Q1. Why do people use Facebook and what do they do when they are there? Facebook unlike any other social networking sites meets two primary human needs namely, 1. The need to belong and 2. The need for self-presentation. A social networking site enables a user with the following three major functions. 1. To create user profile 2. To connect with other users 3. To view or track other users From the above points, one can clearly understand that the visibility of a person among his fellow society members, increases as the network grows.

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People started using Facebook for increasing their visibility in the society. It gives a unique feel to a person, when his opinions are heard and responded to in a social networking site. This is true in the case of Facebook. Facebook has more than one billion users, i. e. approximately one-sixth of the human population. One more reason why an individual uses Facebook is the Network effect. Network effect is the effect a person has on the value of the product to others, i. e. the value of a product is dependent on number of others using it. Most of the people connected to Facebook just to stay in the network.

Facebook activities: An individual uses Facebook for various activities. He can browse profiles of his friends, join or browse Facebook groups/pages, read discussion pages, browse pictures, files, videos, can search for friends or groups, and add friend/people with similar interests. He can also interact with Facebook applications and games. One of the most used feature of Facebook is “What’s on your mind” tab, where an individual can post anything which comes to his mind, ranging from day to day activities, jokes, poems, announcements etc.

All the facilities and unique features provided by Facebook to its customers, has made Facebook as the most used Social Networking service by worldwide monthly users. Q2. Evaluate the success of advertising on Facebook Facebook now has one of the largest internet advertisement businesses in the world, second only to Google. Facebook’s annual ad revenue growth accelerated to 36%, up from 28% last year. Facebook’s average revenue per user grew to $1. 25, showing a 4% increase. The main reasons for such a stupendous success are discussed below.

High Relevance One of the major strengths of Facebook over its rivals is the amount of personal data of an individual that the company has in its possession. This makes it very easy for the Facebook ad interface to select the demographic profile of an audience that the advertiser wants to target, including age, sex, location, education level and interests. Depending on their goals and the product that they are advertising, advertisers can set a targeting filter and handpick which group of people will see their ads.

This makes it possible to focus on or target the people most likely to be interested in the product, amongst the 700 million worldwide Facebook users. Facebook targeting filters have the unique ability to offer the advertisers information that will help them micro-segment their customers. Advanced targeting options help narrow down the reach at the same time increase returns. Apart from the usual demographic based targeting, it is also important to note that every time a user “Likes” something on Facebook it is being added to his personal data which will in turn help advertisers deliver more targeted ads.

Better Social Engagement Facebook allows its users see what their friends like and are talking about pertaining to brands. Nowadays, Facebook Ads are also sometimes paired with social actions one’s friends have taken. For example, an ad for a tourism agency may be paired with a news story that one of your friends likes that agency’s Facebook page. Interactive Facebook Ads are interactive; they usually include a call to action of some kind. A strong call-to-action is the gentle shove that gets people to act on your proposition.

A strong call-to-action can make the difference between someone seeing your ad and actually clicking on the ads. For example advertisers can ask the users to like their FB page before divulging the entire content or making them eligible for a special offer etc. Cost Effective When compared to its competitors advertisers prefer Facebook because of the enormous mass that they can reach through Facebook. This makes it cost effective for any company that wishes to go for advertising on Facebook. Q3. Evaluate the success of Facebook fan page. With more than 500 million active users, Facebook provides an audience like no other.

Facebook also becomes a special attraction to businesses as it provides free corporate profile pages and allow the fans to respond with likes and comments. Other special features like updating the friends of users who have liked a particular advertisement campaign act as further motivation. This phenomenon is known as social advertising which eventually was used by the organizations for acquiring customers at a much cheaper rate than in physical world. Facebook evolved over the time from being a site for socializing to a site where competitors were jostling to attract customers.

It was made feasible due to the Facebook advertisement initiative. It allowed companies to have pages just like the Facebook user profile pages. All the members of the Facebook community usually ended up stumbling over the page of a product they have used or aspire to use in future. These users will end up liking or commenting on that page thus giving a lead to the company. Also the fans can join and create joint interest groups and pages called “fan pages”. Some of the fan pages are maintained by the organizations as a medium for advertising.

The fan pages apart from being used by the organizations to get info about their prospective consumers are also used by various research agencies as data repository to create charts, graphs to accompany their articles. Not only organizations but political parties during elections are also using the fan pages to keep the fans posted about the latest updates on the candidate activities. Several new features are being added to make the feature of “fan page” interactive and useful like a fan page can like another “fan page”. Companies can use this feature to associate with their sister companies and their business partners.

Other area where “fan page” is proving out to be a useful feature is the real time connectivity for the organization with the fans and vice-versa, like in the current tech savvy scenario consumers are using company’s Facebook page as a medium to voice their grievance. This method is not only easy but also is faster than the normal redressal procedure as the companies are wary of the bad publicity they can attract by one negative comment on their Facebook page. So the “fan page” has turned out to be a successful feature which is both engaging and has practical utility for companies and fans.

Q4. Evaluate Facebook Platforms and Facebook for websites. Facebook platforms allowed third party developers to develop applications inside the Facebook environment. These applications had access to the data on user’s profile, and could also acquire permission to post on his behalf, getting new customers at no cost. Facebook’s popularity and huge user base helped third parties like iLike to increase their customer base rapidly. Applications like Farmville and City Ville received highly positive reviews from the users.

The fact that people could connect to their friends through the games helped further enhance their popularity. Although the percentage of users actually buying virtual goods was low, but the popularity ensured that developers like Zynga made profits. Hence, the two major achievements for the application developers were: * Fast increase in customer base at almost nil cost. * Huge customer base helped them maintain positive cash flows. However, this spectacular success was limited to certain application developer like Zynga only. Many applications barely covered their costs and were also criticized for being silly and useless.

Too much of applications were also held responsible for degrading the user experience of Facebook. For Facebook: Platforms helped Facebook build better user engagement. People spent markedly more time on Facebook now than they did earlier, accounting for one third of site’s traffic at any given time. Indirect benefits included the company’s valuation at $15 billion, receiving a $240 million investment from Microsoft. Launch of Facebook credits, a virtual currency to buy virtual goods for applications, helped Facebook monetize the success of platform.

It collected a 30% commission from applications where Facebook credit was being used. Making these Facebook credits available at retail stores resulted in 70% of all virtual transactions at Facebook being through Facebook credits. Facebook also signed a 5-year agreement with Zynga to ensure that its games that used Facebook platform were exclusively for Facebook, to keep parallel platforms from mushrooming. All in all, it was a mutual relationship that helped both the developers and Facebook to increase customer engagement.

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