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

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Published Date: May, 2012
Format: PDF
No of Pages: 20
 
 
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  • Abstract
  • Table of Contents
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
APPENDIX
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