This document proposes 4 solutions to help Facebook attract new users outside its key demographics: 1) Make Facebook Pages more interactive to serve as profiles for businesses and artists, 2) Expand Facebook Credits for use across more apps and purchases, 3) Develop a Facebook Marketplace for e-commerce, and 4) Create Facebook Questions to build community. Financial projections estimate the Marketplace could generate billions annually while requiring investments in servers, data centers, and labor over a 9 month implementation timeline.

1. forAll George Dy, Tian Wang, Timothy Yung, Anhang Zhu

2. Agenda Background Social Media Landscape Strategic Issues Target Audience Recommendation Solutions Solution 1: Interactive Facebook Pages Solution 2: Extend Facebook Credits Solution 3: Develop a Facebook Marketplace Solution 4: Facebook Questions Financial & Technological Impact Implementation Timeline Conclusion Facebook for All

3. Background » Recommendation » Solutions » Impact » Timeline » ConclusionSocial Media Landscape Facebook General Statistics 400+ million users1 500,000+ active applications1 1.5+ million businesses have Facebook Pages1 2.7% of Global Search Search Growth2 Social Media Statistics 58.59% on Facebook3September 2009 30.26% on MySpace3September 2009 Facebook for All 1 http://www.facebook.com/press/info.php?statistics 2 http://www.insidefacebook.com/2010/04/10/facebooks-search-traffic-continues-to-grow/ 3 http://www.hitwise.com/index.php/us/press-center/press-releases/2009/social-networking-sept-09/

4. Background » Recommendation » Solutions » Impact » Timeline » ConclusionStrategic Issues Reinforce Facebook’s mission to give people the power to share and make the world more open and connected. Facebook for All

5. Background » Recommendation » Solutions » Impact » Timeline » ConclusionTarget Audience Cater to existing audience Indirectly target older audience Business is globalized People all over the world have local businesses E-commerce plays an increasing role in GDP Exploits Facebook’s language support Target independent artists and musicians Facebook for All

6. Background » Recommendation » Solutions » Impact » Timeline » ConclusionAlternate Audiences Why not target teens? Why not target children? Teenage demographiccontinues to increaseregardless of marketing. Facebook for All 1 http://www.istrategylabs.com/2010/01/facebook-demographics-and-statistics-report-2010-145-growth-in-1-year/

7. Background » Recommendation » Solutions » Impact » Timeline » ConclusionRecommendation Facebook must provide a suite of functions to attract users outside key demographics Facebook must develop products that create a richer and more interactive experience for businesses Facebook must utilize personal social networks to address competing services like MySpace and Yelp, and provide competing resources for independent artists and restaurants Facebook for All

8. Background » Recommendation » Solutions » Impact » Timeline » ConclusionFour Solutions Solution 1: Interactive Facebook Pages Solution 2: Extend Facebook Credits Solution 3: Develop a Facebook Marketplace Solution 4:Facebook Questions Facebook for All

9. Background » Recommendation » Solutions » Impact » Timeline » ConclusionSOLUTION 1 Interactive Facebook Pages Problem Users without online social networks lack incentives to use Facebook Facebook Pages lack user interaction and general accessibility Goal Establish Facebook Pages to become the de facto social profile for businesses Expand Facebook Pages to serve as interactive avenues for general users, not just Facebook users Facebook for All

10. Implementation Improve general accessibility to Facebook Pages Removing “login requirement” increases available audience Redevelop Facebook landing page to include page search or directory browsing based on locality Begin by targeting restaurants and independent artists to establish Facebook Pages as the default profile for businesses and artists Create modules catered to specific page categories E.g. reservations for restaurants, music store for artists Results Expand Facebook’s user base and retain existing users by providing a more interactive experience Monetize Facebook pages by offering premium modules Facebook for All Background » Recommendation » Solutions » Impact » Timeline » ConclusionSOLUTION 1 Interactive Facebook Pages

11. Facebook for All Background » Recommendation » Solutions » Impact » Timeline » ConclusionSOLUTION 1 Front Page Mockup

12. Facebook for All Background » Recommendation » Solutions » Impact » Timeline » ConclusionSOLUTION 1 Reservations Module Mockup

13. Facebook for All Background » Recommendation » Solutions » Impact » Timeline » ConclusionSOLUTION 1 Reservation Notifications

14. Problem Third-party developers are using Facebook’s user base and creating more competition for Facebook (e.g. iLike). Facebook Credits only used for Gifts (which accounts for 30% of Facebook’s revenue) Users are not aware of Facebook Credits and the potential business models are not fully exploited Goal Promote the use of Credits across more Facebook properties to increase trust in Facebook as a business Enable Facebook to serve as a middleman to conduct transactions between its users and itself or businesses Use Credits as a method to utilize Facebook’s exclusive eCommerce-style marketplace Facebook for All Background » Recommendation » Solutions » Impact » Timeline » ConclusionSOLUTION 2 Extend Facebook Credits

15. Implementation Allow users to purchase (via gift cards or electronically) Facebook Credits and use them in applications Allow users to store and manage credit card information Allow users to purchase goods directly via credit card or other services (e.g. PayPal, Google Checkout) Develop in-house and acquire promising 3rd-party applications Offer incentives to use Facebook Credits outside of the new use for purchase of tangible goods in the marketplace Allow Facebook Page owners to upgrade their service for enabled access to specialized business modules Results Greater monetization for the use of in-house or acquired Facebook applications, increasing revenue streams Facebook for All Background » Recommendation » Solutions » Impact » Timeline » ConclusionSOLUTION 2 Extend Facebook Credits

