Business Information Technology- Assignment

gallaugher_informationsystems_3.0_ch10.pptx

Home >Information Systems homework help >Business Information Technology- Assignment

Published by Flat World Knowledge, Inc.

here http://www.flatworldknowledge.com/legal. No part of this work may be used, modified, or reproduced in any form or by

any means except as expressly permitted under the License Agreement.

Information Systems: A Manager’s Guide to Harnessing Technology V 3.0

By John Gallaugher

Chapter 10

Facebook: a billion–Plus users and big business from the Social Graph

Learning Objectives

Be familiar with Facebook’s origins, rapid rise, and rocky first-year performance as a public company.

Understand how Facebook’s rapid rise has impacted the firm’s ability to raise venture funding and its founder’s ability to maintain a controlling interest in the firm.

Rise of Facebook

Facebook was started by Mark Zuckerberg, a Harvard drop-out.

Made over $7.78 billion in revenues in 2013.

Posted its first billion dollar quarter in mobile ad revenue.

Faces concerns related to:

Competing for user time with services that promote private sharing.

Balancing user privacy with the potential for delivering products that are lucrative.

Whether Facebook can remain one of the Internet’s most successful and influential firms.

Why Study Facebook?

Short selling: Selling attempt to profit from a falling stock price.

Studying the firm provides a context for understanding:

Network effects and platforms

Partnerships

Issues in the rollout of new technologies

Privacy

Ad models

Business value of social media

Differences between desktop and mobile markets

Venture capitalists

The earlier a firm accepts VC’s money, the more control investors can exert:

Facebook’s growth left VCs eager to back the firm

Early backers ceded control

Zuckerberg maintains a majority of voting rights in the public company, virtually guaranteeing his control over the firm.

Investor groups that provide funding in exchange for a stake in the firm and a degree of managerial control

Learning objectives

Identify the two strategic resources that are most critical to Facebook’s competitive advantage and why Facebook was able to create resources with such strength.

Explain the concept of the “social graph,” and explain how Facebook created a social graph stronger than that of its rivals.

Understand the role of features such as news feeds in reinforcing these strategic resources.

Recognize that Facebook’s power in desktop services has allowed it to encroach on and envelop other Internet businesses.

Understand how mobile service offerings differ from desktop efforts, and recognize that the dynamics that allowed Facebook to dominate on the desktop are substantially different in mobile.

Learning objectives

Examine several of Facebook’s recent acquisitions and the competitive motivations behind these purchases.

Understand the concept of the “dark Web” and why some feel this may one day give Facebook a source of advantage vis-à-vis Google.

Understand the basics of Facebook’s infrastructure, and the costs required to power an effort of such scale.

Social graph

Friending: Link between nodes in the social graph.

Requires both users to approve the relationship .

Network effects: When the value of a product or service increases as its number of users expands.

Switching costs for Facebook are extremely powerful.

Switching costs: Cost a consumer incurs when moving from one product to another.

Global mapping of users, organizations, and how they are connected

Facebook feeds

Offering news feeds concentrated and released value from the social graph.

Feeds are the lifeline of Facebook’s ability to strengthen and deliver user value from the social graph by categorizing sharing.

Introduced hash tags, which will:

Help users discover conversation.

Encourage more public sharing of posts and content.

Dark web

A lot of information on Facebook is private and is considered dark web.

Provides access to user content, user opinions, and trending news that Google cannot access.

Facebook can tie together standard Internet search with its dark Web content, allowing that search engine exclusive access to its content.

Internet content that cannot be indexed by Google and other search engines

Facebook’s infrastructure

Facebook’s storage needs have grown by a factor of 4,000 in just four years.

Its cloud is scattered across multiple facilities.

Cloud: Collection of resources available for access over the Internet.

Innards in the bulk of the system are not that different from the ones in the high-end commodity workstation.

Open source software (OSS) powers most of the site.

Open source software: Free software that anyone can look at and potentially modify.

Developed its own media serving solution instead of relying on content delivery networks.

Content delivery networks (CDN): Systems distributed throughout the Internet that help to improve the delivery speeds of web pages and other media.

Learning objectives

Describe the differences between the Facebook and Google ad models.

Understand how content adjacency and user attention create challenges for social network operators and firms seeking to advertise on social networks.

Explain the hunt versus hike metaphor, contrast the relative success of ad performance on search compared to social networks, and understand the factors behind the latter’s struggles.

Recognize how firms are leveraging social networks for brand building, product engagement, and driving purchase traffic.

Understand Facebook’s considerable advantages and efforts with respect to ad targeting.

Compare Facebook’s conventional advertising metrics with those of Google, as well as Facebook’s mobile app install program.

