Detailed Analysis of Facebook's Business Strategy & Revenue Model

This report provides an analysis of Facebook as a social media platform, covering its history, development, business model, and strategies. It explores Facebook's evolution from a Harvard-exclusive network to a global platform with over a billion users. The report details the various companies associated with Facebook, including Instagram and WhatsApp, and the services offered, such as Facebook.com, Messenger, and Marketplace. It also examines Facebook's business strategy, focusing on expanding internet access and generating revenue through targeted advertisements. The analysis includes research and development efforts, sales and marketing costs, and the diverse revenue streams, including advertisements, payments, and Workplace. The report concludes with a look at Facebook's future plans and its continued dominance in the social media landscape. Desklib provides access to this document and many other solved assignments for students.

Running head: ANALYSIS OF FACEBOOK AS A SOCIAL MEDIA PLATFORM
Analysis of Facebook as a Social Media Platform
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1ANALYSIS OF FACEBOOK AS A SOCIAL MEDIA PLATFORM
Table of Contents
1. Introduction..................................................................................................................................2
2. Discussion....................................................................................................................................2
2.1 History of Facebook..............................................................................................................2
2.2 Development of Facebook.....................................................................................................2
2.3 The Business Model of Facebook..........................................................................................3
2.3.1 The Companies associated by Facebook........................................................................3
2.3.2 Services offered by Facebook.........................................................................................3
2.4 Business Strategy of Facebook..............................................................................................5
2.5 Research and Development...................................................................................................7
2.6 Sales and Marketing Cost......................................................................................................8
2.7 Revenue Sources of Facebook...............................................................................................9
2.7.1 Advertisements...............................................................................................................9
2.7.2 Payments.........................................................................................................................9
2.7.3 Workplace.......................................................................................................................9
3. Future Plans of Facebook..........................................................................................................10
4. Conclusion.................................................................................................................................10
5. References..................................................................................................................................11

2ANALYSIS OF FACEBOOK AS A SOCIAL MEDIA PLATFORM
1. Introduction
With the rise in the trends of social networking websites, there have been a major form of
rise of the social media websites. A wide form of research on the usage of social media sites by
the people have shown to have a major form of growth in the recent past years (Curty & Zhang,
2013). The usage of different kinds of social media networks such as Instagram, Facebook and
WhatsApp has increased on a global basis. This has helped in playing a major role in the lives of
the people. They have helped in applying a major form of role in the lives of the people. Based
on the conduction of review of the choices of different people, it has been seen that Facebook has
been considered as one of the most preferable social networking problem. Facebook is regarded
as one of the most preferred website by various users (Leung et al., 2013). This is not because of
the huge number of users but also due to an incredible analytics suite. The social networking
platform has the capability to analyse their customers and their changing behaviour based on a
micro-level based on the ever-changing algorithm that has been inbuilt within their website and
the mobile applications.
2. Discussion
2.1 History of Facebook
Facebook is considered as one of the most popular social networking website that was
launched in 2004. The company was launched by Mark Zuckerberg. Initially the membership of
the website was limited to the students of Harvard. Later it was expanded to different other
colleges within the Boston area and other universities in Canada and United States (Van Dijck,
2013).

3ANALYSIS OF FACEBOOK AS A SOCIAL MEDIA PLATFORM
2.2 Development of Facebook
With the launch of the social networking website, it had gained much popularity in the
initial years. The nature of Facebook gradually propelled from various educational institutions to
anybody who would have a registered email address. The social networking platform is a free
and open source platform, which enlarges their profitability based on advertisements and raising
of revenue. The features of the platform have continued to develop in the recent years (Bicen &
Uzunboylu, 2013). In the recent developments, the users have been provided with different new
form of facilities such as gifting their friends, posting advertisements and thus developing their
personal applications.
2.3 The Business Model of Facebook
Facebook has a history of claiming a huge customer base. They have a record of over
1.13 billion active users through which they have known to have claimed around 27.63 billion of
revenue in the year of 2016. Based on recent reviews from people residing from all over the
world, Facebook has become the most popular social networking website (Baden-Fuller &
Haefliger, 2013). Though there are different other kinds of social networking websites in the
world such as Instagram and WhatsApp, but still the organisation has maintained to establish a
broader customer base in the world. They have also been able to collect immense form of
revenue in each year.
2.3.1 The Companies associated by Facebook
Ever since the inception of Facebook, the organisation has a record of continuously
changing their model of business and thus innovating new kinds of features and services in order
to meet the demands and expectations of their customers. The massive business model of

