The Facebook ecosystem has evolved deeply since the acquisition of Instagram and WhatsApp. But before that, Facebook had to raise its own ecosystem. First, the company that was founded around the idea of watching people’s profiles, commenting and creating structured content fought to become the most popular social network on Earth. And after that, Facebook successfully tried to gain revenue from its business and started to build its own ecosystem, its own empire. Let’s look at how did they approached this goal.
The social networking service Facebook was launched by the 19-year-old psychology and computer science student Mark Zuckerberg in February 2004 due to the enormous interest showed by the public in its predecessor, Facemash. This last one was intended to compare two pictures of Harvard’s students in a game to choose who was “hot” and who was not. The characteristic of comparing real identities was the key aspect for the latter success of Facebook. In the beginning, it was intended only for Harvard students, but it promptly started to grow not only in across US universities but to everyone with a valid email address, beyond educational institutions (Phillips, 2005).
The appeal of Facebook to users
In the beginning, users were attracted by the exclusivity of being part of a private network. When the site became broader, Facebook used the photo tagging feature as a strategic tool to retain and gain more users. This way, if a non-active user was tagged in a picture, they were notified via email and, therefore, persuaded to enter the site. If the person did not have an account yet, you also had the option to send them an email so that they could sign up to see the photo. As part of their growing strategy, they purchased Octazen in 2010, a startup that provides scripts to import user’s contact list of other services such as GMail or Yahoo! (Arrington, 2010). Finally, it must be said that Facebook pays close attention to metrics such as the time spent by users and the most popular pages so that to observe how usage behaviour is affected by every new change that is introduced. (ONeill, 2010)
Facebook can be considered a very complete social network. Since it was released, it has been acquiring new technologies and incorporating new features and now users can do more than just upload pictures and make comments. You can also play games and compete against your friends, chat online, make videoconferences, see the publications your friends make on an organised timeline, geo-tag your images or create events, among others. Furthermore, the large community of users make the network very attractive for companies’ market strategies or customer services.
As discussed, Facebook was released three years before iOS and Android. Before the mobile disruption, personal computers were by far the main devices used to connect to the Internet, and the features mentioned above have described how Facebook is seen on users’ computer screens. However, mobile is the next big step for this social network. By the second quarter of 2014, 62% of its revenues came from mobile advertising, even if out of 1,32 billion users only a 30% of them represent those users that log in with their phones (Hamburger, 2014; Constantinou, 2014). That is why services such as Parse Push, which is capable of sending tempting and personalised push notifications to the user mobile, or the application Instagram, which allows uploading and sharing pictures with your friends, were in its spotlight and then purchased to improve the user experience in mobiles.
The role of developerts
In addition, developers are also a huge part of their strategic plan of retaining and gaining more and more users. One of the key features that makes Facebook attractive for them is its policy, widely considered generous, which lets development companies “run ads and engage in other commercial activities” and, therefore, put real money in your pocket (Perez, 2007).
Additionally, in June 2012, it was added a new source of revenue for developers by introducing a monthly subscription price model, incrementing the ability for devs to build their business on the site (Down, n.d.). The fast and flexible payment options that are offered are considered essential to “turn players into payers” (Facebook Developers, n.d.).
Facebook on smartphones
A study carried out by Nielsen shows that the time spent per person on Facebook on their smartphone is longer than the time spent on computers. In fact, in words of Andreas Constantinou (2014), there are countries, mostly in Asia, where Facebook is rather known as a mobile application. As a consequence, Facebook can be considered a mobile company now (Hamburger, 2014). This is why it is using other mobile platforms to reach mobile users, as Facebook does not own an operating system. Android and iOS are indeed considered a powerful duopoly, so Facebook’s unique chance of succeeding was to take advantage of these existing platforms in a strategic way.
With this approach, Facebook managed to be present indirectly on many of the top-selling Android and iOS applications and games without pestering the OS. This is indeed a win-win situation, in which the network offers their widely used Facebook app and try to persuade developers to keep developing more apps for them, and the operating systems offer their existing base system (Constantinou, 2014). As the Figure 1 shows, those applications running on both Android and iOS that integrate Facebook’s SDK would be displaying the activity in the social network. For instance, Candy Crush Saga or The Simpsons Tapped Out are clear example of these app games in which users are encouraged to share their progress, compete against their friends or even ask them for help. In the particular case of Candy Crush Saga, users are almost entirely dependent on Facebook. The social component embedded in this game is such that its players are to obtain new lives in order to continue playing by inviting friends on Facebook. In case of not doing so, the game would be considerably limited.
At the same time, developers take advantage of this not only because of the wide range of people the game is available for, but also due to the information that users share on their timeline is considered a way of advertising their application and making it well-known. Every action that players undertake in a game is immediately communicated to other players by means of notifications. Therefore, as more players join the game, developers’ revenues significantly increase. At the same time, Android and iOS benefit from this mobile usage. So, this could be seen as a vicious circle, as seen in Figure 2.
The importance of being present in mobiles in such that the social media giant has recently managed to improved their Android App performance and data usage in order to increment their share in emerging markets where high-performance mobiles are scarce (Probasco, 2014).
Apart from developers, users and smartphone platforms, OEMs and operators are also an important part of Facebook’s ecosystem as they are the ones that release and sell, sometimes with subsidies, the phones where Facebook App will be working, while the social network give more reasons to customers to actually buy them those phones. (Constantinou, 2014)
Facebook Ads as a business
Ads are veritably another core business for Facebook. The network assists developers in acquiring their mobile app ads for installs up and running very easily by just copying and pasting your app’s URL into the Ads Create Tool, and by linking their ad to a Facebook Page. (Facebook Developers, n.d.)
Furthermore, developers can very accurately choose the target audience of the ads, selecting the target platform (Android, iOS or Amazon App Store), specific OS versions, the specific device model, devices that specifically have WiFi only connection, people in the demographic, interest, and broad category groups that may well be of momentum importance for their app. Companies can also customise easily the audience. This way, every advertisement will be displayed in the screen of the true potential interested group of users, enhancing the performance of marketing campaigns. (Facebook Developers, n.d.)
So as to build these ads, developers use the Ads API, which is part of the extensive set of Facebook APIs. It concedes ad management tools that can supply innovative solutions and differentiated value for advertisers (Facebook Developers, n.d.). But, who takes real revenue of ads? This is a key question because, even if it has been stated that Facebook is immersed in a win-to-win relation with Android and iOS, it has to be said that Facebook is competing directly against Google’s AdMob and Apple’s iAd tools when it comes to ads monetisation. (Muniz, 2014)
It can also be said that Google started a war against Facebook when they released Google+ in 2011. However, while some see G+ as a little Facebook, some of the literature defends that these two social networks are used for different purposes. On the one hand, Facebook allows you to interact with your the people you know and love. On the other hand, G+ is more about sharing ideas and interesting facts with a strong business approach in which meeting new people is easier and allows organising them in groups or “circles”, as called by them. (Burke, 2014; Dachis, 2013)
Finally, it can be said that Facebook is so big that recently has decided to oblige their users to download a standalone application in order to continue using the chat on their mobile. The aim of Facebook with this Messenger app is to concentrate their development efforts on making Messenger the best mobile messaging experience and avoid the confusion of having separate Facebook mobile messaging experiences, proving a more user-friendly and a faster application. (Constine, 2014)