BSc Minor Assignment
AY2015.2016 T2
Students should answer 5 out of 8 questions regarding the reading
below.
Students should reply to each question in essay format and support
their answers with citations from relevant academic sources.
Each question is worth 20 marks.
Questions
1. Facebook started its life as a social community network but is continuously moving towards
becoming a business platform, whereby more and more businesses are connecting to
Facebook. Why would Facebook move towards this market?
2. Having read the case study and understanding how Facebook’s business model works, if
you were to become a direct competitor to Facebook, how would you stand out from the
rest? What would be your business model?
3. Facebook has become one of the largest social networking sites on the Internet. What is
Facebook’s business model and why has it been so successful?
4. Recently, many concerns over privacy issues have arisen with Facebook. How is Facebook
planning on resolving these issues and do you think that the future will hold more problems
with Facebook? If so, what problems could arise?
5. How has Facebook changed the way people use the internet? In your opinion, is this a
good thing or not?
6. What is Facebook’s revenue stream? How does Facebook make money and do you think
there are other revenue streams that Facebook could take into consideration?
7. If you were to use Facebook for your company, how would you use it? Would you use it to
acquire new customers only or would you go more in depth and integrate your business
more closely with Facebook?
8. More and more of our time is being spent online, whether it is for work, or merely for
personal reasons, we tend to spend more and more of our time navigating in virtual space.
In your opinion can this detachment from reality have serious effects on our future? What
effects might arise and is this a good thing or a bad thing? Explain.
Course: UG5004 E-business and E-commerce
Module Leader: Fabio Paracchini
Project Structure: Individual Project
Percent of final mark: 25%
Due on Week 6
Facebook vision
“Facebook is a social utility that helps people communicate more efficiently with their friends,
family and coworkers. The company develops technologies that facilitate the sharing of information
through the social graph, the digital mapping of people’s real-world social connections. Anyone can
sign up for Facebook and interact with the people they know in a trusted environment”.
Facebook was launched on February 4th 2004 by Mark Zuckerberg, a student at Harvard
University. Initially membership was limited to Harvard students. The initial viral effect of the
software was indicated since more than half of the undergraduate population at Harvard registered
on the service within the first month!
Mark launched Facebook (at the time called thefacebook.com) in February 2004. Once the site
was ready for users, the Facebook founders blasted e-mails to Harvard students to let people
know about the site. The team had access to the e-mail addresses of Harvard students at each
dorm. Thus e-mail marketing, viral feature sets, and word of mouth was how Facebook was
launched. Given the immediate positive reaction that Facebook received at Harvard, Facebook
began rolling out the service to other universities. Facebook did not use a targeted geographic rollout strategy in the early days,
they received registration requests from students at other schools,
and then prioritized which schools to open based on the number of these requests. Interesting to
note that this is how Craigslist rolls out to new cities – based on user requests.
When Facebook first launched in February 2004, there were just three things that users could do
on the site, although they are still core to the functionality of the site. Users could create a profile
with your picture and information, view other people’s profiles and add people as friends.
Since 2004, Facebook has introduced other functionality to create the Facebook experience. Some
of the most significant of these include:
A Wall for posting messages
News feeds
Messages
Posting of multiple photos and videos
Groups
Applications
Facebook or Social Ads
Facebook.com brand identify established
In August, Facebook bought the domain name facebook.com from the Aboutface Corporation for
$200,000 and dropped “the” from its name.
International expansion
Throughout 2005, Facebook extended its reach into different types of colleges and by the end of
2005 included most small universities and junior colleges in the United States, Canada and
Mexico. It was also made available in many universities in the UK and Ireland and by December,
Australia and New Zealand were added to the Facebook network, bringing its size to more than
2,000 colleges and over 25,000 high schools.
Facebook has received many security concerns, especially over user privacy. They have added
new features to reduce piracy concerns such as accepting or declining people who have added
you to their friends list, the possibility to block users as well as the possibility to limit what your
friends can see about you on your profile page. There are other security concerns that are much
harder to manage, such as friends posting unwanted photos of you and friends writing on your wall
which allows everyone else in your friends list to read it.
Unfortunately, these security issues cannot be handled automatically, and Facebook have given
users the possibility to remove photos or tags that people have added and to remove comments or
postings by others.
Facebook Platform for applications launched
The Facebook Platform provides an API (Application Programming Interface) which enables
software developers to create applications that interact with the core Facebook features.
By January 2008, Over 18,000 applications have been built on the Facebook Platform with 140
new applications added per day. More than 95% of Facebook members have used at least one
application built on the Facebook Platform.
