Internet Transformation: Facebook

The development of Facebook has a transformative significance for the progress of the Internet and social platforms

Facebook CEO Mark Zuckerberg (Brifly)

Introduction

Facebook is an innovative social networking site which enables individuals to communicate with each other, connect, share and make new discoveries. This company, whose headquarters is in California has more than 50000 workers, with a revenue of 79 billion US dollars (Statista, 2020).  Facebook is increasingly having a transformative effect on how individuals use the internet to connect with their social, economic and political worlds. Azman, Chiang and Abdullah (2019) claims that Facebook has informed our understanding that the internet is not only a tool for connecting and socializing with other people, but also a tool for socio-economic and political development for countries across the globe (Sood, 2019). This is because, it provides a platform that allows the stakeholders to engage with the aim of expanding their reach for new markets, products and services to open up new streams.

Figure showing Facebook’s annual revenue from 2009 to 2019.

Image: J. Clement, Statista, All rights reserved

History of Facebook’s development

Facebook is a social media entity that was established in 2004 Mark Zuckerberg who was then a psychology student at the Harvard University. Before inventing Facebook, Zuckerberg, who was a keen programmer had invented a number of other social networking sites such as Facemash that would people to rate the attractiveness of others, and Coursematch which allows users to view individuals taking their degree (Brügger, 2015). In February 2004, he launched Facebook which was then referred to as ‘the facebook’, within 24hours of the launch, 1200 students at Harvard University had signed up. One month after the launch of Facebook, more than half of the undergraduate students had signed up.

The social network was suddenly extended to other U.S universities including the Ivy League and Boston universities. In August 2005, it became Facebook.com after the address was bought for 200,000 US dollars (Croft, 2007). In September 2005, students in high schools began to sign and eventually the network began spreading across the world as it reached UK universities in October 2005 (Brügger, 2015). One year later, the site extended beyond the learning institutions to any other individual who had registered email address.

Facebook has continued to develop its features since 2007. The site can now allow businesses to create pages and post-free classified advertisements. The company has diversified its features to fit the different needs of its users beyond just socializing with friends. In 2020, the company made an announcement that its users had reached 30 million, making it the second social-networking site with a focus on education (Brügger, 2015). The site makes a profit through advertising revenue (Croft, 2007). Facebook has come to have a transformative effect because of its large user base and the fact that joining the network is free as long as an individual has internet connectivity (Croft, 207). Because of its millions of users, business and political parties have resorted to communicating with their followers through Facebook because it is one of the easiest ways to reach a lot of people within the shortest time.

Video showing the history of Facebook. Video: IG UK, YouTube, All right reserved.

Facebook’s business model

Facebook is owned by Mark Zuckerberg who is also its founder. The business model of facebook is based on advertising. This network, which has evolved to become one of the most profitable tech giants has been able to unlock so much business value from its operations. The advertising business model of Facebook has enabled the company to make its revenue (Gunnarsson, 2019). For instance, 99 percent of the company’s revenue is from advertising which mainly consists of displaying ad products on Messenger, Instagram and Facebook. Model allows brands, both business and political brands to pay before Facebook channels their brands ads to target audience.

Figure showing the Advertising against other Facebook revenue streams.

Image: Matthew Johnston, Facebook, All rights reserved.

 

According to GrayFox (2020), the business model of Facebook has five pillars. The first pillar is facebook which gives individuals an opportunity to connect, share, discover and communicate either through computers or mobile devices. These individuals engage through different ways on Facebook especially through news feed that organizes various advertisements and stories individualized for each individual (Pereira, 2020). The news feed is a very important aspect of Facebook because it is where Facebook engages its users and manages to monetize the users.

