Week 5

For this week, I choose to analyze Facebook. I have always wondered how facebook became so successful and most profitable than any other social network sites that also offers free subscription. I've always wondered how a website like facebook generate revenues while its subscribers received free service. If you go to Facebook's press room, you can see how facebook currently has over 300 million users and 50% of their users log on to facebook at any given time of the day. It's statistics are true since I do surf on facebook periodically through out the day. While conducting some online research about facebook, I learned how they generate their revenues. I had came across some key factors; portal, advertisement and user registration. Facebook uses the advertising model to general large revenues through online advertisements and most importantly, the subscribers data. By registering with facebook, you provide key information to the advertisers, your age, gender, (city or town) demographics and interests. Advertisers use your data to generate advertisements based on your profile. Web advertising model works extremely well when the volume of viewer traffic is large or highly specialized. Although facebook claims that they firmly respects the privacy of facebook users, its hard to believe how else they would generate such extraordinary revenue each year.