Social Network - Facebook


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Social Network Facebook

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  • Sheryl Sandberg She joined from google & transformed the facebookDavid EbersmanTaken Facebook into Public (IPO)
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  • 2004Feb 4, 2004: Mark Zuckerberg and co-founders Dustin Moskovitz, Chris Hughesand Eduardo Saverin launch FacebookMar 2004: Facebook expands from Harvard to Stanford, Columbia and YaleJun 2004: Facebook moves to Palo Alto, CalifSept 2004: Launch of the Facebook Wall, giving people a place to post messages to their friendsDec 2004: Facebook reaches 1 million users2005May 1, 2005: Facebook grows to support more than 800 college networksSept 20, 2005: officially drops the “the” and becomes FacebookSept 2005: Facebook expands to add high school networks.Oct 2005: Facebook begins to add international school networksOct 2005: Launch of Facebook PhotosDec 2005: Facebook reaches 6 million users2006April 2006: Facebook for Mobile launchesMay 2006: Facebook expands to add work networks.Aug 2006: Facebook introduces the first version of the Facebook APISep 5, 2006: Launch of News Feed and Mini-FeedSept. 26, 2006: Facebook expands registration so anyone can joinDec. 2006: Facebook reaches 12 million users2007May 14, 2007: Facebook launches Marketplace application for classified listingsMay 24, 2007: Launch of Facebook PlatformJun 22, 2007: Facebook Video launchesOct 2007: Facebook London opensOct 2007: Launch of Facebook Platform for MobileNov 2007: Launch of self-service Ads platform + Facebook PagesDec 2007: Facebook reaches 58 million users2008Jan 5, 2008: Facebook co-sponsors Presidential Debates with ABC NewsJan 17, 2008: Facebook Hackathon ’08Mar 3, 2008: Facebook launches in GermanApr 6, 2008: Launch of Facebook ChatJul 10, 2008: Facebook iPhone app launchesJul 21, 2008: New Facebook launchesDec. 2008: Facebook Dublin opens2009Feb 9, 2009: Introduction of the Like buttonMar 11, 2009: New Facebook home page launchesMay 16, 2009: Facebook celebrates its annual Game Day, a day of games and fun for employeesMay 29, 2009: Facebook moves to new offices at 1601 South California Ave., Palo AltoJun 13, 2009: Launch of Facebook UsernamesAug 3, 2009: Facebook New York opensDec 2009: Facebook reaches 360 million users2010Jan 21, 2010: Break ground on our first custom-built data center in Prineville, OregonJul 28, 2010: Launch of Facebook QuestionsJul 21, 2010: Launch of Facebook Stories applicationAug 18, 2010: Launch of Facebook PlacesOct 6, 2010: Introduction of new GroupsSept. 2010: Facebook Hyderabad (India) opensDec. 2010: Facebook reaches 608 million usersDec 5, 2010: Launch of the new profile2011Mar 12, 2011: First official Facebook Hacker CupApr 15, 2011: Prineville Data Center opensApr 20, 2011: US President Barack Obama visits Facebook officeJul 6, 2011: Launch of video callingSep 22, 2011: Timeline, a way for people to share the story of their life, introduced at f8Oct 11, 2011: Launch of Facebook for iPadNov 6, 2011: Facebook reaches 845 million usersDec 7, 2011: Facebook DC hosts its first Congressional Developer HackathonDec 19, 2011: Facebook moves to a new home in Menlo Park, Calif2012April 9, 2012 – Facebook announces acquisition of InstagramMay 18, 2012: Facebook holds its initial public offering.May 24, 2012: Facebook Camera launchedSept 27, 2012: Facebook Gifts launchedOct 4, 2012: More than 1 billion people are active on Facebook.2013Feb 26, 2013: More than 100 million people use Instagram every month.Jan 15, 2013 – Graph Search Beta launchedApril 22, 2013: Facebook announces new data center in Altoona, Iowa.April 12, 2013 – Home launchedJune 20, 2013: Video on Instagram launchedJuly 21, 2013: More than 100 million people use Facebook For Every Phone each monthAug 20, 2013: Facebook announces Internet.org2014January 29, 2014: Facebook announces fourth quarter and full year 2013 resultsJanuary 30, 2014: Facebook announces news reader app ‘Paper’Facebook User DataDaily active users were 757 million on average for December 2013, an increase of 22% year-over-year.Mobile daily active users were 556 million on average for December 2013, an increase of 49% year-over-year.Monthly active users were 1.23 billion as of December 31, 2013, an increase of 16% year-over-year.Mobile monthly active users were 945 million as of December 31, 2013, an increase of 39% year-over-year. 
