Facebook: How a start-up became the world's largest social network

 Published On: May, 2012 |    No of Pages: 20 |  Published By: MarketLine | Format: PDF   |   Request Free Sample

Introduction


Since it was founded in February 2004, Facebook has gone from strength to strength to become the world’s most popular social networking site in terms of registered users. In the eight years since its inception, Facebook has endured an eventful journey from start-up to multi-billion dollar turnover business.


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Highlights


The key factors in its expansion have been its diversification into new groups and relentless innovation. What started as a small network for a small, exclusive group now boasts over 900 million users. Its strategy of constant innovation has seen the site undergo several facelifts as well as the addition of much new and improved functionality.

A usership of more than 900 million people presents an excellent opportunity for advertisers. Facebook users volunteer personal information that is invaluable to advertisers as they can target particular subgroups. In a bid to reduce reliance on advertising income, it has branched out into payments, which now accounts for around 15% of all revenue.

The company has already identified the trend towards accessing the site on mobile devices and applications as an issue, as it cannot monetize this as effectively as the web-based version. Some users are also starting to exhibit signs of what has been dubbed "Facebook fatigue," whereby they are using the site less frequently.


Your key questions answered

  • How did Facebook become the world's most popular social network?
  • How has Facebook turned popularity into revenues and profit?
  • What potential challenges does the future hold for Facebook?

OVERVIEW

Catalyst

Summary

ANALYSIS

Facebook has grown from a start-up to become the world’s most popular social network with over 900 million registered users

Facebook started as a social network exclusively available to Harvard students

Expanding the offering to new groups has been key to Facebook’s growth

This has resulted in dynamic growth of site membership

Constant innovation is crucial to Facebook’s ongoing success

Facebook has adopted a strategy of phased change and evolution

Monetizing Facebook’s popularity has proved far from simple

Facebook derives most of its revenue from the sale of advertising space

The company has acted to establish a more diverse revenue model

Facebook has successfully grown revenues and, more importantly, profits

This performance has made Facebook one of the world’s most valuable brands

The future presents a number of significant challenges for Facebook

An increase in access via mobile apps could potentially harm future revenues

Some regions are starting to experience what has been dubbed "Facebook fatigue"

The decision to undertake an IPO will bring fresh challenges

Facebook proved to be an attractive proposition for investors

As well as challenges, the future also brings opportunities

CONCLUSIONS

Facebook has established itself as a fixture in the daily lives of many people and looks set to remain a powerful social tool

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