Facebook: Is it still the best Social face for Future?

Published by MBA Skool Team, Published on April 07, 2014

Come this 4th of February, one of the leading platforms on social media, sharing a mission of making the world more open and connected, will celebrate a decade of its inception. The date 4th February 2004 ,indeed, marks one of the most remarkable social media revolution in the history of internet with the invention of the 2nd most common word starting with ‘F’ and ending with ‘k’ i.e. Facebook. The brainchild of Mark Zuckerberg and his Harvard college-mates based at Palo Alto, California, U.S, today generates a whopping $10.4 billion as revenue with 1.19 billion monthly active users worldwide.

The magnanimous growth of facebook which saw it grow at 80.81% historically can be attributed to its advertising efficiency as compared to the other web platforms. For instance, Facebook enjoyed overall 1/5th of the total online advertisement traffic with lower clickthrough rates (CTR) resulting in a 440% earnings growth rate in the quarter ending 31st December 2013. The new product development investments have also been key to its success by virtue of its strong interaction among users, developers and marketers. Apps have been another dimension that have created a greater bonding and increased its accessibility by its wide segments across the globe, thus helping it realize its mission of connecting the world. Another strategic USP of Facebook is its extensive customer-centric approach. It scans and does a wide market research of the segments to understand the people’s interests and preferences. This, in turn, helps it deliver the best customized or personalized content delivery.

But all is not hunky dory in an organization’s life cycle and Facebook is no exception. Be it the IPO fiasco in 2012 to changes in the newsfeed algorithm that drew a lot of criticism as it lead to its lower organic reach for advertising brands. The result was an unprecedented fall in its stock prices in 2012.

The huge marketing scope in the online mobile ad industry offers new challenges and opportunities for Facebook. For example, in U.S the average daily time spent on the Web is 5 hours and 16 minutes as compared to 4 hours and 31 minutes of T.V. This along with the fact that more than half of the time spent on internet is via mobile and yet it generating just 22% of the ad dollars, presents an untapped growth opportunity for Facebook. Adding on to this, are the increased threat from competitors like Twitter, YouTube and LinkedIn who are venturing deep into the cyberspace. This coupled with the vital content marketing war that is key business driver for future has left possibilities to be explored by Facebook think-tank.

The acquisition of Instagram.Inc, world’s largest photo sharing service, in April 2012 has been a strategic move and has been one of the largest buy-outs made by facebook till date at $1 billion. This acquisition has been in line with the emerging criticality of mobile based products for enhancing user growth and engagement over the long term. Leveraging the mobile-phone based photo sharing services of Instagram, the ultimate aim of ensuring more user connectivity and engagement can be achieved. A series of other acquisitions by Facebook include Karma Glancee-mobile location app, Face.com- leading face recognition Technology Company in the world, Osmeta- a cloud based computing, Atlas-a campaign management company, SportStream- a sports second screen developer and Little Eye Labs- a startup for rectifying android based apps.

As is quite evident, the game in digital marketing has just begun and many more challenges and opportunities are bound to occur in the ever-dynamic mobile advertisement market. But with the assets and technology at its disposal, Facebook does seem the best bet for your money in the times ahead.

This article has been authored by Pabitra Ranjan Nayak from Vinod Gupta School of Management

Key References:

• http://marketrealist.com/

• http://seekingalpha.com/article/1893891-the-future-of-facebook-in-numbers

• http://www.cnbc.com/id/101305512

• http://en.wikipedia.org/wiki/Facebook

• http://www.cnbc.com/id/101354549

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