4ANALYSIS OF FACEBOOK AS A SOCIAL MEDIA PLATFORM
Facebook have constituted the major companies from all over the world. They include Facebook
Payments Inc., Atlas, WhatsApp, Parse, Instagram and many others.
2.3.2 Services offered by Facebook
Though most of the massive kinds of services that are provided by Facebook are aimed to
generate a huge amount of revenue, there are some services that would be meant for generating a
huge amount of data. The generated data would primarily range from gaining the information of
user accounts based on their behaviour on the internet and their histories on their phone (Gwebu,
Wang & Guo, 2014). This form of strategy have majorly helped Facebook to suppress their
competitors and hence hold a major share over the market.
Some of the major form of services that are offered by Facebook and are included within
their business model are:
Facebook.com – The most favourite social media network in the world, such as
Facebook would help people for connecting with their family, friends and other people from all
over the world. With the expansion of their model of business, Facebook has also launched their
smaller version of their application, which is known as Facebook Lite. This service was launched
in 2015. This new service has been able to incur the biggest source of revenue based on the
parent company.
Messenger – The organisation had separated their chat facility from their application and
has also launched a newer version of chat application, which is known as Messenger. This is a
form of mobile messaging application that would provide the facility to their users to send
messages and stickers privately (Yang et al., 2016). The messaging platform also supports

5ANALYSIS OF FACEBOOK AS A SOCIAL MEDIA PLATFORM
services to their users such as chatting within groups, making free video and audio calls, even
with people from different countries.
Marketplace – With the introduction of the online shopping platform, Facebook has
once again took a step forward to establish a broad base of customers. The Facebook
Marketplace would be similar to other forms of online shopping platforms with an integrated
facility of messaging. This has also made Facebook as a social marketplace (Ali, Sabetta &
Bezzi, 2013).
Workplace – The Workplace offered by Facebook is a form of in-house social network,
which has provided the facility to companies in order to establish a connection with other
companies. A workplace profile would be very much different from the personal profile of the
users. In order to register for a profile within Workplace, the users and the companies would
have to pay a certain price.
Instagram – The Instagram has been defined as the most lovable social media platform
just after Facebook. It could be defined as an image sharing network that would allow the people
to share their moments with the people whom they want to get access to the photos.
WhatsApp – This social media platform is one of the leading messaging platform. The
platform provides end-to-end encryption and full form of digitised instant form of messaging
service. This platform makes use of the internet for sending and receiving of messages
(Karapanos, Teixeira & Gouveia, 2016). The service platform also competes with the major
companies.

6ANALYSIS OF FACEBOOK AS A SOCIAL MEDIA PLATFORM
2.4 Business Strategy of Facebook
The users of Facebook have helped the company to earn lots of money and thus help in
increasing the revenue of the company. Hence, this has become as one of the most important and
topmost priority. As a major form of social media platform, Facebook could be defined as a
major black hole based on Big Data (Woerner & Wixom, 2015). They have always made
successful usage of that data in order to generate a high amount of revenue based on their
targeted advertisements. Facebook has thus expanded their feathers within the core markets of
UK, USA and Canada and to other parts of the world with their massive hit of the idea of user
saturation.
It was noticed by Facebook that half of the population of the world does not have access
to the Internet. Hence, the phase one of their business strategy was meant to provide internet
access to everyone. This form of Internet would be provided at a very low cost or even at no
cost. As Facebook had planned to run their applications on every device, hence they had
implemented to bring Snaptu in the year 2011. This was a free application platform that had the
capability to run on any Internet-enabled smartphone. Facebook also implemented Onavo, which
is based on mobile analytics. The application helps in providing their users with the latest
information about the consumption of data and thus would help them in compression of data
(Pagani, 2013). This application was introduced by Facebook in the year 2013 for enhancing the
Facebook Lite experience and internet.org.
Just after reviewing the accessibility of Facebook to each and every users, the next
essential step for the organisation was to tap them and generate a considerable portion of
revenue. The recent statistics in relation to the percentage of revenue are totally in favour based
on the implemented strategy by Facebook. As there is an increase in the total spent time on the

7ANALYSIS OF FACEBOOK AS A SOCIAL MEDIA PLATFORM
application, generation of services and a rapid increase in the number of advertisement
impressions, the organisation would be making a huge amount of money.
(Fig 1: Growth of Facebook in the Recent Years)
2.5 Research and Development
Facebook is considered as one of the most popular social media platform. Though there is
a high level of competition, Facebook would also remain at the top among the social media
giants. Facebook has many competitors within the market. The company has also been able to
suppress their competitors within the market due to an immense amount of development and
research in several fields (Bakshy, Messing & Adamic, 2015). The factors of R&D would be the
utmost importance of Facebook in order to retain and expand their features. Facebook performs a

