Facebook’s Business Model Canvas

Let’s see what the Facebook’s business model canvas looks like:

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Facebook’s Customer Segments
 Users: They are the biggest customer segment of Facebook, and stand for one-third of the
world’s population! They are all the people who have their profiles in the network and use
them to interact and communicate with friends and other people with similar interests around
the globe. They don’t pay Facebook anything and, thus, they are not directly responsible for
the business revenue. However, they are the basis that makes Facebook interesting for the
ones who do pay;
 Businesses and advertisers: This is the segment involved in Facebook’s revenue. It
encompasses all the brands and businesses that advertise on the social network. They pay to
have ads for their products and services on the platform, which, from its side, offers a more
qualified audience. Due to the information that Facebook collects from its users, the company
is able to target advertisements on its platform, allowing brands and businesses to have their
ads viewed by its target audience. Anyway, although these are the revenue providers, they
will only keep their interest as long as the non-paying user base is wide and qualified;
 Developers: It’s the smallest customer segment, and it includes the ones who develop apps
and games through Facebook’s platform.

Facebook’s Value Propositions

As Facebook has three diverse customer segments, each segment will perceive the brand’s
value differently. That said, let’s divide the value proposition by segment:

 For users: The greatest benefit is to keep in touch with family and friends, via text and picture
posting, and by interactions through comments and direct messages. This is especially
relevant for the ones who travel a lot or live far from their loved ones. Another advantage is
the availability of entertainment and information. Facebook is useful both for those who want
to get entertained by the lives of their acquaintances and for people who use it as a source of
news and current affairs;
 For advertisers: The possibility of targeted campaigns, focused on their particular target
audience, has been of great value for brands. By achieving greater penetration in its main
audience, companies also get greater engagement in their customer segment of interest.
Another relevant point, especially for small businesses or young companies is that the tools to
advertise on Facebook are quite simple, in the best “do it yourself” style, which reduces the
need to hire someone to develop their own advertising content;
 For developers: Facebook is an amazing platform for developing apps and games, and it
offers a wide range of views and disclosure. Besides, there is a great network of providers for
advertisement services.
Facebook’s Channels
It’s quite clear that the main distribution channels of Facebook are its own website and app,
because that’s where users find each other, and advertisers access their audience. Inside
that, the channels can be divided into feed, notifications, direct messages, and stories.
Other channels include the app stores, other products of the company, e.g. Instagram and
WhatsApp, and, of course, word of mouth power.

Facebook’s Customer Relationships

Facebook’s customer relationship is based on its own platform, which is very user-friendly,
as it allows users to specify their profile configurations and use them with no hard time. In
addition, Facebook has an international sales organization, that works alongside marketing
and advertising agencies, to attract advertisers.

Facebook’s Revenue Streams

 Payment revenues (percentage fees)
 Ad revenues (CPM and CPV)
 Free
Facebook’s Key Resources
Within Facebook’s key resources, the only tangible one (but essentially digital) is its
platform, which demands technological infrastructure. Aside from that, the other key
resources are the network users and their content production, and the Facebook brand. The
active users are the company’s biggest asset. Because, if there aren’t users, there is no
audience to view the ads. And to make them engaged, there must be relevant content, to
avoid churn. As for the brand, it’s a very powerful name, still the great synonym for “social
network”, indeed.

Facebook’s Key Activities

Above all key activities, it is the platform development and maintenance, in order to ensure
a positive experience and avoid negative effects on the social network. Then, besides all
the infrastructure that the website demands, to keep it working properly and optimized 24/7,
Facebook also needs to invest in good practices and control bad behavior within the
network. Furthermore, the company focuses on user acquisition and engagement, data and
information storage and security, talent hiring and retaining, and sales and marketing.

Facebook’s Key Partners

 Content developers, e.g. videos, games, texts, etc.
 Developers for compatible operating systems, browsers, and hardware
 Digital influencers
 Businesses and brands that advertise or directly sell on the platform
 Marketing agencies

Facebook’s Cost Structure

The biggest share of Facebook’s cost structure revolves around platform maintenance and
its billions of users’ data storage. Besides, there is user CAC (cost of acquisition) by
delivering tools that foster user engagement, research and development investment,
marketing and advertising, customer support, and all the regular general and administrative
expenses of a worldwide company.