  • $4bn - Amount Facebook will pay in cash February 19, 2014$12bn - Amount Facebook will pay in shares$3bn - Extra restricted stock payable to WhatsApp founders and employees1.2bn -Number of Facebook monthly users27bn- Number of messages WhatsApp processes a day2009 -Year WhatsApp was foundedAddition to 600 million photos and 100 million video message Features: ad-free, paid app (after 12 months); text and voice messaging; photo and video sharingLargest markets: Mexico, Germany, India, and Spain (30 million active users in each market)Global competitors: WeChat (China), Line (South Korea), Viber (Israel/Japan)Oculus VR - March 25, 2014Virtual reality gaming companyThat includes $400 million in cash and 23.1 million shares of Facebook stock. “Oculus has the chance to create the most social platform ever, and change the way we work, play and communicate.”Instagram
  • StrengthsIntegration with websites and applications. To enrich user experience and engage more users to use Facebook, the social network has launched many features that would allow closer integration with other websites and producers of applications that run via Facebook. Easy integration and use of applications results in competitive advantage over other social networking websites that struggle to provide the same level of service.More than a billion active monthly users. For a social network to grow, it must have users. The more users the Facebook has, the more socially connecting it is. With one billion active monthly users, Facebook is able to connect people not only locally but globally as well.Excellent user experience. Facebook has an easy to use interface, is integrated with many website, can connect people through PC or mobile devices, is translated into more than 70 languages and has many more additional features that lack other social networks.Understanding of user’s needs and behavior. Except Google, no other business has so many data collected on what users like, dislike, needs and how the users behave online. With so much data, Facebook knows what exactly to offer to its users (what additional features, what advertisements) and how to further improve their experience with Facebook. WeaknessesWeak CTR of advertisements. Facebook has a lower click-through-rate (CTR) than an average website, which is only 0.05% and about 4% respectively. In order to earn more income from the advertisements Facebook has to change the way it displays the ads (advertisements on wall posts have more than 6% CTR) but without interfering users’ experience.Social network lacks of some features. Although Facebook has a wide range of features that other social networks don’t, the website still lacks: video chats, group chats, dislike buttons, ability to unsubscribe from alerts and many others.One source of revenues – advertisements on Facebook. More than 80% of Facebook’s revenues come from advertising on its social network. The growth of the revenues directly depends on the growth of users. This leaves the business very vulnerable and dependent on continuous growth of users, which will eventually be only marginal as the social network has already attracted so many users.Attitude towards users’ privacy. Facebook collects private users’ information and then stores it, uses it for its own purposes or sells it. Such treatment of users’ private information draws negative attention that decreases popularity of Facebook.Lack of website customization. Many Facebook’s users spend a lot of time on social network and want the website to reflect their personalities but are unable to customize the website to their needs and are forced to use uniform template for all users. In comparison, Google+ allows for much more personalization of the social network account than Facebook does.Weak protection of users’ information. Facebook, having so many users that upload personal information to the social network, is a target for attacks that steal passwords and other personal information from the users. Such attacks occur every day and thousands of passwords are stolen. Though, Facebook is not doing enough to protect users’ from identity attacks. OpportunitiesIncreasing number of people using Facebook through mobile devices. Currently Facebook has more than 600 million users who use Facebook through mobile devices. Despite that this group makes 60% of all Facebook users, the mobile advertising only accounts for only 14% income for the company. Facebook has an opportunity to create a platform that could be used to display ads for mobile users and increase firm’s income.Expansion to China. Easing government regulations and newly elected government may open a way for Facebook to enter China’s social networking market. Until then, Facebook should prepare itself for such an