Sara Gondi Mia Vranješ
Facebook in business
UNIVERSITY OF ZAGREB FACULTY OF ECONOMICS AND BUSINESS-ZAGREB
Course : Enterprise Information System
Zagreb,May,2015
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Sadr탑aj 1.Introduction ................................................................................................................................. 3 2. Web service short description and history................................................................................... 4 3. Technical requirements ............................................................................................................... 4 4. Profile creation ........................................................................................................................... 5 5. Business usage ............................................................................................................................ 5 6. Competitors ................................................................................................................................ 7 7. Advantages and disavdvantages of facebook in business ............................................................. 9 8. SWOT analysis ........................................................................................................................... 11 9. Starting cost .............................................................................................................................. 13 10. Statistics.................................................................................................................................. 14 11. Conclusion .............................................................................................................................. 14 12. List of references ..................................................................................................................... 15 13. List of tables ............................................................................................................................ 15 14. Abstract .................................................................................................................................. 15
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1.Introduction The topic of this paper is called "Facebook in business“. In this paper we will represent all important and key terms relating to Facebook in business, introduce social network platforms and give examples on which you will get clear picture of Facebook in business. The purpose of this seminar is to represent importance of Facebook in the world since it became one of today's biggest forms of communication and one of the biggest influences on people's interactions There are other social networks available, like MySpace, or Twitter, but Facebook has become preferred choice of marketers who are looking for more innovative ways to beat they rivals . Mark Zuckerberg is the founder of Facebook which was started in 2004, but was open to all users worldwide in 2006. Just by the fact that if Facebok was a country it would have been 6th most populated country in the world, what makes it second most visited website in the world, just behind Google, you can understand why companies around the world are struggling to promote their products and market brands by the Facebook platform. Consumers are evolving and learning how to screen disruptive communication attempts, which is why the old way of marketing is being replaced by the more modern form of permission marketing . The advertiser is no longer the one who decides when, how and to whom to communicate. Today it is the consumer who decides which company and what information to take part of. 1 Facebook is thus an attractive marketing channel to reach younger consumers, and particularly interesting for new companies that do not have extensive marketing budget.
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Meadows-Klue; "Marketing through social media", 2007
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2. Web service short description and history Best friends Eduardo Saverin and Mark Zuckerberg had spent many lonely nights looking for a way to stand out among Harvard University’s elite, comptetitive, and accomplished student body. Then, in 2003, Zuckerberg hacked into Harvard’s computers, crashed the campus network, almost got himself expelled, and was inspired to create Facebook, the social networking site that has since revolutionized communication around the world. 2 Facebook is an online social network, and in its beginnings, was intended only to students at Harvard University who in this way could communicate and exchange informations. Later, many other universities, high schools and large companies around the world have joined the network. Today, this website has more than 1.230,000,000 active users. Facebook is the most popular place where users can create profil page, add other users, can also add their common interest groups, communicate with each other, or post photos. Every day the number of active small business pages worldwide is getting bigger, and now there is around 30 million of them. Facebook’s most important revenue channel is advertising. It generates over half a billion in revenue each year, so it is logical that majority of its revenue comes from advertising. The company has always been advertising supported and probably it will always be.
3. Technical requirements Facebook is distributed through the Apple App Store, Google Play, and Windows Phone Store. Support for the app is available for iPhone, iPad, iPod Touch, andAndroid handsets, while third-party Facebook apps are available for Blackberry 10 and Nokia-Symbian Devices. By accessing or using the Facebook website, the Facebook service, or any applications made available by Facebook(together, the "Service"), however accessed, you agree to be bound by these terms of use ("Terms of Use"). The Android beta program gives people who use Facebook for Android early access to upcoming versions of the app. Google play store is a place where Andorid users download the Facebook application, and App store is for Apple users.
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Ben Merzich; "The Accidental Billionaires: The Founding of Facebook"; September 2010
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4. Profile creation To start using Facebook one need to: - Register a facebook account - Comfirm you e mail - Find friends - Join on a regional network - Edit your profile - Add a profile picture - Add a cover picture
5. Business usage The time has passed when Facebook was a "good idea" for businesses to try. It's now essential to your inbound marketing strategy. 3Facebook is a great way to brand your business and engage new and existing customers, especially if your brand is new in the market, or with a low marketing budget. To advertise your brand all you need to do is to follow next steps. Set up your page4
Facebook pages can come in three categories:
Local: These pages are for business that would benefit from a strong local market attendance. A restaurant or a café can be example for the same.
