social networking 01
DESCRIPTION
Powerpoint made for business school presentation for the team Zot Pockets by Pallavi Arunika in 2009TRANSCRIPT
Zot Pockets | Pallavi Arunika |
Journey So Far…
Bulletin
Board System
1970
1999
AsianAvenue
Orkut Bebo Facebook
1999
2003
2003
2005
2006200
22003
2004
2006
LiveJournal
Friendster
Myspace
Facebook [.edu]
Social Networking Land space , Now…
Social Networking Industry GrowthM
ore
Users
Over 1 Billion worldwide (23% growth)
¾ of the US online population
More
Com
pan
ies
More than 220 players in the Industry
More
Tim
e
Average minutes spent on site, per user per day rose from 6.7 minutes on 2007 t0 7.1 minutes in 2008
The Problem $ Money !!!Advertising revenue Model is not enough
(in fact Social networks are not Profitable)
Facebook founder Mark Zuckerburg even said
“I don’t think social networks can be monetized in the same way that search did…in three years from now we have to figure out what the optimum model is.”
How to Go Forward
Facebook and other Social networking sites must improve their revenue earning model by including more premium memberships, paid features and applications, and expanding search partner relationships and CPM earnings (cost /thousand page impressions).
Porter’s Five Force
SNS
Competition
Buyer Power
Supplier PowerNew Entrants
Substitutes
Competition
MySpace : Launched in 2003. Users are more geared towed teens and popular with musicians and bands. US based audience.
Twitter : Launched in 2006. The rising star in Social networking Industry. Currently 3rd ranked site. Experienced explosive 4/09 visitor growth, jumping 83% to 17 million visitors. Uses simple micro-blogging model displaying “What are you doing” updates.
Orkut : Launched by Google in 2004. Popular in Brazil, India and Pakistan
Friendster : Launched in 2003. This site used to be the top US player until it lost market share to MySpace. Still popular in South East Asia.
LinkedIn : Launched in 2003. Focused on building professional networks. Also charges for premium memberships. Based on the higher market demographic, the site can charge a premium for advertising.Competition is
High
User !!! Web Marketers : Companies paying for pop up
ads, banner ads etc. Search Engines. Search Engines pay Sites
millions to be the primary search engine. Mobile. Cell phone companies pay Social
Networks the ability to host featured applications on mobile devices
Buyer Power is High
Who is Buyer ?
Server Providers Bandwidth Providers Storage system providers Application Developers Technology Companies Users—Network Effects
Supplier Power is low to moderate
Who is the Supplier ?
Low Cost to start a site. Low Switching Costs for users. No Track Record means little to attract
web marketers No Profits for established players Hard to get Network effects
Threat of New Entrants is Moderate
New Entrants
Older forms of Communication Phone, Mail, Fax
In Person Communication Web Browsers Email Applications
Threat of Substitute is moderate to high
Substitutes
People use SNS for…
Dynamics that are driving the industry
Technology that Fits a Customer Need
• News feeds. • Built-in spam filter.
Web 2.0
• Web 2.0 services use the Internet as an operating platform, in order to create products and/or services that could not exist outside of the Internet. Some of the key names that are often pointed to as part of the Web 2.0 paradigm are: Google, Wikipedia, Amazon.com, etc.
Changing Corporate Structure:
Dynamics that are driving the industry
Mobile Apps
• Google Latitude lets you broadcast your current location to a select few people based on where on the GPS from your mobile phone.
• Yahoo has unveiled a mobile app designed to help consumers keep up to date on the latest happenings on a number of different social networks.
• The new software called Eos by CISCO, will allow media and content companies to build online communities for niche groups.
Dynamics that are driving the industry
Launched in 2004
In October 2007, 240M investment from Microsoft 1.6% equity stake
Microsoft is Facebook’s exclusive banner Ad partner
Cast a Wide Net in Social network Target Market (One size fits all)
200 million worldwide monthly active users in April and Facebook growing by 5 million users a week overall, 1 million in US
More than 40 translations available on the site, with more than 50 in development
About 70% of Facebook users are outside the United States
There are more than 30 million active users currently accessing Facebook through their mobile devices.
There are more than 150 mobile operators in 50 countries working to deploy and promote Facebook mobile products
Facebook Financials
• Privately OwnedFiscal Year
2007 2008 2009E
Revenue $150 $265 $550
EBITDA $30 $50 ???
Headcount
450 800 1000+
$12 M on electricity
$6M on bandwidth
$100M on server
$100 on storage systems
$15M on office and data centre
$120 M on payroll
$100M on capital expenditure
Challenges
Volatility of social networking space
Older users remain on the sidelines
Privacy concerns
Monetization (Outside of niche sites)
Volatility of Social Networking Space
Not everyone’s winning: in US, slightly more decliners than advancers
US Worldwide0
20
40
60
80
100
120
140
Time on Site Down Y/YTime on Site Up Y/Y
Older Users Remain on the Sidelines
18-25 26-33 34-41 42-49 50-57 58+0%
20%
40%
60%
80%
100%
90%74%
62%49% 41%
23%
% of users in each age group that visited a social networking site at least one a
month
Younger Users Tend to Be Heavy Users; Older Users More Likely to Check in
Occasionally
1-4 times a month More than 30 times a month
0%
10%
20%
30%
40%
50%
60%
70%
80%
14%
34%
45%
9%
73%
5%
18-3334-4950+
% among those who visit social networking sites
Privacy Concerns
Desire to Hide
Desire to Share
Reduces the growth of social networking
Features that meet users’ need for expression are likely to catch on, even if they carry with them incremental privacy concerns.
Monetization
$ Low utilization of personalized information
$ Low advertising rates
Billion Question
How can social networking sites turn their large user base and extreme popularity into profits?
Recommendations
Search partnersContinue to raise CPMsPaid premium membershipsClassifiedsA menu of paid featuresPaid applicationsVirtual goodsE-CommerceLead GenerationEndorsement
How to Go Forward
Monetize Grow