Facebook for All

for All

George Dy, Tian Wang, Timothy Yung, Anhang Zhu

George Dy | Tian Wang | Timothy Yung | Anhang Zhu

Agenda• Background

– Social Media Landscape– Strategic Issues– Target Audience

• Recommendation• Solutions

– Solution 1: Interactive Facebook Pages– Solution 2: Extend Facebook Credits– Solution 3: Develop a Facebook Marketplace– Solution 4: Facebook Questions

• Financial & Technological Impact• Implementation Timeline• Conclusion

Facebook for All


Background » Recommendation » Solutions » Impact » Timeline » Conclusion

Social Media Landscape• Facebook General Statistics– 400+ million users1

– 500,000+ active applications1

– 1.5+ million businesses have Facebook Pages1

– 2.7% of Global Search Search Growth2

• Social Media Statistics– 58.59% on Facebook3 September 2009– 30.26% on MySpace3 September 2009

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1 http://www.facebook.com/press/info.php?statistics2 http://www.insidefacebook.com/2010/04/10/facebooks-search-traffic-continues-to-grow/3 http://www.hitwise.com/index.php/us/press-center/press-releases/2009/social-networking-sept-09/



Strategic IssuesReinforce Facebook’s mission to give people the power to share

and make the world more open and connected.

Avenues for

Growth

Market Expansion

Product Development

Revenue Streams

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Target Audience• Cater to existing audience• Indirectly target older audience• Business is globalized– People all over the world have local businesses– E-commerce plays an increasing role in GDP– Exploits Facebook’s language support

• Target independent artists and musicians

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Alternate Audiences

• Why not target teens?• Why not target children?

• Teenage demographiccontinues to increaseregardless of marketing.

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1 http://www.istrategylabs.com/2010/01/facebook-demographics-and-statistics-report-2010-145-growth-in-1-year/

13-1718-24

25-3435-54

55+

Unknown

05

101520253035

User Base Growth1

Increase from 2009-10Number of Users in 2009

User Age Groups

# U

sers

(Mill

ions

)



Recommendation• Facebook must provide a suite of functions to

attract users outside key demographics

• Facebook must develop products that create a richer and more interactive experience for businesses

• Facebook must utilize personal social networks to address competing services like MySpace and Yelp, and provide competing resources for independent artists and restaurants

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Four Solutions• Solution 1: Interactive Facebook Pages

• Solution 2: Extend Facebook Credits

• Solution 3: Develop a Facebook Marketplace

• Solution 4: Facebook Questions

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SOLUTION 1 Interactive Facebook Pages• Problem– Users without online social networks lack incentives

to use Facebook– Facebook Pages lack user interaction and general

accessibility

• Goal– Establish Facebook Pages to become the de facto

social profile for businesses– Expand Facebook Pages to serve as interactive

avenues for general users, not just Facebook usersFacebook for All


• Implementation– Improve general accessibility to Facebook Pages

• Removing “login requirement” increases available audience• Redevelop Facebook landing page to include page search or directory

browsing based on locality

– Begin by targeting restaurants and independent artists to establish Facebook Pages as the default profile for businesses and artists• Create modules catered to specific page categories• E.g. reservations for restaurants, music store for artists

• Results– Expand Facebook’s user base and retain existing users by providing

a more interactive experience– Monetize Facebook pages by offering premium modules

Facebook for All


SOLUTION 1 Interactive Facebook Pages

George Dy | Tian Wang | Timothy Yung | Anhang ZhuFacebook for All


SOLUTION 1 Front Page Mockup



SOLUTION 1 Reservations Module Mockup



SOLUTION 1 Reservation Notifications


• Problem– Third-party developers are using Facebook’s user base and creating

more competition for Facebook (e.g. iLike).– Facebook Credits only used for Gifts (which accounts for 30% of

Facebook’s revenue)– Users are not aware of Facebook Credits and the potential business

models are not fully exploited

• Goal– Promote the use of Credits across more Facebook properties to increase

trust in Facebook as a business– Enable Facebook to serve as a middleman to conduct transactions

between its users and itself or businesses– Use Credits as a method to utilize Facebook’s exclusive eCommerce-style

marketplaceFacebook for All


SOLUTION 2 Extend Facebook Credits


• Implementation– Allow users to purchase (via gift cards or electronically) Facebook

Credits and use them in applications– Allow users to store and manage credit card information

• Allow users to purchase goods directly via credit card or other services (e.g. PayPal, Google Checkout)

– Develop in-house and acquire promising 3rd-party applications– Offer incentives to use Facebook Credits outside of the new use for

purchase of tangible goods in the marketplace– Allow Facebook Page owners to upgrade their service for enabled

access to specialized business modules

• Results– Greater monetization for the use of in-house or acquired Facebook

applications, increasing revenue streamsFacebook for All


SOLUTION 2 Extend Facebook Credits



SOLUTION 2 Existing Business Model



SOLUTION 2 Potential Business Model



SOLUTION 2 Facebook Gift Cards



SOLUTION 3 Current Facebook Marketplace


• Problem– Facebook does not exploit all the potential

eCommerce opportunities involving social networks– Facebook lacks an avenue for vendors (e.g. with

