Facebook uses an innovative collaboration platform to attract users. These users include third party developers, third party website owners, and the social media user. The platform’s strategy is based on a variety of products, services, tools and interactive applications designed to satisfy the need of the market.
The company realized that people liked instantly sharing images, updates and life events, and developed core capabilities. The main competitive advantage the company formed over other social networking sites was its easy to handle platform and compatibility. As of 2008, Facebook was the sixth most trafficked website, according to Lewis et al. (38) and Alexa.com reports it standing on the first place in the world, second in the US. Alexa also confirms that the average visitor spends about 30 minutes on the site a day.
Opportunities for Developers
Facebook introduced its platform strategy in 2007 (Piskorski 3). It quickly gained popularity among people and continued to grow. With this platform, third party developers were able to create applications in the Facebook environment that allowed users to interact on the site. The developer platform increased revenue for the developer and Facebook alike. Three months after the platform was introduced, 3,000 applications were released by developers (Piskorski, 1). Applications continued to be made and applied to Facebook platform.
The biggest winner of the new environment was the gaming and software industry.. One of the most successful games within the Platform is Farmville created by Zynga which leveraged the gaming platform to create social interactions within the game (Piskorski, 2). The game quickly became viral. These social interactions are appealing to the user and increase the value of the applications. These applications, especially Zynga games, build business dynamics for the developer based on the perceived value of the user.
Opportunities for Businesses
Another popular aspect of the Facebook platform was Facebook for websites. This platform allowed third party websites to be linked to Facebook to increase the value for the user. This option increased value by allowing users to register for a website with Facebook, rather than taking the time to answer questions. Once registered by Facebook providing personal data to the website, the user could also continue to interact with friends regarding the website. They could invite friends to like or view the products and the websites. The website would also be allowed to publish data on the use’s wall which would be available to the user’s friends also. This added value for the website owner in the aspect that it allowed them to gain new users or increase interest in their products or services. Facebook for Websites users showed 50% more engagement from users than other users (Piskorski, 3). According to a 2010 study, (Syncapse and Hotspex), the value of a Facebook fan lies in the following variables: product spending, loyalty, propensity to recommend, brand affinity, media value and acquisition cost. The 2010 research showed that Facebook fans were spending on the average $71.84 more than non-fans. Therefore, providing businesses the opportunity to connect with potential and existing customers paid off for both parties. Paid promotions and business page campaigns can further increase companies’ competitive advantage.
Value for Customers
According to the Syncapse and Hotspex research (2010), the benefits for customers is the freedom to select the applications, friends, interests, posts and photos they like and getting recommendations based on their profile. However, data shows that in the West, especially in the United States and United Kingdom, the number of registered users is declining due to privacy considerations, while in the developing world, the popularity of the site is growing.
Facebook essentially created strategic alliances with the third party developers and the third party website owners. This allowed all partners to increase interest, revenue, and promote growth. The platform is very valuable and successful strategy in the business world.
Social media research shows that similarities in interest are present on social media sites. Therefore, the power of recommendation and connection is valuable for developers, the platform and businesses alike, providing Facebook a competitive advantage.
Piskorski, M., & Eisenmann, T., & Chen, D., Feinstein, B.. “Facebook.” Boston: Harvard Business School, 28 October 2011.
Lewis, K., Kaufman, J., Gonzales, M., Wimmer, A., Christakis, N. (2008) “Tastes, ties, and time: A new social network dataset using Facebook.com”. Web.
Syncapse and Hotspex Study. (2010) “The value of a Facebook fan: an empirical review.” Web.