SOCIAL MEDIAINDUSTRY evolution ANALYSIS

Aaron Loyal | Vivian Le | Jaimie Lim | Anna Tran | Norman Tran

INDUSTRY HISTORY

• Before 1995• Discovery of 6 Degrees of Separation• Bulletin Board System

• 1995-2003• Demise of Bulletin Board System• World Wide Web• America Online (AOL)

• 2003-Present• Social Media Giants• Gaining revenue from users

BIG THREE

• Facebook• ~1 billion active users• $5 billion revenue in 2012• Business model: incremental revenues, ads

• Twitter• 500 million active users• $9 billion estimated value• Business model: sponsored tweets

• Google+• 343 million active users• $40 billion revenue in 2012• Business model: highly personalized ads

COMPETITIVE LANDSCAPE: 5 forces

COMPETITIVE LANDSCAPE: 5 forces

Bargaining power of consumers

• Brand equity

• Many substitutes available

• Low/moderate switching costs

- HIGH -

COMPETITIVE LANDSCAPE: 5 forces

Threat of new entrants

• Saturated market

• Moderate customer loyalty

• Low initial investment costs

• Difficult user accumulation and retention

- MODERATE -

COMPETITIVE LANDSCAPE: 5 forces

Bargaining power of suppliers

• High availability of hardware & storage providers

• Equal supplier concentration to firm concentration ratio

• Minimal supplier differentiation

- LOW -

COMPETITIVE LANDSCAPE: 5 forces

Threat of substitute products

• Large number of substitutes

• Decreasing perception of differentiation

• Brand reputation.

- HIGH -

COMPETITIVE LANDSCAPE: 5 forces

THREAT OF industry RIVALRY

• Many substitutes available

• Constant need for innovation and differentiation

- HIGH -

INDUSTRY trends

• Growth of Mobile Devices

• Shift in Marketing Strategies

• Increase of Online Presence and Activity

INDUSTRY CHALLENGES

•Data Privacy

•Monetization of Mobile Content

•International Censorship

•Measurement of ROI and Value

•Distribution of Profit

INDUSTRY CHANGES

•Revenue Gain Strategies

•Connecting Businesses with Consumers

•Transition from Private to Public

IMPACT ON STRATEGY | BUSINESS MODEL | PROFITABILITY

Impact on Industry Strategy, Business Model & Profitability

Trends

Mobile Device Growth • Opportunities for mobile monetization ↑• More businesses using Facebook ads and greater data volume from users → Profitability ↑ • More mobile phone apps• More advertisements

Marketing Strategies Shift

Online Presence & Activity Growth

Challenges

Data Privacy

• Bad reputation for lack of data privacy-decrease of users• Difficulty monetizing mobile → Profitability ↓• Difficulty expanding overseas (China)→ Profitability ↓• The top social networks will continue to grow but struggle with competing with each other because they are hard to compare

Mobile Monetization

International Censorship

ROI & Value Measurement

Profit Distribution

Changes

Revenue Gain Strategies • Opportunities for revenue from users (in addition to businesses) ↑ • Seamless ad integration increased buyer intent Profitability ↑ • Difficulty meeting shareholder and Wall Street demands

Connecting Businesses with Consumers

Transition from Private to Public

FACEBOOK FUTURE STRATEGIES

• Mobile Ad Revenue• #1 popular app in US but underwhelming mobile ad revenues• Large amount of mobile apps

• Job Search & Recruitment Market• Social Jobs• Graph Search

• Online Dating• Graph Search

twitter FUTURE STRATEGIES

• Breaking into E-Commerce Partnership with AMEX

• International Expansion into Brazil

Google+ FUTURE STRATEGIES

• Advertising Revenue

• Sync Google+ with all Google-related Services

• Community Focus

• Google Hangout

ADDITIONAL QUESTIONS