Facebook is the most dominant social network has more than
1.11 billion active users and over 680 million mobile users. Facebook users
spend more than 700 billion minutes every month on the website. While the broad
user base and social graph give Facebook a huge advantage, the company still
does not have a solid revenue generation model and faces intense competition
for online ad sales. For instance, the channel attribution problem is
still a major issue and the social advertising model is still viewed with
skepticism by many marketers.As such, the barriers to entry in the sector are limited
and Facebook’s current advantage is its scale.
There are other emerging starts in this market who's fortunes are rising rapidly. Video and photo-sharing social networking platforms
such as Pintrest and Youtube which have been experiencing rapid growth. Pintrest
is experiencing the highest growth rates among Social Networking platforms and
Youtube gets in excess of a billion unique visitors a month. These platform
pose a serious challenge to Facebook and will compete with Facebook in getting
a bigger share of the social advertising dollars. To stay relevant, Facebook
has to keep innovating and expand its services as it related to video and
photo-sharing services and try to develop more tangible and measurable
performance metrics for demonstrating the ROI on Facebook advertising.
Facebook’s purchase of the photo-sharing service Instagram is a step in the
right direction and will help the firm to stay competitive in the space, but
needs more than an aggressive M&A strategy to sustain its dominance of the
Social Network market. Facebook also has to drastically improve its user’s
perception of Facebook’s lax privacy policies and settings as this could
severely undermine its credibility as a secure platform.
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