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Strategy report
TO: Proximity social networking team FROM: Elizabeth Stangenberg DATE: September 28, 2009 SUBECT: Facebook strategy analysis

This is my Facebook strategy analysis. Facebook currently dominates the social networking market. Whether Gen-Y will stay with Facebook depends on if it can keep its critical mass of users feeling secure and happy, and knowing that they have the latest advancements in social networking.


 * Profile**

Mark Zuckerberg, current CEO, founded Facebook in 2004 at Harvard University. It is now headquartered in Palo Alto, California (Facebook 2009). Facebook provides its users with the gratification of commenting on various pages or pictures and getting responses from friends and family. One reason Facebook is ahead of the game is because it has such a large user base and offers a large variety of functions. Facebooks projected revenues of about $550 million for 2009. Microsoft bought a 1.6% share of Facebook in October of 2007 for $240 million. This means that the implied value of Facebook is around $15 billion dollars (Wikipedia 2009). Since Facebook is a privately held company we can not know for sure there exact revenues in the past. Facebook currently reaches over 300 million active users (Facebook 2009).


 * Competitive Landscape**

The social networking landscape is driven by two forces:


 * __Consumer power__- Users can switch from network to network with no or little costs. The primary battle is to keep a critical mass of users. Currently Facebook has the most active users, although there are rumors that a record number of people are leaving Facebook (New York Times 2009). Facebook must keep a critical mass of its users and their friends that are users happy because if their friends leave they will too.


 * __Rivalry__- Myspace and Twitter are Facebook's main competitors.
 * //Myspace//- Facebook and Myspace have a head to head rivalry with Myspace. They are similar but Myspace allows its users to customize their profile in ways that Facebook doesn't. Myspace user's can show off their creativity and personality, but it lacks the instant gratification of communication that Facebook has. Myspace's demographic is also much smaller. In the U.S. Facebook and Myspace are the biggest social networking websites.
 * //Twitter//- Twitter is a newer competitor of Facebook, although it is less compatible then Myspace. As long as Facebook offers enough functions that are similar to Twitter's, then Facebook's users will remain loyal.


 * Facebook's strategy**

Facebook's key problem is how to turn a profit. Its main source of revenue is ads, but Facebook's original ad model, Beacon, failed. It announced on September 22, 2009 that is was teaming up with Nielson Brandlift to provide marketers with an effective measurement for Facebook advertising. The Neilson Brandlift program will measure aided awareness, ad recall, message association, brand favorability, and purchase consideration by prompting users with short, one to two, question surveys that are specially designed to collect the information marketers need (Nielsen 2009).

This new program will certainly help marketers, but the real problem is that users don't pay attention to ads. Facebook must find a way to solve this problem or find a new source of revenue.


 * Gen-Y implications**

Facebook believes these surveys will easily mesh with the Facebook user experience (Neilsen 2009), but these surveys could become an annoyance to Gen-Y users. Gen-Y has three main concerns:
 * __Privacy__- This new marketing scheme may make Gen-Y users feel that their privacy is being compromised. Privacy issues are one of the main reasons people are leaving Facebook (New York Times 2009).
 * __Simplicity__- These surveys may compromise the simplicity of Facebook as well if users become annoyed with having to click through them. Therefore these surveys may lead Gen-Y to use a different social networking site that does not have surveys, for instance Twitter.
 * __Latest capabilities__- Even if these surveys don't interfere with the simplicity of Facebook or the privacy of users then Facebook will just have to keep up with the latest trends and functions, along with keeping its users happy.

Analysts should closely watch how users react to Brandlift. I believe the new marketing strategy is a horrible idea: Facebook should generate new revenues from a mix of subscription plans for users who use more then just the basic Facebook functions and ad revenue.


 * References**

Facebook. Press Room. Retrieved September 25, 2009 from []

Heffernan, V. (2009, August 26) Facebook Exodus. New York Times, BU 4. Retrieved September 4, 2009 from [] 2009/08/30/magazine/30FOB-medium-t.html?_r=1

Nielsen. The Nielsen Company and Facebook Form Strategic Alliance. (2009, September 22). Retrieved September 25, 2009 from []

Wikpedia. (2009, September 20). Facebook. Retrieved September 21, 2009 from []

Blog proposal
TO: Proximity social networking team FROM: Elizabeth Stangenberg SUBJECT: Blog post proposal DATE: October 21, 2009

I propose that we do our Proximity blog post proposal on the future of Social Networking. This post will help inform Gen-Y of the latest trends in social networking and where the critical mass of users exist today.


 * Rationale

Social Networking websites must keep a critical mass of users to stay afloat. Therefore users should know what the future of social networking is to make a decision on which site to use. We should consider popularity, new trends, advancements, functions, etc... I think that we should create a slide show to inform users of the break down of each social networking website and there current status and plans if any. We can then also gain their opinion by creating a short survey with questions relating to the future of social networking to be filled out after watching the slide show.

Sources:**

To create this slide show and survey, I think we should use the information offered from these two sites:

Forbes. (2009, October 21) Time for a Social Networking Shakeout. Retrieved October 21, 2009 from []

Heffernan, V. (2009, August 26) Facebook Exodus. New York Times, BU 4. Retrieved September 4, 2009 from [] 2009/08/30/magazine/30FOB-medium-t.html?_r=1

Report proposal
TO: Proximity Social Networking Team FROM: Elizabeth Stangenberg SUBJECT: Report Proposal DATE: November 17, 2009

Facebook currently dominates the social networking market with the most active users but its biggest problem is turning a profit. I propose to write a report on Facebook's plans to generate revenue through their team-up with Brandlift and the viral loop of the social networking market.


