• Giving people the power to share and make the world more open and connected •

Do you know that today every twelfth person has a Facebook account; this is a twelfth of the whole human population? Altogether there are more than 550 million members since summer 2010 and they’re collectively spending more than 8,3 billion hours on the website each month. Everyday 700.000 new members join Facebook and there are more than 100 million active users currently accessing Facebook through their mobile phones. Since 2008 the page is available in about 80 different languages. So, let’s assume facebook was a country; with its 550 million members it would be the third most populous in the world after China and India and twice as large as the USA. The current market value of Facebook is increasing to about $50 billion and there are over 1700 employees. But why does a website like this catch so many of us? Isn’t it just an ordinary social networking site like all the others? Why is the whole Internet infested with facebook links or buttons? And why does everyone talk about who poked whom or about the most interesting status updates, messages, wall posts, comments, videos and links? It seems as if the whole world is obsessed of this new social platform. If not on the local pc, people get access via laptop or mobile phone wherever they are. I want to give you an overview of this social networking site

• Where does the idea come from? The idea of the whole facebook thing originally comes from the former Harvard student Mark Zuckerberg who simply wanted to make something that would make Harvard more open. Therefore he created a social networking site with the web address “facebook.com”. Facebook was primarily created to connect the students with each other but also to organise events or lectures on the Harvard University. To realise his concept of the website, he worked in collaboration with other students, such as Eduardo Saverin, Dustin Moskovits, Andrew McCollum and Chris Hughes. And on February 4, 2004 “facebook” was launched. At that point nobody could imagine that this event would be the beginning of an enormous change in our today’s society and that this Harvard student was

the person who laid the foundations for it. So, at the beginning this social networking site was only accessible to all Harvard students and since September 26, 2006 “facebook” has been available for everybody of ages 13 and older who had a valid email address.

• Where does the money come from?
Today’s valuation of Facebook is increasing to about $50 billion. But how comes that “facebook” is so profitable although it is free for all users? First of all, “facebook” got some funds from so called angel investors. That’s why facebook has a current market value of approximately $50 billion. But the fact that Facebook isn’t listed at the stock exchange so far makes it quite difficult to get proper information about the statement of Facebook’s financial condition. The company avoids joining the stock exchange to keep their financial statements a secret. The company also doesn’t want to share how it earns its money. Financial sources are: E-commerce Applications Advertising

One way of how Facebook comes to its money is the E-Commerce. So, all the virtual gifts one can send each other, like birthday cakes, hearts or other things. Sometimes these gifts are free, but if not, they generally cost users $1 each to send. And the same with games like FarmVille, CityVille or MafiaWars, where the user can buy extra objects such as several animals, buildings, tools etc.

Another method of Facebook how to earn money is the platform where facebook allows developers to build their own applications and integrate them into Facebook’s Application Platform. These applications range from IQ tests, to games (such as FarmVille, CityVille etc.) and Facebook gets a piece of the profit the developers make from those applications.

• Advertising
Facebook Advertising is one of the most effective marketing tools available for companies today and it is Facebook’s largest source of revenue. Since 2007 they use a system to drive relevant and interactive ads to their users. Unlike other websites, advertising on Facebook is available to anybody. This means, that not only large companies have the opportunity to advertise on Facebook. Furthermore the advertisers are able to specifically limit the target audience to make sure the ad is seen by the most relevant audience. For example, the advertisement can be targeted by age, gender, location, workplace or school and even relationship status. (That’s the reason why there

is often relevant or interesting advertisement on users profiles). And there’s no other place where one can personalise one’s advertisement. Therefore these recent functions prove it’s worth and attract lots of advertising agencies. But to realise this concept, they need our data. (I’ll come back to this later on.) Another advantage is the function that allows users to give personal feedback (comments) referring to the content of the advertisement. (And that again helps advertisers to improve their announcements). Users are able to click the “thumbs up” button or close the advertising window. As one can see, facebook works with the tool to enable the user to control as much as possible. With it, the user experiences a more intensive social networking and is able to personalise his virtual environment (profile). And if you think on Facebook’s population (the 550mio. members) it probably becomes clear why there is such a great demand for advertising on Facebook. (Without a doubt, it is the biggest target audience concerning advertising).