entry.Diversify sources of revenue. Facebook heavily relies on advertising on its social network as a source of income, but with being the number 2 website in the world and more than 1 billion active monthly users, Facebook could exploit other opportunities to attract the money.Open Facebook marketplace. With so many users and extensive coverage of the world, Facebook is well positioned to open Facebook marketplace. If successful, it would bring more revenues than the advertising, thus boosting company’s growth and future prospects. ThreatsIncreasing number of mobile internet users. Currently Facebook has more than 600 million users who use Facebook through mobile devices. Despite that this group makes 60% of all Facebook users, the mobile advertising only accounts for only 14% income for the business. If the company will be unable to monetize mobile users, it will face decreasing advertising income as more PC users will turn to mobile users.Users using ad-block extensions. Educated internet users often install extensions that block advertisements from the websites. The growing number of such users is threatening Facebook’s model as they can’t see advertisements and click on them.Slow growth rate of online advertising. Although online advertising still grows in double digits (14% in 2012, down from 23% in 2011) that growth is slowing down, thereby threatening growth of Facebook’s advertising income.Identity thefts. Even today, identity thefts are common on Facebook. The more identities are stolen the more criticism Facebook will receive strongly damaging its brand for inability to protect users’ private information.Weak business model. Facebook’s aim is to attract social network users, display the ads for them and charge the businesses for the ads displayed. Although Facebook’s business model looks sound for the moment, the company may face severe difficulties if some conditions change that are not in firm’s control. For example, slowing growth of online advertising, new social network, shift from advertising on Facebook to other websites, growing number of mobile users (Facebook is yet unable to monetize them) or failure to diversify source of income.
  • Debt ratios measure the firm's ability to repay long-term debt. Debt ratios measure financial leverage.
  • Social Network - Facebook

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    2. 2. Agenda  Executive Summary of Global Market – Social Network  About Facebook  Facebook - Mission  Current Core –Team  Facebook – Timelines  Facts & Figures  Facebook Users Worldwide  Competition  Acquisition  SWOT - Analysis  Financials  IPO  Case I – Indian Case  Case II – International Case  Conclusion  Video – 7 Minutes 2
    3. 3. Executive Summary- Social Network  In 2013 around 1.61 billion people log in to social networking sites at least monthly, from any electronic device  That’s a 14.2% gain on social networker numbers from 2012  Market will grow at the rate of 10 % CAGR  By 2017, 2.33 billion people will use social networks.  Social media advertising market is expected to grow 52% to 58% YOY Drivers  Increasing popularity of social media sites  Emerging countries like India and China large potential internet users in future  Increasing sale of smart phones is a key driver for this market  Most of the social networks are free for the users Challenge  Increasing abuse of social media and security concerns  The risk of confidential information leakage example: - Personal information 3
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    5. 5. About Facebook Facebook® is a “social networking website” that allows you to create an online page to connect with friends, family, or make new friends with anyone anywhere. On your Facebook® page you can share pictures, personal information , messages, videos , join groups and add applications. 5
    6. 6. Mission 6
    7. 7. thefacebook 7
    8. 8. Facebook Current Core Team Mark Zuckerberg (Chairman and CEO – 28.2% Stake) Age-29 • Personal wealth, as of April 2014, is estimated to be $25.3 billion • Mark Zuckerberg receives a one-dollar salary as CEO of Facebook Sheryl Sandberg (COO) Age-44 • American businesswoman, activist, and writer • Worth over US$1 billion -17.2 million Facebook shares, 0.5% stake David Ebersman (CFO) Age - 45 • He was hired as he had "public company experience" • Facebook issued an IPO of its stock on May 18, 2012 Mike Schroepfer (Chief Technology Officer) Age -39 • Mike Schroepfer is an entrepreneur & technical architect • Schroepfer holds 2.1 million shares of Facebook 8
    9. 9. Facebook Users Worldwide 9 Source: Facebook