Facebook’s Competitors
 Snap: Photo and video sharing app released in 2011, with 280 million active daily users. It is
very popular among kids under 16 because the content disappears in seconds;
 LinkedIn: This professional network was launched in 2003. It aims at linking recruiters,
employers, and potential applicants. The site is free to use, but it has some premium features,
for its over 600 million registered users;
 Twitter: Free microblogging service founded in 2006. Its 180 million members can post short
texts called tweets;
  YouTube: The video-sharing platform allows users to upload, view, and share videos. It was
founded in 2005 and accounts for 2 billion regular users, who watch more than one billion
hours of videos each day;
 Pinterest: This social networking site is for saving and discovering creative ideas. It was
created in 2009, and it has around 480 million active users nowadays;
 TikTok: It is a social media app for creating and sharing videos or for live broadcasting.
Founded in 2012, it is the newest one and has more than one billion active users currently.

Facebook’s SWOT Analysis

Below, there is a detailed swot analysis of Facebook:
Facebook’s Strengths
 Brand: Yes, Facebook has already been in the top 5 most valuable brands in the world. Now
th
it is the 13 one, but that still represents a very strong name, valued at over $35 billion;
 Portfolio: Diversification and acquisitions allow Facebook to protect its financial assets, as it
does not put all its investments in only one sector. WhatsApp, Instagram, Messenger, Oculus,
Workplace, Portal, and Calibra stand as major strengths for the business;
 Market dominance: Despite its declining user number, Facebook still remains the leader in
rd th th
the social network industry, with more than 2 billion users. And the 3 , 4 , and 6 places are
occupied by WhatsApp, Messenger, and Instagram, respectively, which are part of the
company;
 Loyal customer base: Around 30% of the world’s population uses Facebook and its family
products (Instagram, WhatsApp, Messenger) putting the company in a very comfortable
position;
 Good employer: HR policies put Facebook as one of the best employers in the world, thus
attracting and retaining top talent;
 Leader: Mark Zuckerberg is a brand itself nowadays. His visionary leadership provides
innovation, stability, and sustainability for the business;
 R&D: Facebook is one of the leaders worldwide in Research and Development investments,
focusing almost 20% of its total revenue on innovation;
 Marketing strategy: Facebook is a very powerful marketing tool, as it reaches 2 billion people
but enables target advertisement. That is why 97% to 99% of its revenue comes from ads.

Facebook’s Weaknesses
 Privacy: Facebook faces some decline in popularity and a bad reputation due to its lack of
protection regarding users’ privacy and data;
 Overdependence on advertising: The business revenue is totally dependent on social
media (the other brands of the family are in the same industry) and, as mentioned above,
advertisement is basically the source of revenue for the business, leaving no place for other
revenue streams;
 Fake news: Facebook has been under huge critics as a result of its incapacity for controlling
misleading information.
Facebook’s Opportunities
 Portfolio: Facebook has the potential and resources to diversify its portfolio in order to avoid
overdependence on social media and advertising;
 Integration with other applications: Facebook can be open to integration with many types
of applications, such as e-commerce, podcasts, games, etc.;
 Different audience: With new features, Facebook can attract other target segments, besides
tech-savvy youngsters;
 Acquisitions: Facebook has the potential to keep acquiring other companies, even from
different industries.

Facebook’s Threats
 Competition: Facebook’s user number is declining, and much as a result of competition with
old platforms as well as new entrants;
 Regulations: There are many new regulations regarding the Internet that can harm
Facebook’s business model, such as ones concerning data safety, user privacy, intellectual
property, etc.;
 Data breach: Data breaches can affect millions of users, by exposing personal information to
the dark web;
 Digital taxation: This new tax is being adopted in the UK and European Union. If this kind of
tax is implemented in other countries, it can jeopardize Facebook’s profits;
 Reputation: Data breaches, fake news, hacked and/or false accounts, and other scandals
have tainted Facebook’s reputation, thus reducing usage.

Conclusion
Despite all the accusations and controversies, Facebook is still booming. Although many
people believe this social network is going to end soon, Facebook’s brand and business are
going to certainly remain, investing in new approaches and brand names, as you may have
noticed.