Pages) to sell products and services

• Goal– Acquire Facebook Marketplace as the de facto

destination for all Facebook users looking to shop within friend networks or local businesses

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SOLUTION 3 Develop a Facebook Marketplace


• Implementation– Acquire Facebook Marketplace from Oodle.com– Aggregate all products offered by users or businesses in the

Facebook Marketplace– Create a Facebook Marketplace shopping cart and wish list to

aggregate purchases and allow sharing product lists with friends• E.g. Wishlists will appear on user profiles during birthdays

– Allow users to make online transactions

• Results– Increase revenue through business and featured product listings– Encourage the use of Facebook search for eCommerce– Develop Facebook into a sales intermediary between users, taking a

percentage of seller feeFacebook for All


SOLUTION 3 Develop a Facebook Marketplace


• Problem– Facebook is lacking a strong community feel

outside of personal networks– New users lack retention rate because questions

are often left unanswered

• Goal– Develop a stronger Facebook community outside

of friends networks to promote higher retention of new users and provide incentives for active users

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SOLUTION 4 Facebook Questions


• Implementation– Create Facebook Questions to provide a community that

answers new user questions about Facebook or anything trending

– Develop a strong community feel that offers support and the promotion to Facebook Expert, which is a title that is offered to the users with highest answer count

– Users can connect with people outside of personal networks if they are lacking friends, greater incentive to stay on Facebook

• Results– Retain new users and provide stronger community incentives

to increase time spent on Facebook by existing usersFacebook for All


SOLUTION 4 Facebook Questions


Estimated Annual Profit for Marketplace

($60B Traded2)/(90M Active Users2) = $667 Traded per Active User ($8.7B Revenue)/($60B Traded2) = 14.5% Revenue Margin on Traded

Goods ($2.4B Profit)/($60B Traded2) = 4% Profit Margin on Traded Goods

Estimated active users that make at least $50k per year:(400M Active Users)(67%1) = 268M Potential Marketplace Users

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Financial Impact

1 http://www.socialtimes.com/2010/04/demographic-of-the-7-most-popular-social-media-sites-infographic/2 http://investor.ebayinc.com/

Adoption Rate Average (50%) High (80%) Low (10%)

Predicted Users 134M 214.4M 26.8M

Active Goods Sold $89.333B $142.933B $17.866B

Revenue from Active Goods $12.95B $20.73B $2.59B

Profit from Active Goods $3.573B $5.717B $0.714B


Additional DatacenterDue to the increased use in user base and Facebook Marketplace, Facebook will be required to upscale its datacenters in preparation for the surge in trafficEven though Facebook has already begun building a 35-acre custom datacenter in Oregon that is scheduled to be available in June 2011, Facebook needs to have enough hardware until this datacenter is complete

Facebook for All


Technological Impact


Estimated Total Cost for Development

Server Cost (775M Users in June 20111)/(220M Users in May 20092)

= 352% user base growth($25M server cost in June 20112) * 352%4

= $88M projected server cost in June 2011

Operation Cost for MarketplaceAverage: $9.38B High: $15.01BLow: $1.88B

1 http://www.insidefacebook.com/2010/04/06/facebook-sees-solid-growth-around-the-world-in-march-2010/2 http://www.facebook.com/press/info.php?timelined3 http://www.salarylist.com/all-real-jobs-salary-at-facebook-inc.htm4 assuming data grows parallel with user growth, compounded over 15 months


Technological Cost


Estimated Total Cost for Development (cont.)

Labor Cost

($70K Annual salary for Software Engineers1/12 months per year)*(50 Software Engineers)*(9 months) = $2.63M in labor

Estimated Acquisition Cost


Technological Cost

iLike Estimated Acquisition Price by MySpace $20,000,000 Kaango Acquisition Price $20,000,000 iLike Esimated Worth $1,530,000 Kaango Esimated Worth $144,306.40 iLike Acquisition Multiple 13.07189542 Kaango Acquisition Multiple 138.59

Lala Estimated Acquisition Price by MySpace $17,000,000 Oodle Esimated Worth $867,707.00

Lala Estimated Acquisition Cost $15,947,712Oodle Estimated Acquisition Price $120,258,977

Lala Acquisition Multiple 13.93442623

Average Facebook Related Website Acquisition Multiple 13.50316083

Range of Acquisition PriceOodle Esimated Worth $867,707 Low $11,716,787Oodle Estimated Acquisition Cost $11,716,787 High $120,258,977

1 http://www.websiteoutlook.com/



Implementation Timeline


• Stronger Facebook community outside friend networks

• Stronger monetization through Facebook Marketplace

• Utilization of Facebook Credit, line of currency exclusive to Facebook users for exclusive Facebook offers

• Pages become a default profile for business and independent artists, eliminating competition from Yelp and MySpace

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Conclusion


Questions

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Education

Facebook for All