    10. 10. Facts About Facebook  Facebook employed only 6,337 people directly  Facebook has more than 1.23 billion users globally  Mobile monthly active users were 945 million as of December 31, 2013, an increase of 39% year-over-year.  Facebook Deals with Everyday: 2.7 Billion Likes, 300 Million Photos Uploaded and 500 Terabytes of Data in real time  Facebook Handles 300 Petabytes of Daily Data, it stores for its active users  Users are exposed to 1500 pieces of potential content every day.  There are 70 different languages available for users on Facebook  The average person spends between 18 and 20 minutes viewing their Facebook account  Originally, engineers wanted to call the “Like” button the “Awesome” button  By 2010, Facebook became profitable 10
    11. 11. 2004 2005 Oct 2005: Facebook begins to add international school networks, Launch of Facebook Photos & reached 6 million users Sept. 26, 2006: Facebook expands registration so anyone can join- reached 12 million users Feb 4, 2004: Mark Zuckerberg and co-founders Dustin Moskovitz, Chris Hughesand Eduardo Saverin launch Facebook Source: Wikipedia, Facebook & Google Facebook - Timelines 2006 2007 Nov. 26, 2007: Launch of self- service Ads platform + Facebook Pages – reached 58 million users 2008 2008: Launch of Facebook Chat, Facebook iPhone app & New Facebook launches 2009 2009: Introduction of the Like button, New Facebook home page launches & reached 356 million users 2011: Launch of video calling, Timelines -reached 845 million users 2011 2012 2012: Facebook announces acquisition of Instagram, IPO & More than 1 billion people are active on Facebook 2014 2014: Facebook is 10 Year Old, Acquired WhatsApp & Oculus-1.23 Billion users
    12. 12. Competition 12  Connecting  1.23 Billion  $152.58bn  Passive  Friends  Information  232 Million  $33.05bn  Active  Followers  Business Oriented  260 Millions  $ 21.4 Billions  Passive  Connection Type of Social Media Active users Market Cap Communicati on Form Difference
    13. 13. Major- Acquisitions by Facebook WhatsApp Messenger ( $ 19 Billion) 55 Employee • WhatsApp has 450million users with 70% active daily, which is already 60% the size of Facebook’s daily user community (550million.) • 50bn- Number of messages WhatsApp processes a day Oculus VR ( $ 2 Billion) 75 Employee • Oculus VR is a virtual reality technology company • Oculus Facebook's answer to Google Glass? Instagram ( $ 1 Billion) 13 Employee • 13 employees created a billion dollar app • The average Facebook user has 26 profile photos 13
    14. 14. SWOT- Analysis 14 Strengths  Integration with websites and applications  More than a billion active monthly users  Excellent users experience  Understanding of user’s needs and behavior Opportunities  Increasing number of people using Facebook through mobile devices  Expansion to China  Diversify sources of revenue  Open Facebook marketplace Weaknesses  Weak CTR of advertisements  Social network lacks of some features  One source of revenues – advertisements on Facebook  Attitude towards users’ privacy  Lack of website customization  Weak protection of users’ information Threats  Increasing number of mobile internet users  Users using ad-block extensions  Slow growth rate of online advertising  Identity thefts  Weak business model
    15. 15. IPO & Share Price History 15
    16. 16. Financials- Last 5 Years 16 Years/ Particulars 2009 2010 2011 2012 2013 Revenue 777$ 1,970$ 3,711$ 5,089$ 7,872$ Revenue Growth % 154% 88% 37% 55% Net Income 122$ 372$ 668$ 32$ 1,490$ Net Income Growth % 205% 80% -95% 4556% Years/ Particulars 2009 2010 2011 2012 2013 Total Assets 1,110$ 2,990$ 13,790$ 15,100$ 17,900$ Total Assets Growth % 169% 361% 9% 19% Total Liabilities 241$ 828$ 1,430$ 3,350$ 2,430$ Total Liabilities / Total Assets 22% 28% 10% 22% 14% Debt Ratio 0.22 0.28 0.10 0.22 0.14 All figures are in Million $777 $1,970 $3,711 $5,089 $7,872 $122 $372 $668 $32 $1,490 $- $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $- $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 2009 2010 2011 2012 2013 Facebook Revenue & Net Income Revenue Net Income
    17. 17. Indian Case Study – Election Campaign 17
    18. 18. Global Case Study- Zynga Social game services company founded in July 2007 Zynga states its mission as "connecting the world through games." Social gaming pioneer Zynga, creator of the Facebook games Farmville, CastleVille, and Mafia Wars, among others, is one of tech’s big success stories FarmVille became the most popular game on Facebook 18
    19. 19. Conclusion 19 Mobile Monetization:– Facebook still has yet to find the right formula for monetizing on mobile. Compete with Google:- Focus on evolving its search engine & compete directly  Growth from Subsidiaries :- The Subsidiaries companies like Instagram, WhatsApp & Oculus VR is diversifying the business & can fuel the growth any time in near future
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