Understand the unique opportunity and potential challenges Facebook faces as it expands its app install program.

Recognize the challenges that mobile advertising presents for Facebook, and why mobile is also a potential opportunity.

Advertising and Social Networks

Facebook makes its money from advertising.

For years, online advertising has been the only major media category that has seen an increase in spending.

Firms spend more advertising online than they do on radio and magazine ads.

Not all Internet advertising is created equal:

There are signs that social networking sites are struggling to find the right ad model.

Problems in advertising on social networks:

Content adjacency: Concern that an advertisement will run near offensive material, embarrassing an advertiser and/or degrading their products or brands.

User attention

Attention challenges

Based on the revenue model, Facebook is different from Google and the hot-growth category of search advertising.

Users of Google and other search sites are on a task-oriented expedition to collect information that will drive a specific action.

Google only charges text advertisers when a user clicks.

Users click on Google ads enough for it to be the most valuable activity among any Internet firm.

Attention challenges

Most banner ads do not charge per click, but rather via CPM.

CPM: Cost per thousand impressions.

Billing mechanism used in online display advertising and by other media.

Facebook banner ads performed so poorly that the firm pulled them in early 2010.

Facebook ads sell for very little.

Facebook Ads: Reasons for Growth

Precise targeting.

Mobile advertising.

Building better ads through social engagement.

Engagement ads: Attempts to get consumers to interact with an ad and then share that action with friends.

Popular with social media.

Learning objectives

Recognize how user issues and procedural implementation can derail even well-intentioned information systems efforts.

Recognize the risks in being a pioneer associated with new media efforts, and understand how missteps led to Facebook and its partners being embarrassed (and in some cases sued) as a result of system design and deployment issues.

Examine the challenges that leveraging potentially sensitive consumer data, altering privacy settings, and changing terms of service may present to innovative firms.

Understand the difference between opt-in and opt-out efforts, the breadth of possible consumer reaction, and impact of such policies on a business.

Study Facebook’s response to concern and crisis and learn tactics that may be employed to recover lost credibility with consumers, the government, and partners.

Learning objectives

Understand the potential strategic value of evolving from a service to a platform.

Learn from Facebook’s platform successes as well as its missteps and lost opportunities.

Describe Facebook’s efforts to integrate its service with other Web sites and the potential strategic benefit for Facebook and its partners.

Understand how Facebook’s web-centric culture allowed for a degree of A/B testing, rapid refinement, and error correction that isn’t as easy to obtain in an app-centric smartphone world, and see how this may have led to several of the firm’s struggles in developing and deploying mobile offerings.

Highlight areas of opportunity and concern regarding Facebook’s designs on emerging market growth.

Facebook’s Beacon Platform

Purpose was to harness the energy and virulent nature of social networks to provide useful information to consumers.

Facebook assumed users would agree to sharing data in their feeds.

Automatically signed in users and made opting out difficult.

Reputation Damage and Recovery

New TOS (Terms of Service) was offered in a way that solicited user comments.

Facebook settled a series of governmental inquiries in a deal with the U.S. Federal Trade Commission.

Facebook agreed to undergo twenty years of regular third-party privacy audits, and to a host of additional restrictions.

Facebook as a platform

Published a set of application programming interfaces (APIs) that specified how programs could be written to run within and interact with Facebook.

Application programming interfaces: Programming hooks, or guidelines published by firms that tell other programs how to get a service to perform a task such as send or receive data.

Programmers can write applications that run inside a user’s profile.

Developers are allowed to:

Charge for products

Offer them for free

Run ads

Keep what they made

Each application potentially added more value and features to the site without putting in a lot of effort.

Challenges for facebook as a platform operator

Some applications were accused of spamming friends with invites.

Security concerns, privacy breaches, and apps that violated the intellectual property of other firms.

Open approach has caused asset weakening and problems with revenue sharing.

Too much data portability leads to free rider problem.

Free rider problem: Taking advantage of a user or service without providing any sort of reciprocal benefit.

Obstacles to smooth user integration have increased.

The Web may be endangered by Facebook’s colossal walled garden.

Walled garden: Closed network or single set of services controlled by one dominant firm.

Facebook’s wall closes off a large part of the Web within itself

Stifles innovation, exchange, and competition.

Facebook’s integration

Allows developers to link web pages and app usage into the social graph.

Puts itself at the center of identity, sharing, and personalization.

Offers Website operators the choice to accept a user’s Facebook credentials for logging in.

Allows firms to make their sites more personalized by leveraging its data.

Strategic benefit - The measures allow Facebook membership to increase in value by:

Enhancing network effects

Strengthening switching costs

Creating larger sets of highly personalized data to leverage