Mayank Gupta

241073 FMG 24 B

FACEBOOK

Introduction
Since its inception in 2004, Facebook has changed the way people used to interact with each
other. With a present user-base of over 1.31 billion people (841 million mobile users), [1]
and a dedicated workforce of over 9199 [2] employees, Facebook presents a perfect example
of how innovations in Information Technology are changing the rules of the business world.

Business Model of Facebook

Key Revenue Sources

- Mobile ads: Major portion of facebooks revenue come from mobile ads, i.e. ads
-

displayed by facebook on its mobile version.

Desktop ads: Second major source of facebooks revenue are the ads displayed by

facebook on its desktop version which are known as dektop ads.

Payments for other services: Facebook also serves as a platform for various
kinds of applications and services. The revenue it generates from this segment is

the third source of revenue for facebook.

Key Cost Sources
- Data Centre These costs includes maintenance and addition of data centres to
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store huge volumes of data.

Marketing and sales- These costs include all the costs which are related to
promotion and expansion of facbook.com both for common people and

corporates.
R&D- Being an internet based platform facebook invests large sums of money in

research and development to keep itself up to date and relevant to people.

General Administration- These include administrative expenses such as

expenses on office buildings, employees, etc.

Unique features of facebooks business model
- Users do the work Most impressive feature of facebook is most of the catchy
and popular content for which people come to facebook is created by users
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themselves.
Brands send the traffic - Facebook also gets a lot of traffic from brands who call

their customers to check out their facebook pages.

Smaller Team- The facebook team is much smaller as compared to other big
online companies and hence it is better focussed and co-ordinated.

Methodology
Facebook offers a great opportunity for businesses to engage with their present and potential
users by allowing anyone to start an own brand page. This report examines how facebook

Mayank Gupta

241073 FMG 24 B

FACEBOOK

serves (or has potential) to serve various businesses. Each scenario is explained by a suitable
example which has been gathered through primary research by the author of this report.

Analysis
- For Celebrities
From movie stars to politicians, different celebrities try to engage with their fans
through Facebook. The number of fans a celebrity has on facebook is seen as a criteria
to judge the celebrities popularity. Also a huge fan base can serve as a basis of
evaluating the worth of a celebrity from any brands point of view
An example of Cristiano Ronaldo
Portuguese Footballer Cristiano Ronaldo is the most followed celebrity on Facebook
with a following of over 105 million people worldwide. On 13 August 2015 he shared
his interview with Herbalife.com (an online healthcare website) on his facebook page.
The interesting result of this activity was that the number of new people who followed
the Herbalife.coms official facebook page rose sharply [3]
Hence by simply using a free platform (facebook) and a huge fan following of
Cristiano Ronaldo the brand was able to add a significant number of new potential
users.
- For Brands And Organizations
Facebook page serves as a virtual showroom for various brands and organizations.
They either use it for promoting their new and existing products or for promoting
various initiatives and campaigns.
Example of Starbucks
Starbucks (a global coffee caf chain) has 10th biggest facebook page in world in the
brands category with a following of over 35 million [4]. It makes its customers more
engaged by interacting with as many people as possible through various tabs like open
jobs and events on its facebook page. Hence it is not just one of the biggest pages on
facebook but is also much active than the leader page (Mc Donalds with over 58
million followers) in the same category.
The average numbers of likes on last seven posts of Starbucks official page (for the
period ending on 13 August 2015) were 133537 as compared to just 480 for Mc
Donalds for the same period.
-For e commerce websites

Mayank Gupta

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FACEBOOK

Facebook serves as a major source of traffic for all the e-commerce companies. Also
the official pages of these companies often come up with interesting ways to engage
its followers hence building a strong customer loyalty. Amazons video campaign
called this dog is having a rough day on 12 august 2015 which got over 273000
views in just 4 days on its official facebook page is an example of such innovative
marketing using a facebook page. Facebook also rolled out its new feature of Shop
now for such companies through which people can now directly buy through the
companies Facebook page.
Example of Flipkart.com
Flipkart is the 5th largest e-commerce company of the world in terms of traffic. It has a
following of over 5 million people on its core facebook page and also owns a number
of specialized facebook pages such as Flipkart fashion, Flipkart gaming, etc. It also
uses facebook adverts for promoting both its brand and products.
As a result of these activities 5.4% of all the traffic it receives comes directly from
facebook. That means on an average 1934505 people visit flipkart.com daily directly
from facebook.
-For Unofficial Pages
There are over 50 million pages on facebook [5] out of which majority of pages are of
the unofficial category. A large number of these pages are related to small
organizations. But there are a number of unofficial pages which have grown
extraordinarily over the years and now enjoy a vast audience which ranges in multiple
millions in numbers. Such pages are giving rise to entirely new kinds of businesses
which cannot be generalized under any category.
Example of viralnova.com
Viranova.com was launched in May 2013 by Scott DeLong and it features articles on
viral videos and other such interesting stories. The founder popularized its website
mainly through its facebook page which presently has a following of over 2.4 million
people. The website became so active that the owner sold it to Zealot Network in July
2015 for 100 million US Dollars. The story of how One guy launched a website and
made millions without hiring a single employee which was based on viralnova.com
featured in business insider news website on July 9 2015.

Mayank Gupta

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FACEBOOK

Insights
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Facebook as a virtual showroom

As seen above in case of Starbucks Facebook can be successfully used as virtual
showroom to showcase the utility of a brands products and initiatives in

interesting and innovating ways.

Facebook as a new marketing tool
With such a large user base, facebook offers great possibilities for marketers.
Some of the brands such as Starbucks are already using this tool very effectively
but still many companies are not able to make the most out of it. Hence there is a

great possibility for marketers in the world of facebook.

Emergence of new business orders
Facebook is allowing people to engage with more and more people in ways like
never before. This allows people to come up with new and innovative ideas to
make the most of this opportunity. The way Scott Delong of viralnova.com

exploited it is just one example of this.

Mobile is the future
With more and more facebook traffic now coming from mobile sources it can be
deducted that any strategy to make use of facebook for business should take care
of the mobile version of this website.

Conclusion
With such a large and active user-base facebook turns out to be a platform which no business
or organization, no matter how small or how big, can afford to ignore. It provides immense
opportunities for both existing businesses and budding entrepreneurs to make use of this
wonderful tool and reach out to as many people as possible.