 * Rationale**

Social networking sites have had difficulty creating a profit because no one pays attention to ads. Brandlift has joined with Facebook to try to fix this problem. Neilson Brandlift is a well known marketing company with a great reputation. They plan to:


 * Integrate short, one to two, question surveys that are specially designed to collect the information marketers need.
 * Measure aided awareness, ad recall, message association, brand favorability, and purchase consideration (Nielson 2009).

It will be very important for analysts to watch how users react to these surveys, and their effectiveness. Clients of proximity who want to target Gen-Y users would benefit from this report because it will address the problems of getting in touch with the currently unreachable Gen-Y. It will also provide information regarding business opportunities that Facebook will enable in the future.


 * Topics**

There are many ways that Facebook plans to reach Gen-Y in the future. __Viral Loop__ a book by Adam Penenberg illustrates marketing strategies that can be used by social networking sites. The proposed report will include:


 * Click through advertisements and Beacon's failure
 * The viral loop and Brandlift
 * The future of social networking

Sources:

Penenberg, Adam L.. //Viral Loop: From Facebook to Twitter, How Today's Smartest Businesses Grow Themselves//. New York: Hyperion, 2009. Print.

Penenberg's book analyzes the viral landscape of the social networking market. He addresses the problems and concerns that social networking sites have had in generating a profit. There is an in depth look at Facebook's original ad model Beacon, and Marc Zuckerberg's future plans to manipulate the viral loop. Further analyzing a given person's worth on Facebook, and how companies that are in attempts to reach Gen-Y will be able to use trend setters, those who are worth the most, to their advantage.

Nielsen. The Nielsen Company and Facebook Form Strategic Alliance. (2009, September 22). Retrieved September 25, 2009 from []

The Nielsen Company introduces its recently formed partnership with Facebook and their plans to help marketers in the development and spread of new products. This press release further explains how Brandlift will collect the data needed for marketers through surveys integrated into the Facebook user experience.

Forbes. (2009, October 21) Time for a Social Networking Shakeout. Retrieved October 21, 2009 from []

Forbes' article relays information from Wharton school of the University of Pennsylvania's findings on social networking trends. Such as Facebook's ability to amalgamate smaller competing companies, and adopt their innovations (e.g. Friendfeed). This is possible because Facebook's already established large user base. The article examines the possibilities of the future of social networking based on past trends and emerging business models. According to Wharton there is a vast potential for revenue in social networking. These companies just need to tweak their models, for example, companies may need to consolidate.

Gilbert, Sarah. "Proximity: Social Network Marketing: What Works? — HBS Working Knowledge." //Proximity//. N.p., 27 July 2009. Web. 9 Dec. 2009. .

Gilbert interviews Sunil Gupta, a professor at Harvard Business School. They examine the effects that person has on their network of friends, finding that 40% of users are influenced by their friends. Furthermore users can be placed in different groups based on their connectivity and activity. Gupta claims viral campaigns in social networking may be most effective, in terms of profitability.

Hwang, Inyoung. "Facebook, Twitter Influence Holiday Gift Buying, Survey Shows." //Bloomberg.com//. N.p., 9 Dec. 2009. Web. 9 Dec. 2009. .

Hwang explores the impact of social media on shoppers this holiday season. Included are results from a survey by ComScore Inc., portraying different social networking sites' (i.e. applications) ability to influence consumers. For example, 7 % of those surveyed have followed a company's fan page on Facebook. The article examines the increased communication between businesses and consumers, and the consequent increase in opportunities for business clientele.

Team conference presentation proposal
//paste team conference presentation here//

Sales letter and report prospectus
 **//PROXIMITY reports//**  ||   || //connecting with Gen Y using on-demand media//  ||^   || Elizabeth Stangenberg //How businesses and marketers can take advantage of the trends in social networking// || Marketers cannot reach Gen-Y, therefore social networking sites can not make a profit. || My report outlines the ways that businesses can use the viral loop of social networking to its advantage in reaching Gen-Y and spreading the word of the product. || **Available now at www.proximity.edu**
 * **The Viral Loop in Social Networking here**
 * **//The problem//**
 * **//Proximity’s on-demand media solution//**

December 21, 2009

Ms. Sarah Washington, Director of Marketing The Chill Zone 2000 York Rd Towson, MD 21204

Dear Sarah,

I enjoyed talking with you yesterday at Proximity’s Next Generation Media seminar regarding The Chill Zone’s need to promote its brand to Gen-Y consumers. Enclosed you will find a prospectus for the report I mentioned describing the ability to use the viral loop of social networking in promoting your product with Gen-Y.

As you noted yesterday, in order to get Gen-Y to come to The Chill Zone you must be able to market them and get their attention. I believe Proximity can work with you to devise a comprehensive campaign that uses on-demand media and social networking to achieve that goal.

We can show you the latest trends in social media and marketing such as Brandlift. Facebook’s new advertising solution that will help market The Chill Zone as a hip cool place for urban teens to hang out and get to know each other. We can also show you how to use the viral loop of the social networking market to advertise the Chill Zone to Gen-Y. Through “trend-setters” you will be able to reach Gen-Y and through incentives you will be able to campaign The Chill Zone fast and effectively.

I invite you and your staff to join us at Proximity’s Towson office for a special focus group session on marketing The Chill Zone to Gen-Y. After that session, you can meet with members of our group to discuss how Proximity can help you meet your marketing goals.

Sincerely, Elizabeth Stangenberg Associate Media Analyst