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4 lessons of business model changes Facebook

By: omer nawaz on Monday, 12 January 2015 | 06:36

Battered stock market, criticized and increasingly questioned its ability to be profitable and to persist over the long term , Facebook is at a turning point in its history. And desperately looking for ways to earn money.
Decryption, analysis and lessons learned from this research - hopeless? - A profitable business model from Facebook.

 



Facebook : 1 billion users but still no business model profitable! 
 
Facebook has just passed the one billion active users on the social network. This is certainly what Mark Zuckerberg announced Thursday . An incredible performance that confirms the exponential growth of the site in terms of number of users since its inception.

The problem is that if these figures attendance and membership were enough to impress and reinforce the "myth Facebook " there are still a few months , this is no longer the case since its IPO . Just because the social network is now facing another challenge , obviously much more difficult for him to succeed in generating income at the height of its size and the expectations created!

And this is where it gets complicated for Facebook recently announced that , to meet the expectations of investors, a battery of measures intended to boost the monetization of social networks . With the creation of mobile advertising , the transition to a fee of functionality "Facebook Offers " which allows companies to distribute discount coupons to their fans , adding a gift sales service between users etc.


And lately , a new announcement : the ability for users to pay for " sponsor " their status and make it visible to all their friends. If it begs the question of the usefulness of this feature - although the ego of the human being should never be underestimated - and the real impact it may have in terms of revenue , it shows in any case that Facebook, with all these ads, looking more than ever to find new sources of revenue and reassure investors.

 



Clearly, finding a business model that works and allow it to earn money to live up to its ambitions. But also show that the site can be profitable while uncertainties increase and the IPO was a failure . While Facebook is trying , trying things , opens avenues . Sometimes without guideline. But we can at least recognize that the social network : Facebook questions , seek solutions and continues to innovate in startup mode to its business model. They do not remain passive in the hope that advertising eventually - finally! - For work on their website.

An advertising strategy to very low efficiency

For everything comes from there. What the character of Mark Zuckerberg did not consider "cool" in The Social Network does not . The click rate of advertising on Facebook is desperately low . And as it is sold CPC (cost per click ), the site is much less profitable than Google and its sponsored link service that displays Google AdWords him a rate (CTR) much more important.

Just because Facebook , people are there to see the articles and pictures of their friends, spend time , etc. Not click on ads . An important difference with Google AdWords where users discover the sponsored links when they are in a search situation. And beyond investors, Facebook should also reassure advertisers primarily on the relevance and effectiveness of campaigns on the social network .

At the same time , this difference of attitude does not explain everything . Because users are no more in a research perspective when browsing traditional content sites and yet the click rate is still slightly higher on these banners.

It is also a question of visibility given to advertisements, how to present , model compensation and indicator used to measure effectiveness . Moreover, Facebook has recently approached Datalogix order to measure the effectiveness of its advertising based on the act of buying out of the user.

Because Facebook has everything to be an incredible advertising medium ! Of course, users are not in an instant search and click least currently on advertisements. The phenomenon of Ad Blindness will also not help. But they can be incredibly focused specifically on demographic and social criteria. Making it a gold mine for advertisers and marketers . Both on the part of acquiring customers for loyalty . But it is still necessary that these opportunities are in place . And advertisers - and advertising - are better regarded by Facebook.
4 lessons from the situation in Facebook

    Do not neglect advertisers

Because it is one of the lessons to be learned from all this . In wanting to keep the site "cool" , Mark Zuckerberg (voluntarily ) favored the growth of the site and put off thinking about monetization and advertising including integration ... at the expense of advertisers. Yet a major issue for a site "free and always will remain the " supposed to draw a large part of its turnover in advertising revenues.

If the strategy has paid off in terms of number of users and social network development , the problem of the effectiveness of integration and advertising model . Which directly affects its advertising revenue and sales.

In wanting to keep the "cool" website and focus the user experience, Facebook has opted for an advertising strategy whose effectiveness and ROI for advertisers has been very low. But if the end users of Facebook are its billion members , customers are advertisers !


Have a monetization strategy defined from the start

The side "let grow the site and then put the pub after " has found its limits. It is essential , when you start a project, a new site or blog, to have in mind a clear monetization strategy and set to monetize . Certainly, it will certainly have to evolve over the months , but it remains a basis for profitable. And especially allows to record the monetization as a component in the development of the project rather than just worry about it after !

    The limits of the model 100% free

The current difficulties although Facebook also show the boundaries that can present the model 100% free . While it is clear that a social network charge would not have experienced the same growth, the huge volume and the incredible scale effect brings 1 billion active users yet still enough for now Facebook not to achieve revenue worthy of its ambitions.
A relevant consideration for sites that want to get on the same model.
 
Continue to innovate and improve its business model

If everything does not work perfectly at the moment at monetization for Facebook, we can at least recognize the social network actively seeking solutions and developing ways to optimize its business model and increase its revenues.

Instead of continuing to simply grow its number of users , the startup is interested more than ever how to monetize its incredible hearing regularly out new innovations and features for monetization.  

Conclusion
 
Facebook is a turning point in his career. The social network needs to find new sources of revenue to increase its turnover and reassure investors. But it must also optimize its advertising model to reassure advertisers and improve the effectiveness of advertising campaigns on the site.

This is the challenge for Facebook that book, at the same time , real lessons for monetization and economic model for a website and a startup.

And you, what do you think of these attempts Facebook to increase their income? What would you do if you could direct the site monetization strategy?

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