Summary
Facebook is an internet based social-networking created in 2004 by Mark Zuckerberg as a sophomore at Harvard. From its humble beginnings, the company has recorded such phenomenal growth to become the second most visited website after Google. Facebook is visited by about 600billion users who spend 700billion minutes a month uploading 3 billion photos, 2 billion videos and 30billion new stories, posts and albums every month (Griffin 289).
The valuation of Facebook has been equally spectacular. The company was valued at 100million in 2005, this valuation increased exponentially to 15billion two years later. By mid 2010, the company was quoted at 33 billion and 50 billion by year end. In January 2011, Facebook surpassed Amazon to become the second internet company after it was valued at $82.9 billion (Griffin 289). This growth prompted the founder, Mr. Zuckerberg to announce that the company would start reporting its financial results in April 2012. There is speculation that the company could be planning to make an initial public offer.
Facebook can credit its growth to advertising, independent sources estimate that the company made 98% of its revenue from advertising. Conservative figures place this value at $625, but they may be as high as $700 billion. Facebook provides performance advertising ($350 billion), brand advertising ($255 billion) and Microsoft advertising ($50 million) (Griffin 289). About 2% of the revenue ($10 million) was from virtual goods and credits from which Facebook got a certain percentage.
It is estimated that company revenues doubled annually from $ 150 million in 2007 to 300 million in 2008 and then 600 million in 2009. In 2010, revenues ballooned to 2 billion and it is expected that the doubling trend will hold true in 2011. Observers had questioned the stability of this growth patterns. Many have gone as far as questioning the valuation of the company. The main issue is whether the valuation will match the price per share that will be quoted once the company goes public (Griffin 289).
Many skeptics compare Facebook to Google. The two are the most successful internet companies by revenue. However, Google’s revenues are gigantic when compared to Facebook. In January 2011, Google was valued at an astounding $192 billion compared to Facebook whose valuation was $ 82.9 billion. Ironically, Google is Facebook’s 5th largest advertiser yet Facebook’s performance pales in comparison (Griffin 289). This is not to say that Facebook has not been successful. Comparisons between the two companies are not entirely accurate because their core businesses are different. Google is a search engine while Facebook is a social media company. To its credit, Facebook has grown exponentially in its first 7 years of operation; however, compared to Google’s result during a similar period in its life, Facebook performance is unimpressive.
Mark Zuckerberg will have to justify his company’s valuation to potential investors by showing that his company is equally capable of mirroring Google’s growth. One way in which Facebook can achieve this is by diversifying its product. Unlike Google which relies on its search engine, Facebook has working business relationships with other companies such as Zynga which makes online games. Zynga represents a new model of business in which other companies are finding business opportunities on Facebook (Griffin 290). Gaming is one of the many products that can be extensively marketed on Facebook. Social media is the industry of the future since many industries will have to reevaluate their strategy and change it to a social version. Facebook and other social media companies can find ways to make business out of helping other companies to adopt. Therein lays the potential and value for Facebook.
Question 1
As social media, Facebook is one of the best places to catch up with friends, family and acquaintances. Then can switch with relative ease from the personal page to the homepage. The personal page is where the individual can view wall messages, present and past updates, stories, notes, photos and videos (Joshi, Patrice & Scott 12). The home page is where one can view all the activities of their friends and any groups they have subscribed to. The timeline feature allows users to record the most important events in their life in a timeline. Landmark events such as birth, graduation from school and college, engagement and marriage are given prominence on the personal page.
Facebook provides an unbiased platform on which young people can express their opinions without fear. One can easily comment on trending topics in their country. Users can conduct in depth discussions on an array of issues from economic, social and political topics (Josh, Patrice & Scott 15). Anybody is free to air their views as long as they have subscribed to the page. There are no restrictions based on affiliations, nationality, race or creed. Facebook has broken down physical barriers and made the world a truly global village. This is perhaps Facebook’s greatest achievement.
Facebook is an excellent site for creating formidable business networks. There are numerous companies that have Facebook pages. One can easily visit such pages and gather more information regarding the company. Many brick and motor companies are using Facebook to advertise and sell their products online. Many startup businesses rely on Facebook for marketing because they can advertise for no charge and still reach a wide customer base.
Question 2
Facebook is very accessible; this makes it available to many users and potential clients across the world. The site can be accessed on basic internet phones, computers, tablets and other connected devices. In developing countries, it is possible to use on a mobile phone with no internet connectivity through a short message system.
Another major competency is that Facebook attracts young users who represent a large market for a myriad of products. Facebook can be used to advertise colleges, events, games, jobs, merchandise and any other businesses that will appeal to user who are between 15-45 years. Currently, there are about 600million Facebook users worldwide, this number is still growing. The advertising potential for any company is unlimited. Advertiser can filter their messages to reach a specific age group or country (Josh, Patrice & Scott 73). They can also advertise on specific pages that are directly related to their business.
Facebook has a strong brand name. The company has improved the social lives of millions across the world. When one mentions Facebook, comments, likes, messages, tags and chat functions come to mind. Facebook has consistently improved the platform to protect user identities, increase ease of use and improve the user experience. Both corporate and social users of Facebook can be assured of quality interaction between them and other users.
Question 3
Advertisements are generally considered a nuisance on social media. While using Facebook, I always concentrate on chatting with my friends and other contacts. Sometimes I spend time flipping through new photo albums and new videos. I rarely click on advertisements because there are very many advertisements posted on the site bar. The side bars keep changing in quick succession; it is therefore difficult to keep up. The only times I click through is when many of my friends have liked the advert, when it is advertising an even or product I am interested in such as a scholarship, when the advertisement features interesting animation or when it promises reward for subscribing.
Question 4
Privacy is a major issue of concern on the social media. The logging process requires the individual to key in important personal information. Facebook has a privacy feature that allows the account holder to block certain information from being visible to other users. This feature gives the individual the power to decide the level of exposure they want. One can limit access and visibility to themselves, their friends, the friends of their friends or everybody. Additionally, when one opens other applications that are usable on Facebook, there is usually a privacy permission certificate that requires the user to allow the application to access their personal information.
I have no problem with Facebook using any of my public information because I will have allowed the information to be utilized by anyone with access to it. The decision to set the information to public is equivalent to signing a release on the information. Facebook can legally use the information to without infringing on my privacy rights.
Work Cited
Griffin, Ricky W. Management. Mason, OH: CENGAGE Learning Custom Publishing, 2012. Print.
Joshi, Kent, Patrice-Anne Rutledge, and Scott Morley. Using Facebook. Indianapolis, Ind: Que Pub, 2011. Print.