The second pillar is Instagram which is a platform that enables individuals to stay connected through sharing visual stories through videos, photos, and direct messages. The third pillar is Messenger which allows individuals to connect with each other and with various businesses on the platform. The fourth pillar is Whatsapp which is a messaging application that enables people to connect with each other and with various businesses in a securely and private manner (GrayFox, 2020). The last platform is Oculus. This is a content platform and virtual reality technology platform which gives individuals an opportunity to enter an interactive environment that can enable them to train, learn and play games and interact with others (Pereira, 2020). These pillars have greatly supported Facebook’s advertising business model which has generated a revenue of over 70 billion US dollars for the company.

Customer Segments of Facebook

Facebook has divided its customers into segments so that it can be able to affectively and appropriately market its products. Facebook’s biggest customer segment is its users who make up about a third of the world’s total population. These people have profiles on Facebook where they connect and interact with their friends and other individuals of similar interests around the world. This customer segment does not contribute any business revenue directly to the company because they do not pay anything, however, they contribute the revenue indirectly since they make Facebook interesting to those who pay.

The second customer segment is made up of businesses and advertisers. This customer segment is responsible for Facebook’s revenue. It is made up of all businesses and brands that use the social network to advertise their products (Mosquera et al., 2020). The businesses and advertisers pay to have ads of their services and products on the social networking site. Facebook collects information of its users and sends it to various businesses which target to advertise their products to these users (Azman, Chiang & Abdullah, 2019; Jermsittiparsert, 2019). Other than business brands, political brands have also been provided with an opportunity to sort individuals that they need to reach out to and sort messages that they need to deliver to those people so that the people can make informed political decisions (Rui, Cui & Liu, 2020; Salvador et a., 2017). Once the brands pay, their ads are generated and channeled to their target audience. Although brands are the main revenue generators of Facebook, these entities’ interest is based on base of the users.

The last customer segment of Facebook is comprised of developers. This is the network’s smallest customer segment made up of individuals who us the Facebook platform to develop apps and games.

Picture showing the business page of Facebook.

Image: Thomas J Law, All rights reserved

Social ecology

The social ecology of the company is reflected in organization of the social networking site where users influence and support each other through information technology. Facebook is one of the giants in the tech industry which offers a wide variety of products. The company is the leading in the industry with a revenue of over 70 billion US dollars. Facebook has several competitors in the Tech world. Its greatest rival includes Amazon, Apple, PayPal, Alphabet, Google and Twitter (Dunn, 2017). Facebook is regulated by the Federal Communication Commission which sets out rules and standards for social media including Facebook. Facebook users are comprised of ordinary users who use the platform to connect and interact with their family, friends and the world. The users are also comprised of advertisers and business who use the platform to advertise their products to their target audience. Lastly, the users are comprised of developers who use the platform to develop apps and games.

Facebook’s Innovativeness

Facebook, which has developed into the world’s a social networking site, has transformed the use and understanding of the internet through its innovativeness. The company has been able to cultivate a culture of innovation by encouraging its workers to be entrepreneurial and to embrace new ideas and perspectives (Arvidson, 2020). One approach that the company users to pursue its innovativeness is the aggressive approach by implementing several changes to its services to suit the needs and preferences of the customers even without seeking the approval of the users. According to Arvidson (2020), this approach has been at the center of Facebook’s success. For instance, in 2006, the company was able introduce a new feature; ‘News Feed’ which enables users to easily and quickly track the updates of their friends. At first, the users did not accept it, but later, they embrace and loved the feature and eventually, it became the defining feature of the site. If the company has sought users’ approval before implementing changes, it would not be innovative.

Facebook has played a significant role in shaping the way individuals relate both socially and politically. The networking site has allowed individuals to interact with their families, friends, brands and even political parties. For instance, through Facebook, individuals can interact with various brands and even launch complaints about certain brands without visiting the customer care services (Mosquera et al., 2020). Also, Facebook has given political parties an opportunity to identify individuals that they need to reach out to and help to sort messages that these people need to receive. This shows how Facebook has transformed the use and understanding of the internet. Therefore, facebook, as a social networking site, has been used to mobilize both social and cultural change.