• Why is Facebook growing so quickly?
“Facebook – social from day one” Those are the words Mark Zuckerberg said. So, if you think about today’s society, you’ll probably encounter many weak points or unaccomplished needs. The society is changing. It is becoming more and more superficial. But there are some things they will not change. For example the primal urges of the people. Everyone needs someone to talk to or to be with, but there’s not enough time to chat with people today. Everyone needs to be accepted. And just today social isolation is one of the biggest problems we are faced with. And now there’s a website that provides you to keep contact with all of your friends, relatives, classmates and colleagues at work. Now, you’re able to talk to them wherever you are and whenever you want. You just need to click one button. “Facebook wants to connect the world.” This is not only their mission, but also and especially a marketing approach. So to explain how Facebook catches so many people, I’ll show you those two different human needs: First, to share personal things with others (what means: getting personal information from others and disclose one’s own) and the second is the social activity. On Facebook you may do all those things with just one click. • Getting personal information and disclose your own.  you can inform others with posting your status or publishing your personal data  you can say whether you like something or not  post your own photos and check those of your friends (same with videos or wall posts)

 you can join a group  you can play games together with your friends  and you can post where you are at the moment • social activities  communicate with others (whether via instant chat, messaging or wall posts)  you can send gifts to friends  you can add friends  you can like something or not  you can comment everything (whether photo’s, videos or wall posts and even other comments) And as I told you already, Facebook saw this high potential of the social network and developed a complete new marketing concept that not just offers people the possibility to keep contact with their friends but also helps developers to market their products or to spread their personalised advertisement. According to the Facebook Company, “products, which are built around people, around their connections, around their interests, grow faster, grow bigger and get better than products, which went before them.”

• Facebook’s Mission
Therefore, Facebook wants to change the whole web: from a web of documents to a social web, organised around people. They want to develop a platform with new strategies, where Facebook is at the centre of it all. And that’s what they call the “Facebook Platform”. It consists of: • Apps on Facebook • Developers & Entrepreneurs • Integrated Websites • And especially engaged users (because without them there wouldn’t be anything) It’s all about merchandising certain products or even celebrities and advertisement. And the main points Facebook wants to improve with the service characteristics are: • Traffic – for example how to drive traffic to the developer’s website • Engagement – how to make people stay longer and engage more deeply • Insights – knowing and understanding users behaviours, knowing what works and what doesn’t (getting feedback) For example social plug-ins like the “Like Button” should help to drive traffic to the websites and make people stay longer. The root idea especially from the “Like Button’s job” is based on the principle

of social context: “ It’s like walking past a restaurant and seeing your friends inside- if you see friends, you’re much more likely to go inside.” And that’s exactly what the “Like Button” is for: to show how many like something and also who likes something. There are even different versions, but the most effective is the standard version with added Faces (as you can see on this statistic). Activity Plug-ins have the same function. They show what people have been doing on the website so that others can see for example which articles, videos or products are favoured. Now, the developers are able to gain insight and analyse the people’s behaviour with certain tools from the Facebook Platform. Did you ever wonder about why one spends that much time on the Internet? I think the answer is clear now! And like already mentioned, the web is changing from a web of documents to a social web. But I would rather say it is changing to a marketing web where Facebook contributes a lot to it. And now to answer my question, why facebook is growing bigger and bigger: the problem is, that its marketing concept works and the companies are forced to join so that they can keep up with the others.

Of course facebook has to face lots of criticism especially because of its privacy settings and the inability to terminate accounts without first manually deleting the content. As we saw with the advertisements, facebook needs to sell users’ data to private companies, (so-called third parties) to target the advertisement. Now they reworked their privacy settings to satisfy the people but there’s again an issue because the new settings are extremely unclear and it is definitely complicated to arrange the own privacy settings. In the last five years Facebook’s privacy policy has grown to 5.839 words today. In addition, Facebook offers an in-depth Privacy FAQ page, with 45.000 words. But honestly; who would read that?

I think the main problem is the fact that people aren’t carefully enough with sharing their photos, data etc. Did you know that there are GPS data loggers in your digital cameras or cell phone cameras which offer others to localise where the photo was made? Another unsafe thing is the fact that employers use Facebook to control their employees. This happened already to many people. People are addicted to Facebook, what makes it more difficult to quit. You would loose your second world.

Maybe you are addicted too? Those are some signs: 1. 2. 3. 4. 5. You are late for meetings because you are on Facebook You think about it when you are offline Your friends and family comment on your excessive Internet use You check your accounts from your Blackberry You get stressed when a Facebook “friend” doesn’t add you

I think facebook definitely has good qualities but one has to face the “gist of the matter“ and learn how to use it in a conscious way. Otherwise it will control people and make all of us dependants.

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