Mackenzie Wolter
Case Study Analysis: Facebook
6/15/12
In only 7 years, Facebook has become one of the most well-known and browsed online
social networking platforms in the world. At the time this case study was written, comScore
Media Matrix ranked it the number seven most trafficked website, but more recently Facebook
experienced a massive 55% increase in traffic in 2010. It is translated in more than 70 languages
and though it doesn’t think of itself as a photo website, Facebook was the number one photosharing website on the Internet. The aim of the website is to make it easier to share information
with friends and people around you. Its two core principles consist of the user’s control over
personal information and the universal access to information that others want to share.
Mark Zuckerberg created the first Facebook in his Harvard dorm room, making it
available to every Harvard student on February 4, 2004. One month later, its access extended to
Yale, Columbia and Stanford students, and by June, Facebook was present at 30 colleges across
the U.S. In August of that year, Peter Thiel invested in the fast-moving upstart, helping the
website accommodate the mass number of users, approximately 80% of undergrad students at
participating universities, by May 2005. In September, Facebook decided to broaden the
traditional target market to include high school students, allowing the company to reach 7.5
million registered users by April 2006. Today, Facebook and Zuckerberg are adjusting from their
recent IPO that took place in February 2012. The decision to go public raised $16 billion and was
the third largest IPO in U.S. history. By the end of this year, the number of Facebook members is
estimated to near one billion.
SWOT ANALYSIS
Strengths
Underlying Organic Growth
Intelligent Management Team
True Understanding of Target Markets:
College & High School Students
Frequency of Visits by Users
Weaknesses
Need to Constantly Differentiate from
Competitors
Inexperienced Management Team
Much Control is with Users
Slow Activity or Bugs/Issues with the
Website are a Constant Concern
User-Friendly Layout
Top-of-Mind Brand Awareness
Addicting
Opportunities
Expand Offerings for Facebook Users
Great Platform to Advertise New Businesses
Great Platform to Spread Word on Important
Issues
Threats
Competitors Offering New Features
Appealing to Young Market
Becoming Comfortable/Complacent With
Current Popularity
User Privacy Concerns
Expansion to International Markets
Younger Generation Losing Interest
Twitter
The aspects of the Facebook company detailed in the SWOT analysis above support the
strategy Zuckerberg and the rest of the management team have pursued. Facebook is a free
service to members, generating revenue from advertising space and sponsored groups, which
increases its popularity with the younger demographic. Its target markets consist of college
students and high school students, but has stretched even further into middle school aged users as
of late. This has helped Facebook establish strong brand loyalty with the market having the most
potential for long-term use. In addition, because of this young market of intended users,
Facebook puts the privacy settings in the hands of the user, allowing the individual to set their
own privacy levels depending on what they are comfortable with. Furthermore, Facebook
maintains a focus on functionality, keeping their website simple for its members to navigate and
share information. Zuckerberg strives to create a culture of experimentation by employing a flat,
organic structure that promotes creativity and innovation. This will further help Facebook
differentiate itself from competitors, allowing it to ultimately achieve its goal to increase
frequency of visits.
Going forward, Facebook must examine what direction they want the popular website to
take. Intended for college and high school students, the increasing number of middle school kids
with Facebooks has turned many older users off of the website. Many of these younger members
use the website frivolously and deluge others with information that they don’t necessarily care to
see every time they go to their newsfeed. I recommend reinstating the “college,” or older student,
aspect of the website that was intended at its inception. The purpose of Facebook is to share
information and connect with friends and people around you, which younger children don’t
necessarily need to do through online means. Friends may have moved away or gone to different
colleges, making Facebook an effective tool for keeping in touch, but for the middle school
demographic, it is not yet necessary for them to spend so much of their time on the website. I
believe this is part of the reason Twitter has become so popular. Many people have stopped using
Facebook as much and have gotten Twitter so they can follow specific people and keep in touch
with friends that way.
I also recommend Facebook continually work to streamline and simplify its new
Timeline feature in order to make the transition easier for its users. Many Facebook members
dislike changes made to the website, as they have to learn the new layout or navigation tools, but
if Facebook can simplify it as much as possible, members will eventually accept changes made
in the website. The Timeline feature is a unique aspect to Facebook that I think plays very well
to the overall “experience” that users feel when on the website. It is an experience when you go
on the website to connect with others and look through photos, relationships, or news. The
Timeline merely exploits that aspect of the popular site.
Finally, I recommend that Facebook use its creativity and innovative strengths to conjure
up new revenue streams in order to justify and live up to its huge IPO valuation. With such a
large market worth, the company must work to generate more profit for its shareholders than it is
used to perhaps. However, it is important that advertising to create revenue does not overtake the
website, as members will not appreciate endless ads in their face when trying to simply see what
friends are doing. It must remain an experience, but also be a very profitable company.