Social networking 01
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This document discusses the history and growth of social networking sites such as Facebook. It notes that while social networks have hundreds of millions of users, they have struggled to become profitable. The main challenges include high competition in the social networking space, volatility in the industry, privacy concerns that reduce growth, and difficulties monetizing the large user bases. The document recommends ways for sites like Facebook to improve their revenue models, such as expanding search partnerships, raising advertising rates, offering premium memberships and paid features/applications, and entering new areas like e-commerce.
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Social networking 01
- 1. Social Networking: Facebook Zot Pockets | Pallavi Arunika |
- 3. Journey So Far… Bulletin Board System AsianAvenue LinkedIn Orkut Bebo Facebook 1970 1999 2003 2003 2005 2006 1999 2002 2003 2004 2006 LiveJournal Friendster Myspace Facebook [.edu] Twitter
- 4. Social Networking Land space , Now…
- 5. Social Networking Industry Growth
- 6. The Problem $ Money !!! Advertising revenue Model is not enough (in fact Social networks are not Profitable) Facebook founder Mark Zuckerburg even said “I don’t think social networks can be monetized in the same way that search did…in three years from now we have to figure out what the optimum model is.” “ “
- 7. How to Go Forward Facebook and other Social networking sites must improve their revenue earning model by including more premium memberships, paid features and applications, and expanding search partner relationships and CPM earnings (cost /thousand page impressions).
- 9. Competition MySpace : Launched in 2003. Users are more geared towed teens and popular with musicians and bands. US based audience. Twitter :Launched in 2006. The rising star in Social networking Industry. Currently 3rd ranked site. Experienced explosive 4/09 visitor growth, jumping 83% to 17 million visitors. Uses simple micro-blogging model displaying “What are you doing” updates. Orkut :Launched by Google in 2004. Popular in Brazil, India and Pakistan Friendster :Launched in 2003. This site used to be the top US player until it lost market share to MySpace. Still popular in South East Asia. LinkedIn : Launched in 2003. Focused on building professional networks. Also charges for premium memberships. Based on the higher market demographic, the site can charge a premium for advertising. Competition is High
- 11. Web Marketers : Companies paying for pop up ads, banner ads etc.
- 12. Search Engines. Search Engines pay Sites millions to be the primary search engine.
- 13. Mobile. Cell phone companies pay Social Networks the ability to host featured applications on mobile devicesBuyer Power is High
- 19. Users—Network Effects Supplier Power is low to moderate
- 21. Low Switching Costs for users.
- 22. No Track Record means little to attract web marketers
- 23. No Profits for established players
- 24. Hard to get Network effects Threat of New Entrants is Moderate New Entrants
- 26. Phone, Mail, Fax
- 28. Web Browsers
- 29. Email ApplicationsThreat of Substitute is moderate to high Substitutes
- 30. People use SNS for…
- 31. Dynamics that are driving the industry
- 32. Changing Corporate Structure: Dynamics that are driving the industry
- 33. Dynamics that are driving the industry
- 34. Facebook
- 35. Facebook 200 million worldwide monthly active users in April and Facebook growing by 5 million users a week overall, 1 million in US
- 36. Facebook
- 37. Facebook Financials Privately Owned $12 M on electricity $6M on bandwidth $100M on server $100 on storage systems $15M on office and data centre $120 M on payroll $100M on capital expenditure
- 39. Challenges
- 40. Volatility of Social Networking Space Not everyone’s winning: in US, slightly more decliners than advancers
- 41. Older Users Remain on the Sidelines
- 42. Younger Users Tend to Be Heavy Users; Older Users More Likely to Check in Occasionally % among those who visit social networking sites
- 43. Privacy Concerns Reduces the growth of social networking Features that meet users’ need for expression are likely to catch on, even if they carry with them incremental privacy concerns.
- 45. Low advertising rates Billion Question How can social networking sites turn their largeuser base and extreme popularity into profits?
- 46. Recommendations Search partners Continue to raise CPMs Paid premium memberships Classifieds A menu of paid features Paid applications Virtual goods E-Commerce Lead Generation Endorsement
- 47. How to Go Forward
Editor's Notes
- Why are so many people around the globe flocking to social networks? Though there are many activities that people can engage in—games, applications, listening to music—the key benefit is that they are an easy way to stay in touch and share information with friends and acquaintances.According to Universal McCann, interacting with existing friends was the most common activity done by social network users worldwide (66%), followed by uploading photos (55.1%).
- Success of social networks is attributable, at heart, to the fact that they provide a superior technology such as• News feeds. A news feed is a feature that enables users to see updates on their friends’ lives, and vice versa, without needing to specifically contact each other. As any social network user updates his/her profile, those updates become visible to that user’s circle of friends.• Built-in spam filter. Many proposed spam solutions have focused on attempting to verify that the person contacting you is a friend, but social networks have a built-in verification system that allows one to ensure that the bulk of communication is from confirmed friends.
- While some might perceive social network behavior as frivolous and a waste of time, other organizations are starting to tap the benefits of social web behavior to improve productivity and to support a culture of innovation at the organizations. Companies now see real value in promoting social web behavior between their employees, partners, and customers. This has impacted in how organization chart looks now. Now, customers are not only looking for the value of the products, but for corporate values that make sense
- Picture this: a young woman goes to a party. She doesn't know anyone but it's fine because she has her mobile with her. A few clicks and she accesses the profiles of a dozen people at the party, including their pictures. She's in luck: two of them turn out to be friends of friends. She messages them and they start to chat. This is not science fiction - it is the future of social networking and it is just around the corner. After the explosion in internet-based social networking (MySpace, Facebook) doing the same thing in real life instead of in front of a computer became an obvious next step. You can browse the internet quickly and easily on most new phones. Phones know where they are, thanks to in-built GPS satellite technology. They can then tell if other phones are in the same area. Bluetooth short-range radio technology is also standard on most mobiles and with this phones can pick up the presence of other Bluetooth-enabled phones within about 20 metres. Effectively, by linking these two developments, your phone can tell if someone is near you and can access lots of information about them - the perfect ingredients for real social interaction.
- ubiquitous Facebook is now the leading global social networking site. Founded, like many social networking sites, by university students who initially peddled their product to other university students, Facebook launched in 2004 as a Harvard-only exercise and remained a campus-oriented site for two full years before finally opening to the general public in 2006. In October, Microsoft outbid its archrival Google to invest $240 million for a 1.6 percent stake in Facebook, which valued the company at a startlingly rich $15 billion. Microsoft has right to Facebook's exclusive third-party advertising platform. Microsoft, which already sells banner ads for Facebook in the U.S., will now sell Facebook ads internationally as Facebook expands to include foreign language social-networks.
- Facebook is privately owned and operated by Facebook, Inc. Its revenue in 2008 was about $265 million, which was less than the $300 million expected. This was composed of about $180 million of ad revenue, $50-$60 million of virtual gifts, and some smaller revenue items.