Throughout the presentation, I will cover, in depth, the external and internal factors that affect Facebook, their strengths, weaknesses, opportunities and threats. Finally I will provide my key recommendations for Facebook to enhance their company.
Facebook Inc. is the world’s most popular social media site, which allows its members to share information, photos and videos. Additionally, Facebook provides a service to businesses by allowing targeting advertising based on built-in analytical software. Facebook strives to provide exposure of companies’ products in order to provide a rapid return on the money invested to advertise. While Facebook current carries applications for smartphones, it currently lacks advertisements on mobile phones; therefore, businesses are only able to target consumers who use the PC version of Facebook. A large majority of the company’s popularity stems from consumer developed applications, such as games, photo editing tools, communication tools, etc., which can be downloaded and used by the consumer. Some of these applications require payment while others are free of cost for use.
Currently, the US experiences a high level of economic uncertainty due to events such as presidential elections, high levels of natural disasters, depression recovery and government cutbacks (Ip, 2012). These topics all have an impact on consumer and business confidence and their willingness to increase spending. From the business perspective, Facebook enables businesses to communicate with their followers in a free and open venue. Advertisement costs vary depending on the desired reach of the product; however, are still relatively inexpensive when compared to other mediums. Americans tend to be less personal and have weaker family ties than other cultures. However, the influence of purchases still relies heavily on the experiences and opinions of others. Facebook users are able to view comments and “Likes” of various products advertised through the site. Recent technology allows an increased ability to access, compare and purchase products by using items such as bar code scanning, comparison websites, and applications on their smart phones, which enable quick purchases in any location. Facebook quickly surpassed its predecessor, MySpace; however, it now faces an immerging competitor. Google, known for its advanced search engine, has created Google+, which allows its users to categorize their friends and families and communicate ideas, photos and location similar to that of Facebook. In addition to Google+, Google also provides Adwords, which takes advantage of Google’s monitoring capability to direct advertisements to individuals typing certain words in emails, chats, or searches.
Six years after its creation, Facebook became one of the most popular websites in the world (Yousif, 2012). Facebook recently created an initial public offering in which the owner, Mark Zuckerberg, “sold 421.2 million shares for at $38.00 each” (Jong and Pendleton, 2012). The IPO has increased involvement and exposure of Facebook, but has also made Zuckerberg wealthier than the owners of Google, his primary competition, according to the Bloomberg Billionaires Index. A business-to-business environment in which advertisements target Facebook users that meet certain criteria or discuss and view certain information through the site produces their internal revenue. Facebook uses two methods to charge its customers, which include either a cost-per-click or a fixed price per thousand impressions (Datamonitor360). Facebook is enabled by a complex and precise analytical system, which is able to track very specifically, the interests and demographics of its users. This adds great credibility to Facebook as well as increasing the marketing efforts of its consumers. Large contributors to the success of Facebook are independent software developers. Hundreds of small applications developed specifically for Facebook users keep people engaged on Facebook, increasing their exposure to advertisements.
As previously mentioned, Facebook is currently the world’s most popular social media site with nearly 900 million monthly active users. This popularity has driven them to own 63.2% of the market share of social media services, beating out services such as Google+, Twitter, LinkedIn, and MySpace. They have captured such a large audience very rapidly due to the services they provide. Though others have attempted to mimic the Facebook site, Facebook provides a greater security level than MySpace, has a more user-friendly interface than Google+, and is more practical for the consumer. If the point of the service is to keep your friends and family updated on the latest news in your life, it’s beneficial if all your friends and family are on the same network. With such a current high usage rate, it would be difficult for a consumer to pull away from this service and join Google+ if their family and friends stay on Facebook.
The PC version provides the sole place for advertising, and there isn’t a large amount of data to prove a true effectiveness of advertisements on Facebook. Additionally, Facebook has consistently been in litigation over patent and privacy violations over the last few years. Finally, their lack of attention to developing advertisements on their mobile versions are reduce investor confidence in the company. We will look at exploiting this weakness in the upcoming slides.
The primary method Facebook draws a profit is through advertising. There is high potential for Facebook to earn even more by producing advertisements integrated into the mobile applications for smartphones. They also have the proper analytics to branch into retail services without causing too much heartache. Their additional opportunity to grow their income is through creating an application payment system. Currently, applications purchased for use in Facebook, go directly to the software developer and do not filter through Facebook. This requires consumers who purchase items from numerous applications to put their information out in several different places. By having a consolidated location to make application payments, consumers may be more apt to buy.
Google, already a strong and popular company, is growing in strength and provides a greater array of services to consumers. Additionally, Google+ has incorporated advertisements in their mobile platforms, giving them an advantage over Facebook. Additionally, Facebook privacy concerns have come to light on more than one occasion, raising eyebrows from consumers, advertisers and investors. If consumers do not feel their information is protected, they stand to lose a lot of business. Finally, Facebook has such a large piece of the market already that there is little room for expansion with their current services. Their service has been blocked in countries such as China, which is a major loss for the company due to the size of the country; however, if Facebook does not expand their services provided, they will eventually fail to grow.
A major weakness of Facebook is their failure to take advantage of the mobile market. The lack of action by Facebook leads to lower investor confidence, thus return on investment for Facebook, as well as those advertisers. In order to increase sales in the business-to-business market, Facebook must expand advertisements to mobile devices. This would allow Facebook to stay competitive with growing social media competitors such as Google, whom have already seen positive returns on their mobile advertisements.
To further Facebook’s relevancy with consumers, there is an opportunity to develop other services such as a retail applications. Facebook already possesses a highly effective analytical system which, when used for retail purchases, stands the opportunity to be just as effective as Google Shopping and Amazon.com. The preexisting system also facilitates potential consumer feedback on products. With Facebook’s current strengths, such a high active user rating, consumers would be able to share their purchases and deals with their current friend listing within Facebook, potentially increasing sales of popular products.
Facebook Strategic Marketing Analysis
FacebookStrategic Marketing Analysis
Agenda• Overview• Strategic Analysis o External Factors o Internal Factors• S.W.O.T.• Key Recommendations
Overview• Largest social media site in the world• Targeted business advertising via analytics• Mobile capability• Independent consumer contribution
External Factors• Poor economic conditions drive need for free or low-cost services• Consumer behavior influenced by popular products and reviews of companies and products• Constant increase of technological advances provide growing market• Competitive service providers gaining strength in social media realm
Internal Factors• Facebook’s initial public offering (IPO) less effective than anticipated• Profit earned through B2B advertising services• Businesses benefit through the use of analytical software built into pages• Independently developed applications ensure constant consumer interaction with site
• Mobile advertising o Based on current analytic software on PC versions o Larger return for advertisers o Greater investor strength for Facebook
• Retail service integration with social analytics o Current analytics can contribute to consumer purchases o Large consumer base will lead to stronger feedback on products
Questions?For a supplementary narrative on this presentation, visit: http://ad-analyzer.livejournal.com/617.html
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