Brand, Product or Organization: These pages are for larger companies which can include also non-profit organization. Example for the same would be SAP, Versace, and Red Cross etc.
Artist, Band or Public Figure: These pages are used by popular artist or celebrities. Barack Obama and Kraftwerk can be good examples for the same.
Your facebook page is foundamental for your marketing success. It makes your business: Discoverable: People can find your business on facebook Connected: You can have one-to-one conversation with your custumers Timely: Your Page can help you reach large groups of people who are interested to your business
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Anum Hussain; „How to create a Facebook business page in 5 simple steps“; October 2012; Hubspot
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Insightful: You can get a better understanding about your customers and your marketing activities
Identify your audience By using facebook, you can choose people you would like to meet, see their page, and by that, their life and interests, and also you can introduce yourself. You can also reach more people, than you could by promoting your business by phone or billboard. To build your audience, you should also embolden your current customers and fans to like and share your page, so their friends with same affinity could see it. Create compeeling audience When you post photos, videos or updates, you should think about what your customers like. Also, experiment with different kinds of posts to find out does your audience prefer photos or find more interesting when you share useful links about your business. There is also possibility to use Page Insights, so you can see which posts are performing the best. Than, when you see that a post is getting a lot of engagement, you should promote it even more to catch up with more people. Next, when those people like or share your posts, their friends will be also able to see your post in their News Feed. Advertising When you start linking with your buyers on Facebook, you wll want to find other people who are interested in your product or service. Also,you can use Facebook ads to send the right message to the right people, so they can easily discover your business. You can create an ad from the admin sheet of your Page to enlist more people, or you can use the ad create tool, which is designed to help you meet your marketing target. It includes a powerful set of targeting and creative options to help you reach all the right people with relevant and engaging Facebook Ads. The following are some of the ways to promote your facebook page:
Adding Application: We can do by posting in our wall and also in the news feed of users who are there in your page. Facebook has different apps for different categories like Business, Entertainment, and Sports etc.
Posting information: We can post some link of the company newsletter or blogs which are interesting news about your company or business.
Commenting on Discussion tab: By commenting to member’s discussion or your page shows that you are engaged in the feedback and this adds value to the discussion. This will make your customers more eager to discuss various things and will show your transparency.
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When a user become fan of our page, it is shown on their wall and can be seen by others who have not seen your page and this can help in promoting your page indirectly and this can be effective as this can be a way for endorsement of our product or business.
Measure and adjust There are different tools by which you can find out what is working well, so you can maximize the impact of every post and ad. The best tool is page insight, and you can use it to see who answer to your messages. You can also take a look at the gender, old age or location of the people who are the most occupated with your company so you can continue to engage them through ads and promoted posts.
6. Competitors Twitter Twitter is a microblogging service. It may also publish various messages and notifications, also known as status updates up to 140 characters. Following are the people who you follow and see their tweets / status, and Followers are people who have chosen to follow you. It is obvious that Twitter differentiated from Facebook by the fact that if someone is your "friend", does not mean that you are his. These two networks are closely related, without any intention, and Facebook has a huge influence on Twitter. After four years Twitter introduced a promotional message to the website. Corporate Twitter Account is an ideal opportunity to make it real time gain feedback from the market. A great example of an application of Twitter as a successful marketing tool is the Dell Outlet. When employees of Dell Outlet discovered Twitter, most of them weren'tt interested . However, the employee Ricardo Guerrero saw the potential in Twitter as a business tool. He used this channel as a medium to send quick links and messages on the range, which came into outlet. In March 2007 he created @DellOutlet account on Twitter. It was several months before "Twitter strategy" didn't managed. Dell offered discounts of 15% to 30% in the limited period to to force customers to react quickly and buy the products. In November 2008, Dell announced that he has earned $ 500,000 trought his @DellOutlet account. One month later, Dell via Twitter announced that the amount exceeded $ million. This was the first time anyone has managed to earn such an amount of money via Twitter. Also, the number of users suddenly jumped from 8,000 in February to 500 000 in March.
