Ronnie05's Blog

Profiling Facebook: The Google of Social Networking

Posted in Social context, media and advertising by Manas Ganguly on February 24, 2009

I intended a study on Facebook to be a one blog post initially. However, the literature, reserach and comments on the subject is staggering and hence i feel compelled to give more than one post. Here is the firt one on the phenomemon of social networking and profiling Facebook, the one company which has revolutionalized the power of social networking.

Facebook is accorded a status of being the second wunderkid of the web world. The first web wunderkid is Google!
Consider this: 
  • Barack Hussein Obama, used Facebook as a cornerstone for his path breaking presidential election last year. 
  • Dell is recruiting new hires from Facebook audience.
  • Windows 7 “borrows” networking features from it.
  • It is a 175 million users community..
  • …adding 5 million new users everyweek.
  • If Facebook, were a country, it would be greater than the population of the whole of Brazil
  • It edges out USs greatest sporting event Superbowl XLIII with a record 152 million eye balls
  • One of the most addictive sites, users spend an average of 169 minutes per month (compare it with 13 minutes in Google news and 10 minutes in New York Times)
  • The Maine democratic party uses it to organize regular meetings
  • Ernst and Young uses this site to recruit new hires
  • Sometime in October November 2008, Facebook edged past Myspace to become the largest networking site in US.
  • In a 2006 survey conducted by student monitor, a New Jersey based company specializing in college student market, Facebook tied with Beer as the second most popular thing among undergraduates, ranked lower than iPod.



At the heart of the Facebook phenomenon is what is now being termed as Conversational marketing (Word of mouth marketing). The underlying insight is that consumers are more liley to trust a pitch from friends rather than paid commercials and other promotions from the company! Thus users become product promoters….and are encouraged tp spread the word about things they buy and use –> thereby endorsing the product.

What Facebook has been successful in doing is blending E – Commerce with word of mouth marketing for results which at this stage are more promising than anyother in the Web 2.0 space. While advertising online as we know it today may be a good profit engine for social networking companies, the FaceBook avatar of  e-commerce selling is looked upon with some hope in terms of bringing results.
While a Amazon or a e-Bay uses a rating system to throw up results on relevant products basis current purchases, Face Book ratifies products by adding rating and recommendations from friends. They call thisSocial Graphs. Thus when a user buys something online through Facebook, Facebook will seek a permission for sharing the purchase with the user’s social network, with a product endorsement by the current user. For instance is a user browses through New York Times editorial section using a Facebook application, Facebook prompts the user when he is leaving to rate his experience. Depending upon the users feedback, Facebook flashes a status update to the users social network saying “… has read the editorial in NYT and thinks it rocks! Check it out.” 
In terms of Online marketing, Facebook thus shifts the focus from ads to consumers to promte purchase (and earning revenues by the clicks on the ad widget) to making people endorse the products they buy and tell it to their friends (Facebook earns from the users endorsement of the company product).
To that effect this strategy has been voted to be one of the boldest moves on the internet!.
Apart from user endorsements, Facebook has three other sources of revenue:
1. Business pages: Where they host the company and its offerings for  consumer/users of a particular profile. Thus it creates a platform for companies  to talk to their ideal profile consumers and promote its product. A 100,000 of such hosted company profiles are found in Facebook at this point.
2. Social Ads: Ads targeted by user profile data! This source also hosts the Beacon which uses personal information of users (which they would like to share only with their network) for targeting marketing campaigns. There have been privacy concerns around the Beacon, which mined implicit data (which the consumer doesnot want to share with other outside his network). Google and others used Explicit data, which the user has voluntarily disclosed about himself to be used for marketing campaigns. Amidst outrages on privacy, Beacon was made an “opt in” service for users instead of being an “auto enrollment”.
3. Insight: Facebook also has a data of usage metrics for advertisers (trends etc) and also sells data on targeting/focussing and clicks.
According to Facebook’s own books of account, they value themselves at $3.7 Billion (June 23rd, 2008). However Microsoft, in 2007 bought 1.6% of Facebook stake at $240 million,  thus giving Facebook a valuation of $15 Billion. It made $280 million in revenues in 2009 and is yet to break even.
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  1. […] This is the last of the Profiling facebook series. The earlier posts have been listed above. The […]

  2. […] Facebook: The Google of social networking.; […]

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