Figure showing Fakebook’s revenue growth against that of its competitors.

Image: Jeff Dunn, Statista, All rights reserved.

Summary

Facebook has been part of internet transformation through changing the way individuals live, work or play. Zuckerberg invented Facebook with the objective of creating a platform that would enable people to interact with each other. However, the social networking site has developed over the years and incorporate various aspects that are beyond social interaction. For instance, many business brands are now signing up on facebook so that they can have a platform to reach its target customers with their products. Through Facebook, users have an opportunity to interact with various business brands and even launch complains about various brands without necessarily visiting the customer service centers. Facebook has also brought about internet transformation through incorporating the political aspect of our everyday life. With this social networking site in place, political parties have an opportunity to sort individuals that they need to reach out to and sort messages that they need to deliver to those people. Also, Facebook decides what is news, makes news and breaks the news to people, this means that Facebook is a main source of news to various people across the world. This way, facebook has been able to change the way we live in the society today.

 

References

Arvidson, E. (2020). Can Facebook be used by businesses to communicate internally? Small Business – Chron.com. Retrieved November 19, 2020, from https://smallbusiness.chron.com/can-facebook-used-businesses-communicate-internally-28204.html

Azman, H., Chiang, X. Y., & Abdullah, M. M. (2018). THE EFFECT OF FACEBOOK ADVERTISING ON GENERATION Y PURCHASE DECISION. The Journal of Technology Management and Technopreneurship (JTMT)6(1), 31-46.

Brügger, N. (2015). A brief history of Facebook as a media text: The development of an empty structure. First Monday.

Croft, C. (2007). A brief history of the Facebook. Retrieved November 19, 2020, from https://charlenegagnon.files.wordpress.com/2008/02/a-brief-history-of-the-facebook.pdf.

Dunn, J. (2017). Here’s how much the biggest tech companies grew in terms of revenue last quarter. Business Insider. Retrieved November 19, 2020, from https://www.businessinsider.com/tech-companies-biggest-revenue-growth-chart-2017-2?IR=T

GrayFox. (2020). Facebook business model: How does Facebook make money. GARY FOX. Retrieved November 19, 2020, from https://www.garyfox.co/facebook-business-model-makes-money/

Gunnarsson, B. (2019). GDPR effect on Facebook´ s business model.

History of Facebook. (2018). Retrieved 20 November 2020, from https://www.youtube.com/watch?v=U3RvX42zeis

J Law, T. (2020). 19 Easy Steps to Setting Up a Killer Facebook Business Page. Retrieved 20 November 2020, from https://www.oberlo.com/blog/facebook-business-page

Jermsittiparsert, K. (2019, November). Impact of Facebook Advertising on Purchase Intention. In Proceedings of the 2019 3rd International Conference on E-Business and Internet (pp. 1-7).

Mosquera, R., Odunowo, M., McNamara, T., Guo, X., & Petrie, R. (2020). The economic effects of Facebook. Experimental Economics23(2), 575-602.

Pereira, D. (2020, September 9). Facebook business model. Business Model Analyst. Retrieved November 19, 2020, from https://businessmodelanalyst.com/facebook-business-model/

Rui, J. R., Cui, X., & Liu, Y. (2020). They are Watching Me: A Self-Presentational Approach to Political Expression on Facebook. Mass Communication and Society, 1-27.

Salvador, P., Vivar, P. C., de Vera, E., Inocian, R. B., & Rosaroso, R. C. (2017). Influence of Facebook to Voters’ Political Practices. Asia Pacific Journal of Education, Arts and Sciences4(1), 15-23.

Sood, R. (2019). Effect of facebook on our society. TRANS Asian Journal of Marketing & Management Research (TAJMMR)8(3and4), 40-43.

Statista (2020). Facebook’s annual revenue from 2009 to 2019. Statista. Retrieved November 19, 2020, from https://www.statista.com/statistics/268604/annual-revenue-of-facebook/

 

 

Junjie Qiu
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