Facebook is without a doubt, the giant of the social media platforms.
It has been the king for years. Today we are going to go over a detailed SWOT Analysis of the business.
- Α huge number of daily active users. To be more precise 169 million of them.
- The users are not only hyper active, they are loyal to the platform. They share their precious data and they use all kinds of 3rd party applications and sites through their Facebook profile.
- The gathering of so much data, and most importantly very personal data such as income level and purchasing behavior has attracted a lot of advertisers. Facebook’s income from advertising in 2015 was $40 Billion.
- They are always coming up with new features that increase the overall user experience and off course engagement. Prime examples are the 360 degree photos, Facebook live and Facebook Stories.
- One of the platforms with the highest engagement is Instagram. Facebook owns Instagram, and this couldn’t be a better investment. The versatility that this relationship is offering to both advertisers and users is unparallel.
- Facebook’s revenue streams are not diversified at all as the only way they earn their money is through advertising. The commitments from the advertisers to the company are minimal, and they can stop their campaigns at any given time. Facebook can’t depend on anyone for being a long term client.
- The biggest problem all types of platforms are facing is data breaching and violation of the user’s privacy. Every single time that a new scandal or problem reaches the news, many users stop using the platform even in the possibility that “something is not going right”.
- This of course results to massive drops in advertising spend, and overall company valuation.
- The brand’s image has been significantly impacted and users are much more skeptical as to what they do online and which privacy policies they agree with.
- Even though the number of business using Facebook ads profitably is very high, there are some businesses that can’t justify the investment. It is very hard for them to make a worthwile ROI and thus don’t bother at all. Facebook could do further research and improve their advertising platform in ways that could benefit these types of businesses.
- Facebook can also try to repeat the successful investments they made by buying Instagram and Watsapp. If they acquire different platforms that have engaged users that belong in other demographics, they will eventually have the ability to reach everyone. Every type of person and consumer will be approachable through the Facebook Network. This is exactly what the advertisers are looking for.
- They could also consider launching a paid service, in an effort to diversify their income streams.
- The most important threat to Facebook would be a future privacy violation scandal or data breaching situation. If the users stop trusting Facebook whatsoever the whole system will collapse. They need to take care of it, and make sure than nothing like this will hapen anytime soon.
- The large amount of spam/fake profiles is a big problem for the company. It lowers the overall user experience and the image of the company to the actual active users.
- The competition is very fierce and there are always other options for advertisers, if they see something they don’t like in Facebook. Google is still the number 1 place where businesses buy advertising space from. As a result they have to keep striving for improving their advertising services and retain their market share.