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Myspace Myspace is a social networking service with a strong music emphasis, launched in 2003. Because of great competition of Facebook and Twitter, Myspace recently redisigned its streaming, and now it include messages from its competitors. Myspace is a great way for music gropus and bands to promote themselves and to give opportunity to other people to find out for their upcoming shows. Another marketing tool that MySpace offers is its blogs and forums. Link to any blog that user posts can be found on their Myspace page and it allows other people to read the blog and know more about the product. By visiting Myspace groups you are able to see categories relevant to the product and post some informations and interesting facts to their website. This offers businesses a unique opportunity to find out which people are interested in their products and put information about it directly in front of them. MySpacehas its own classified site, and it gives opportunity to businesses to post their products or services not just to “friends� but to anyone on MySpace on the classified site. If the classified ads include a link to their website, businesses both advertise their products and generate more traffic to their website. Instagram Instagram is an online mobile photo sharing, video sharing and social networking service that enables its users to take pictures and videos, and share them on a variety of social networking platforms, such as Facebook, Twitter,Tumbir and Flickr.5 Instagram has more than 200 million active users , who upload 60 million photos per day. Instagram users spend an average of 3.7 hours on the app every month. Instagram let people tag locations, so if a business is food or clothing related, Instagram is crucial because when customers are in the store they'll be able to post a picture of the product and tag the location. Their followers will see their post and it's the sort of free advertising. In early 2014, Instagram was purchased by Facebook , and the company is limited to use only Facebook location. Also, another way to use Instagram to brand your business and engage new and existing customers is by using hashtags, a word or an unspaced phrase prefixed with the number sign (#). They enable content marketers get in front of their target audience and identify social media conversations that are relevant to their business. When used well, hashtags can be powerful tools that drive brand recognition, increase reach, build community, create buzz, and positively impact customer loyalty. 6
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Dan Frommer; Here is how to use Instagram“, November 2010 Pam Dyer; "Using Hashtags in Social Media Marketing"; Available at: http://www.pamorama.net/2014/04/26/hashtags-social-media-marketing/ 6
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7. Advantages and disavdvantages of facebook in business Social media is the modern tool for marketers who try every means to get their message out to their target markets. The medium has many advantages and disadvantages, and companies struggle to find the right way to use it. 7
Advantages Wider Target Customer Reach : Facebook has over millions of users around the world. Those are mainly users aged 35 to 54 years, so it is not just the kids that are using social networks. Therewithal of the age of users that your business wants to target, Facebook can be a great way to reach them. Multiple Marketing Platforms: Facebook has three marketing platforms that every person can use to promote their brand, those are Pages, Groups and Ads. We can say that Pages are free Facebook profiles for businesses, or public figures, but the only difference from free profiles is that there are no limits on the number of likes on a page. Groups are designed in a User Wall format, and they serve like discussion forums.The Ads, on the other hand, is the social network’s paid marketing platform, and it helps business to reach their buyers based on demographic standard. Specific Market Targeting: Businesses can easily target costumers they want, because facebook gathers a great amount of informations about demographic of its users. Networking:Facebook was firstly built to help people to create networks, so it also offers you chance of networking . The benefit of networking is that you can search for other businesses that are doing the same business as you do, just by becoming a fan of their Facebook page. If you are networking and connecting with other businesses, you can increase your own visibility between your target market. Business-to-customer Relationship: Facebook is a method to create and cultivate a community around the brand, because it stimulates a two-way discussion between the sellers and its buyers.With huge amount of marketing platforms and characteristics, Facebook can be powerful site for any type of businesses. Connect with experts: Facebook can connects you with many professionals in your field which can share worty informations and secrets about how to improve your business
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Sandilands Tracey; "Advantages and disadvantages of social media marketing" ; Available at: http://smallbusiness.chron.com/advantages-disadvantages-social-media-marketing-21890.html
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Disadvantages Cost of maintenance: Content pages must continually be updated with new information that readers will find useful, beneficial or interesting for Facebook marketing to be effective. This requires development of a detailed innovative social media marketing strategy - a costly investment for small advertising budgets. Facebook marketing strategies include video product demonstrations, interactive forums and online contests, all of which must be created, uploaded, monitored and maintained by a business owner, staff member or social media advertising agency. Competition: Marketing platforms executed via Facebook are open to easy duplication by competitors. Although we previously list it as an advantage,it can also be disadvantage that rival business owners easily pose as “friends” or “fans” to gain access to your content. Photos, artwork and other images posted to your site are easily accessed and reused by visitors and can show up in other places you may not approve of. Professionalism: Social media platforms like Facebook were created to facilitate the casual sharing of information that may not mesh with the professional reputation you want to establish for your business Advartising cost: While basic Facebook pages are free of charge for personal users, business accounts that feature advertising opportunities come with a price tag attached. This added promotional expense can be a disadvantage for small business owners. Negative Content: Communicating with your clients or fans over Facebook sounds friendly in theory, but some people may use your Facebook page as a venue to write offensive comments or post spam. A user might even post false allegations about your business on your page for anyone to see. As a result, your business needs to be monitoring its Facebook page frequently, ideally checking each individual post. Even if you address these issues quickly, you'll never know how many people saw the negative comments on the page and will associate that memory with your business