16. Facebook for All Background » Recommendation » Solutions » Impact » Timeline » ConclusionSOLUTION 2 Existing Business Model

17. Facebook for All Background » Recommendation » Solutions » Impact » Timeline » ConclusionSOLUTION 2 Potential Business Model

18. Facebook for All Background » Recommendation » Solutions » Impact » Timeline » ConclusionSOLUTION 2Facebook Gift Cards

19. Facebook for All Background » Recommendation » Solutions » Impact » Timeline » ConclusionSOLUTION 3 Current Facebook Marketplace

20. Problem Facebook does not exploit all the potential eCommerce opportunities involving social networks Facebook lacks an avenue for vendors (e.g. with Pages) to sell products and services Goal Acquire Facebook Marketplace as the de facto destination for all Facebook users looking to shop within friend networks or local businesses Facebook for All Background » Recommendation » Solutions » Impact » Timeline » ConclusionSOLUTION 3 Develop a Facebook Marketplace

21. Implementation Acquire Facebook Marketplace from Oodle.com Aggregate all products offered by users or businesses in the Facebook Marketplace Create a Facebook Marketplace shopping cart and wish list to aggregate purchases and allow sharing product lists with friends E.g. Wishlists will appear on user profiles during birthdays Allow users to make online transactions Results Increase revenue through business and featured product listings Encourage the use of Facebook search for eCommerce Develop Facebook into a sales intermediary between users, taking a percentage of seller fee Facebook for All Background » Recommendation » Solutions » Impact » Timeline » ConclusionSOLUTION 3 Develop a Facebook Marketplace

22. Problem Facebook is lacking a strong community feel outside of personal networks New users lack retention rate because questions are often left unanswered Goal Develop a stronger Facebook community outside of friends networks to promote higher retention of new users and provide incentives for active users Facebook for All Background » Recommendation » Solutions » Impact » Timeline » ConclusionSOLUTION 4Facebook Questions

23. Implementation Create Facebook Questions to provide a community that answers new user questions about Facebook or anything trending Develop a strong community feel that offers support and the promotion to Facebook Expert, which is a title that is offered to the users with highest answer count Users can connect with people outside of personal networks if they are lacking friends, greater incentive to stay on Facebook Results Retain new users and provide stronger community incentives to increase time spent on Facebook by existing users Facebook for All Background » Recommendation » Solutions » Impact » Timeline » ConclusionSOLUTION 4Facebook Questions

24. Background » Recommendation » Solutions » Impact » Timeline » ConclusionFinancial Impact Estimated Annual Profit for Marketplace ($60BTraded2)/(90MActive Users2) = $667Traded per Active User ($8.7BRevenue)/($60BTraded2) = 14.5%Revenue Margin on Traded Goods ($2.4BProfit)/($60BTraded2) = 4%Profit Margin on Traded Goods Estimated active users that make at least $50k per year: (400M Active Users)(67%1) = 268MPotential Marketplace Users 1 http://www.socialtimes.com/2010/04/demographic-of-the-7-most-popular-social-media-sites-infographic/ 2 http://investor.ebayinc.com/ Facebook for All

25. Additional Datacenter Due to the increased use in user base and Facebook Marketplace, Facebook will be required to upscale its datacenters in preparation for the surge in traffic Even though Facebook has already begun building a 35-acre custom datacenter in Oregon that is scheduled to be available in June 2011, Facebook needs to have enough hardware until this datacenter is complete Facebook for All Background » Recommendation » Solutions » Impact » Timeline » ConclusionTechnological Impact

26. Facebook for All Background » Recommendation » Solutions » Impact » Timeline » ConclusionTechnological Cost Estimated Total Cost for Development Server Cost (775MUsers in June 20111)/(220MUsers in May 20092) = 352% user base growth($25Mserver cost in June 20112) * 352%4 = $88Mprojected server cost in June 2011 Operation Cost for Marketplace Average: $9.38B High: $15.01B Low: $1.88B 1 http://www.insidefacebook.com/2010/04/06/facebook-sees-solid-growth-around-the-world-in-march-2010/ 2 http://www.facebook.com/press/info.php?timelined 3 http://www.salarylist.com/all-real-jobs-salary-at-facebook-inc.htm 4 assuming data grows parallel with user growth, compounded over 15 months

27. Facebook for All Background » Recommendation » Solutions » Impact » Timeline » ConclusionTechnological Cost Estimated Total Cost for Development (cont.) Labor Cost ($70KAnnual salary for Software Engineers1/12 months per year)*(50Software Engineers)*(9 months)= $2.63M in labor Estimated Acquisition Cost 1 http://www.websiteoutlook.com/

28. Facebook for All Background » Recommendation » Solutions » Impact » Timeline » ConclusionImplementation Timeline

29. Stronger Facebook community outside friend networks Stronger monetization through Facebook Marketplace Utilization of Facebook Credit, line of currency exclusive to Facebook users for exclusive Facebook offers Pages become a default profile for business and independent artists, eliminating competition from Yelp and MySpace Facebook for All Background » Recommendation » Solutions » Impact » Timeline » ConclusionConclusion

30. Questions Facebook for All