8ANALYSIS OF FACEBOOK AS A SOCIAL MEDIA PLATFORM
huge amount of R&D in order to lift their application within the world market. With the help of
performing a huge amount of research, Facebook would be able to enhance the user experience.
The factor of research and development would play a major role for Facebook to expand their
user base. Understanding the needs of the customer would be a major form of need before them.
2.6 Sales and Marketing Cost
As Facebook has become one of the biggest social media platform, hence the
organisation would require a huge cost effective management in order to maintain to the services
that are provided by them (Ramsaran-Fowdar & Fowdar, 2013). Other costs include sales and
marketing expense that would be incurred on products and people.
(Fig 2: Flowchart of the interdependency of Facebook)

9ANALYSIS OF FACEBOOK AS A SOCIAL MEDIA PLATFORM
2.7 Revenue Sources of Facebook
Though the primary form of income of Facebook does not depend on selling of user data,
the main source of generation of revenue is based on advertisements that would involve the
making usage of user data based on targeting. Some of the different sources of the generation of
revenue for Facebook are:
2.7.1 Advertisements
The business model of Facebook is based on the generation of revenue based on their
unique ability for providing targeted advertisements. Many new platforms such as Messenger,
WhatsApp and other websites and applications have also been added to their network (Kim et al.,
2016). In order to make marketers to put high investments within their platform, Facebook has
also modified their newsfeed algorithm.
2.7.2 Payments
There are different games such as Candy Crush, Farmville and many others, which have
the option of making payments based on virtual currency. These applications and games have a
major role in developing a framework based on the business model of Facebook. A significant
part of the type of payments would reach to Facebook that would act as a payment gateway
based on those games and applications (Casadesus‐Masanell & Zhu, 2013).
2.7.3 Workplace
This is one of the private social networking service meant for companies. People and
employees have the option of connecting with different companies in order to discuss ideas
based on different projects and ideas.

10ANALYSIS OF FACEBOOK AS A SOCIAL MEDIA PLATFORM
3. Future Plans of Facebook
Facebook owns an innovative future plan based on increasing their hold over the market.
They have an immense form of strategy based on bringing access to the internet for everyone.
These are helpful with the introduction of solar drones, express Wi-Fi and internet.org. Facebook
has also introduced project ARIES and Terragraph based on providing consistent and high speed
internet experience. Facebook has also moved into the virtual reality sector with the acquirement
of Oculus (Rainie, Smith & Duggan, 2013). They have also promised to integrate the platform
within the social media platform.
4. Conclusion
Hence, from the above discussion, it could be concluded that Facebook has a huge market
opportunity to grow and enhance the customer experience. They have innovating new kinds of
changes and thus generating huge amount of revenue. The sales and marketing cost of Facebook
include the expenses based on better user interface and various other services that are provided to
different users, developers and marketers in order to attract their attention and thus be able to
retain them. Hence, Facebook has a huge opportunity for growth and expand in the social media
market.

11ANALYSIS OF FACEBOOK AS A SOCIAL MEDIA PLATFORM
5. References
Ali, M., Sabetta, A., & Bezzi, M. (2013, April). A marketplace for business software with
certified security properties. In Cyber Security and Privacy Forum (pp. 105-114).
Springer, Berlin, Heidelberg.
Baden-Fuller, C., & Haefliger, S. (2013). Business models and technological innovation. Long
range planning, 46(6), 419-426.
Bakshy, E., Messing, S., & Adamic, L. A. (2015). Exposure to ideologically diverse news and
opinion on Facebook. Science, 348(6239), 1130-1132.
Bicen, H., & Uzunboylu, H. (2013). The use of social networking sites in education: A case
study of Facebook. J. UCS, 19(5), 658-671.
Casadesus‐Masanell, R., & Zhu, F. (2013). Business model innovation and competitive
imitation: The case of sponsor‐based business models. Strategic management
journal, 34(4), 464-482.
Curty, R. G., & Zhang, P. (2013). Website features that gave rise to social commerce: a historical
analysis. Electronic commerce research and applications, 12(4), 260-279.
Gwebu, K. L., Wang, J., & Guo, L. (2014). Continued usage intention of multifunctional friend
networking services: A test of a dual-process model using Facebook. Decision Support
Systems, 67, 66-77.
Karapanos, E., Teixeira, P., & Gouveia, R. (2016). Need fulfillment and experiences on social
media: A case on Facebook and WhatsApp. Computers in Human Behavior, 55, 888-897.