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8. SWOT analysis Strenghts Integration with websites and applications. To enrich user experience and engage more users to use Facebook, the social network has launched many features that would allow closer integration with other websites and producers of applications that run via Facebook. More than a billion active monthly users. For a social network to grow, it must have users. The more users the Facebook has, the more socially connecting it is. With one billion active monthly users, Facebook is able to connect people not only locally but globally as well.8 Excellent user experience. Facebook has an easy to use interface, is integrated with many website, can connect people through PC or mobile devices, is translated into more than 70 languages and has many more additional features that lack other social networks. Understanding of user’s needs and behavior. Except Google, no other business has so many data collected on what users like, dislike, needs and how the users behave online. With so much data, Facebook knows what exactly to offer to its users (what additional features, what advertisements) and how to further improve their experience with Facebook. Weaknesses Weak CTR of advertisements. Facebook has a lower click-through-rate (CTR) than an average website, which is only 0.05% and about 4% respectively. In order to earn more income from the advertisements Facebook has to change the way it displays the ads but without interfering users’ experience. Social network lacks of some features. Although Facebook has a wide range of features that other social networks don’t, the website still lacks: video chats, group chats, dislike buttons, ability to unsubscribe from alerts and many others. One source of revenues – advertisements on Facebook. More than 80% of Facebook’s revenues come from advertising on its social network. The growth of the revenues directly depends on the growth of users. This leaves the business very vulnerable and dependent on continuous growth of users, which will eventually be only marginal as the social network has already attracted so many users. Attitude towards users’ privacy. Facebook collects private users’ information and then stores it, uses it for its own purposes or sells it. Such treatment of users’ private information draws negative attention that decreases popularity of Facebook. Lack of website customization. Many Facebook’s users spend a lot of time on social network and want the website to reflect their personalities but are unable to customize the website to their needs 8
Heussner, K. M. (2012). Internet advertising still a growth business, but pace slows. Available at: http://gigaom.com/2012/10/11/internet-advertising-still-a-growth-business-but-pace-slows/
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and are forced to use uniform template for all users. In comparison, Google+ allows for much more personalization of the social network account than Facebook does. Weak protection of users’ information. Facebook, having so many users that upload personal information to the social network, is a target for attacks that steal passwords and other personal information from the users. Such attacks occur every day and thousands of passwords are stolen. Opportunities Increasing number of people using Facebook through mobile devices. Currently Facebook has more than 600 million users who use Facebook through mobile devices. Despite that this group makes 60% of all Facebook users, the mobile advertising only accounts for only 14% income for the company. Expansion to China. Easing government regulations and newly elected government may open a way for Facebook to enter China’s social networking market. Until then, Facebook should prepare itself for such an entry. Diversify sources of revenue. Facebook heavily relies on advertising on its social network as a source of income, but with being the number 2 website in the world and more than 1 billion active monthly users, Facebook could exploit other opportunities to attract the money. Open Facebook marketplace. With so many users and extensive coverage of the world, Facebook is well positioned to open Facebook marketplace. If successful, it would bring more revenues than the advertising, thus boosting company’s growth and future prospects. Threats Increasing number of mobile internet users. If the company will be unable to monetize mobile users, it will face decreasing advertising income as more PC users will turn to mobile users. Users using ad-block extensions. Educated internet users often install extensions that block advertisements from the websites. The growing number of such users is threatening Facebook’s model as they can’t see advertisements and click on them. Slow growth rate of online advertising. Although online advertising still grows in double digits (14% in 2012, down from 23% in 2011) that growth is slowing down, thereby threatening growth of Facebook’s advertising income. Identity thefts. Even today, identity thefts are common on Facebook. The more identities are stolen the more criticism Facebook will receive strongly damaging its brand for inability to protect users’ private information. Weak business model. Facebook’s aim is to attract social network users, display the ads for them and charge the businesses for the ads displayed. Although Facebook’s business model looks sound for the moment, the company may face severe difficulties if some conditions change that are not in firm’s control.