According to App Data, an independent application metric network, in October 2012, the most
popular FB applications were:
1. ChefWall – 4,300,000 daily active users
2. Texas HoldEm Poker – 6,300,000 daily active users
3. Zynga Slingo – 1,900,000 daily active users
4. Istrogram – 13,000,000 daily active users
5. FarmVille 2 – 7,400,000 daily active users
6. TipAdvisor – 1,200,000 daily active users
With Zynga, the leading developer for Facebook apps, with 51,321,388 daily active users using
apps developed by them.
In October 2007, the Facebook Platform for mobile applications was launched although many
Facebook users already interacted with their friends through mobile phones.
In July 2007, just 3 years after the site was launched, Facebook passed 30 million active users.
Statistics showed that in November 2007, the majority of Facebook users in many countries were
female.
Some current Facebook statistics shows there are:
68 million active users
An average of 250,000 new registrations per day since Jan. 2007
Sixth-most trafficked site in the United States (comScore)
More than 65 billion page views per month
More than half of active users return daily
People spend an average of 20 minutes on the site daily (comScore)
In November 2007, Facebook launched there Ads campaign. Some of the features of Facebook
ads include:
Targeting by age, gender, location, interests, and more.
Alternative payment models: Cost per Click (CPC) or impression based (CPM).
“Trusted Referrals” or “Social Ads” – Ads can also be shown to users whose friends have
recently engaged with a companies Facebook Page or engaged with the company website
through Facebook Beacon.
At the time of the launch, Facebook made these comments which indicates the delicate balance in
getting the equilibrium right between advertising revenue and user experience. They said first of
all, what’s not changing:
“Facebook will always stay clutter-free and clean.
Facebook will never sell any of your information.
You will always have control over your information and your Facebook experience.
You will not see any more ads than you did before this”.
Facebook is a more compelling advertising opportunity than other social networking sites because
of deep penetration within a series of micro communities (college campuses). If a local advertiser
wants to target a particular college campus, Facebook is the best way to get the advertiser’s
message to that audience. CPM rates for local advertising command a significant premium from
advertisers because of their more targeted nature. With 65% of users logging in daily and 85%
weekly, advertisers can run time-oriented campaigns very effectively. The large, branded
advertisers, who value reach, can advertise to nearly every student in the 18-22 demographic in
the US with one campaign.
Facebook will have ample opportunity to diversify its revenue streams beyond traditional banner
advertising due to its deep penetration in these micro communities. Having the attention of 90% of
students attending a university lends itself to online classifieds, event listings, e-commerce, and
lead generation. Facebook should be well-positioned to be a major player in online classifieds
given the usage patterns of its user base. In July 2012, Facebook reported that 84 percent of its
overall revenues come from advertising. As the social media giant strives to develop relevant
products for advertisers, large and small brands are exploring new ways to use Facebook to
engage consumers, generate leads, and boost sales.
In December 2007 Facebook launched the New friends list functionality due to a criticism leveled
at Facebook has been the difficulty in separating out personal friends and business acquaintances.
The launched of this new functionality called Friend Lists was to enhance the user experience.
Friend Lists enables users to create named groups of friends in particular categories, e.g. business
or personal and these private lists can be used to message people, send group or event
invitations, and to filter updates from certain groups of friends.
In December 2007 / January 2008 Facebook registered its first drop in numbers of people using
Facebook. Application spam has been considered one of the possible causes to the drop in visitors
to Facebook starting from the beginning of 2008, when the website’s growth had fell from
December 2007 to January 2008, its first drop since the website first launched.
To put this in context, the Facebook blog reported at the end of 2007, that nearly two million new
users from around the world sign up for Facebook each week. This creates technical challenges –
the blog reported that at end of 2007 full capacity was reached in their California datacenters. They
resolved the issue in the past by purchasing a few dozen servers, but this time they had run out of
physical space in their datacenters for new machines. They found a solution by utilizing other
datacenters and assigning a user logging in to their site to specific datacenters – users in Europe
and the eastern half of the US are connected through their new Virginia datacenter where as other
US users are connected to their California datacenter.
In February 2008, Facebook expanded its sites internationally. Despite the hype generated
amongst English speakers, Facebook only announced the launch of a Spanish site in February
2008 with local language versions planned for Germany and France. Facebook is continuously
expanding its reach by launching many new local language versions.
Apart from expanding internationally, Facebook has launched new ideas and social tools such as
Facebook-studio which is a showcase of some of the world’s most successful social marketing.
Where marketers and designers can upload their work, get opinions and inspiration.
“We created Facebook Studio to celebrate the agencies and marketers that are showing what
creativity can accomplish in a connected world. Facebook Studio is a resource where you can get
recognized for your work, be inspired by great campaigns from around the world and learn how to
strengthen your Facebook strategies. It’s one big community, so make yourself at home. ” –
Facebook Studio.
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