact your market come from
unexpected sources.
Technological factors can be broadly divided into two areas:
manufacture and infrastructure.
Organizations that fail to keep up with technological
advances leave opportunities for a smaller producer or new
entrant to enter their market.
10. PESTLE
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Legal
Recent years have seen a significant rise in the number of
regulatory bodies that have been set up to monitor
organizations’ observance of legislation relating to all areas
of operations, including consumer protection, employee
welfare, waste disposal, and how their earnings and
investments will be taxed.
11. PESTLE
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Environmental
These ecological and environmental aspects can have
consequences that are felt both on an economic and a
social level.
- Use social media to improve environmental performance
- Each media should be used in a different way
- Keep it fun, keep it engaging
12. Use Of Social Media Marketing
We began by simply asking marketers if they use social
media to market their businesses?
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15. Facebook Key Resources - Tangible
Finacial Resources
Strong cash
position especially
after the IPO
Huge data centers with very
high capacity servers & storages
Accurate profile
photos & videos
hobbies, interests,
places, history,..
1.11bn web MAU &
Physical Resources
End-user data Installed base
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16. Facebook Key Resources - Intangible
Network Effect Switching Cost
User Lock-in
Most of friends &
relatives are pushing for
facebook
Gaming
Loss of historical data
Loss of friends & connections
Loss of registration in some web sites
Strong brand with well known
favorable signs “like” buttonBrand
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17. Facebook Capabilities
Analysis of Data
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Developement of new
products and features
Acquiring talents & startups
End user
Messages Photos & video pages
video calling gifts Places
Marketers & Advertisers
Targeted ads with high hit ratios
Developers
APIs Social Plugins Payments
FB credits Login
Strong financial position
FB easily attracts best talents
from competition
Acquiring early competitors such
as Instagram
connections User data
18. Facebook Competitive Advantage
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Largest installed base
for social media
High Switching Cost
User lock-inNetwork Effect
Unique access to the largest database of
accurate and detailed users’ contents
Valuable
Rare
Costly to imitate
Organized to be captured
19. SWOT
Strengths
Large installed Base 1.11B monthly active users
Biggest and the strongest brand in social networking.
Global phenomenon with presence of over 70 languages,
Integration with websites and applications.
Excellent users experience and understanding of user’s needs
and behavior.
Strong financial position in 2012 with 9.6B Cash Position
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Weaknesses
Only two sources of revenues. low investments in “mobile ads”.
Weak business model. Lack of website customization.
Weak CTR (click-through rate) of advertisements
20. SWOT
Opportunities
Increasing number of people using smart phones and using Facebook
through mobile devices.
Continuous increase of world populations and demand for
communications across the globe
Continuous increase of internet reach around the globe
Growing demand for advertising services and gaming entertainments
Diversify sources of revenue to maximize profits and need to increase
investments in “mobile ads”
Open Facebook marketplace and expansion to China
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Threats
Increasing number of mobile internet users. Attitude towards users’ privacy invasion.
Decreasing annual growth rate of social networks. Slow growth rate of online advertising.
Advertising revenue growth forecast by in U.S. , CAGR 2013-2018
21. Industry rivalry
Google+, Twitter
,LinkedIn , Renren ,
Mixi , vKontakte.
Direct Network
effect
New Entrants
Medium barriers
to entry
High for Other
social
networking sites
Bargaining Power
Of Customers
Moderate for End
Users Low for
Marketers &
advertisers
Complementary
Moderate
bargaining
power for Game
makers
Threat Of
Substitute
High due advance
in technology and
mobile internet
Bargaining Power Of
Suppliers
Moderate For
Hardware and
software supplies
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Porter’s Six Forces
23. Problem Definition
IPO Crisis
◦ One of the biggest IPOs in technology and Internet history (104B market cap and 38$ initial stock price)
◦ Technical issues with NASDAQ’s electronic trading platform due to high volume of trades
◦ Stock opening was delayed 30 minutes
◦ Mass investor confusion
◦ Traders were unable to sell stock when it started to fall
◦ Even after months, the stock was still declining (more than 50%)
◦ Criticism and questions from investors and Wall Street stakeholders about the initial offering (overvalued)
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24. Problem Definition (cont’d)
Low “Average Revenue Per User – ARPU”
◦ Massive gap between Google and Facebook
◦ Although the number of Google users vs. Facebook users is comparable (1.3B vs. 1.11B), and advertising is the core business for
both companies (> 80%)
◦ Facebook real crisis of the continuous stock decline
◦ Plenty of room to grow… but where?
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Average Revenue Per User in 2012. source: seekingalpha.com US Digital Ad Revenue Share, source: emarketer.com
25. Problem Definition (cont’d)
Low “Average Revenue Per User – ARPU”
◦ Upon IPO, digital ads revenue of Facebook was almost completely tied to desktop ads
◦ Looking at different digital ads segments for e.g., mobile ads is in significant growth
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Digital Ads Market growth by market segment, source: emarketer
26. Alternative Strategies
Increasing revenue, even with the same user base, is the main strategy to mitigate the losses
and improve ARPU and stock price.
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• Encourage all accounts to watch ads by giving points that can be redeem from Facebook store (gifts, apps, etc)
• Keep the same core products for free, and create premium accounts for advanced/complementary features
• Expand Gaming Applications (by introducing proprietary apps or by investing in new advanced apps with Web developers)
• Increase advertising on mobiles
• Big data analysis… FB has tons of personal and public information for all users, they can provide better customized
information for marketers and sales enterprises
• Partnership with mobile OS vendors, to force all mobile users to HAVE a Facebook account
• Make commercial pages with fees, when reached a certain number of likes
Capitalize on existing core products and services
• Facebook can invest in emerging technologies – long term investment
Technology
• Apple Partnership to integrate Facetime with Facebook video/audio caller. This will be a head-head competition with
Google’s Hangouts, and it will provide Facebook access to more users (Apple users)
• Amazon Partnership to enable the “one-click-to-buy”. This will give Facebook user the luxury to buy any product/item found
on the ads (whether desktop or mobile ads) without leaving their Facebook page.
Alliances and Aqcuisition
27. Selected Strategy
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Select Strategy
Capitalize on existing core
products and services.
Technology
Alliances and Aqcusition
28. Capitalize on existing core products
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Capitalize on existing
core products. data
analysis
Expand in
Gaming Apps
advertising
on mobiles
U.T
model
Easy
adds
Diff
platforms
Fb
experience Invests
29. Technology
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Invest in
new
markets
invest in
emerging
technologies
Pushing to
expand in
marketing in
other
countries
User Lock-in
30. Benefit from competition
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• Apple Partnership to integrate Face time with
Facebook video/audio caller.
• Amazon Partnership to enable the “one-click-to-
buy”.
• Possible Acquisition for new cutting-edge
technologies
Increase advertising on mobiles
An example can be similar to Youtube use model, where users are forced to watch 5 seconds when they login/re-login to their accounts, or when their phone is locked automatically while their FB accounts were open
Facebook can invest in emerging technologies. Examples can be wearable technology, WiFi for free around the globe, virtual glasses, etc…