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9. Starting cost Facebook create almost all of its revenue from advertising and from fees which are associated with its payment infrastructure that gives the opportunity to users to purchase goods from its platform developers. Table1. Facebook Q4 2013 earnings
Source: http://marketingland.com/facebook-q4-2013-earnings-big-quarter-beats-high-expectations-mobiledrives-53-revenue-72291
By the fourth quarter earnings report, advertising revenue was $2.34 billion in Q4, which is an increase of 76 percent over the Q4 2012. Payments and other fees accounted for $241 million in revenue in the fourth quarter. 9
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Ginny Marvin: „Facebook Q4 2013 Earnings: Big Quarter Beats High Expectations, Mobile Drives 53% Of Revenue“; January, 2014; Marketing Land
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10. Statistics Facebook in numbers: 10
Monthly Active Users – 1.11 Billion Daily Active Users – 665 Million Mobile Monthly Active Users – 751 Million Instagram – 100 Million Monthly Active Users Likes – 4.5 Billion daily Content Items Shared – 4.75 Billion daily Local Businesses – 16 Million Promoted Posts – 7.5 Million Revenue – $1.46 Billion Ad Revenue – $1.25 Billion Employees – 4,900
11. Conclusion In conclusion, according to variety of articles, reports and case studies, there is no doubt that Facebook is a successful business for companies. As you can see marketing with Facebook is simple and easy way to attract more customers in this competitive world where competitors are constantly trying to beat their rivals to gain more market share. Creating a Facebook page is a free and easy way to increase your visibility of your brand. Also, Facebook easily connects you to other social network websites, with no need of setting up more that one account. But at the same time, Facebook has also went through itsimperfections and risks, such as problem with privacy, advertising cost, or unsteady social information for some high request business issues. All in all, facbook as a successful business tool is getting more and more populat,and every day it becomes a more unavoidable part of social media marketing.
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Josh Constine; „Facebook's growth since IPO in 12 big numbers“ , May 2013; Tech Crunch
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12. List of references Josh Constine; „Facebook's growth since IPO in 12 big numbers“ , May 2013; Tech Crunch Ginny Marvin: „Facebook Q4 2013 Earnings: Big Quarter Beats High Expectations, Mobile Drives 53% Of Revenue“; January, 2014; Marketing Land Al & Laura Ries(May 2004); The Fall of Advertising & the Rise of PR“ Nair Smita(January 2014); „Assessing Facebook's revenue sources“; Available at: http://finance.yahoo.com/news/must-know-assessing-facebook-revenue-170009607.html Anum Hussain; „How to create a Facebook business page in 5 simple steps“; October 2012; Hubspot Montgensten Jared(2007); „The marketplace is open“; Available at: https://www.facebook.com/notes/ facebook/ the-marketplace -is-open/2383962130 Doyle Alison; „Facebook Marketplace Jobs“; Available at: http://jobsearch.about.com/od/facebook jobsearchgroups/qt/facebook-marketplace-jobs.htm Dan Frommer; Here is how to use Instagram“, November 2010 Pam Dyer; "Using Hashtags in Social Media Marketing"; Available at: http://www.pamorama.net/2014/04/26/hashtags-social-media-marketing/ Sandilands Tracey; "Advantages and disadvantages of social media marketing" ; Available at: http://smallbusiness.chron.com/advantages-disadvantages-social-media-marketing21890.html Meadows-Klue; "Marketing through social media", 2007 Ben Merzich; "The Accidental Billionaires: The Founding of Facebook"; September 2010
13. List of tables Table 1. Facebook Q4 2013 Earnings
14. Abstract In this paper we will compute a detailed analysis of Facebook. The paper will display historical background, development through years, and descriptions of what the Facebook does and how to install and use it. Also, the impact it had on formulation of modern social media.
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