The Success of Facebook Company - Case Study Example

The data that Facebook has collected has been the lifeline of its operations since most of its revenue, 85 percent of its total earnings, comes from advertising where the advertisers rely on the information which Facebook has to improve the focus of their advertising to those clients that are more likely to buy their products. For instance, an individual whose profile on Facebook shows his interests are mainly cars will be brought to those organizations advertising with Facebook that sell motor vehicles. 

A big dilemma that the company faces is whether to compromise the security of its users and increase their revenues or to protect the information users put on their Facebook profiles at the expense of them making revenues. This dilemma is evident from the policies that the organization implements where the organization has been at the forefront to assure its clients of their security but the features that the organization puts on the site without the approval of the users go to show how far the dilemma has worsened. Further, the dilemma has been complicated by the entrance of Facebook into the public market where investors can buy its shares since the scrutiny on its privacy measures will increase and at the same time, the investors are interested in returns from their investments.

Facebook gets most of its revenue from advertising, which is a substantial 85 percent of its total earnings whereas the remaining 15 percent is got from the sale of its online services such as the Zynga games. This source of business for the company is a result of a large number of users on Facebook that run into billions. The personal information that a user put on Facebook is the core interest of advertisers since it will able to make them channel their advertisements to those individuals that are interested in their products, therefore, increasing the effectiveness of the advertisements. For instance, advertisements from a certain region will be displayed on the profiles of the people who have indicated in their profiles they are from the said region, or adverts about an action movie will be put on the profiles of those people who have indicated one of their interests as watching action movies.

One of the greatest weaknesses of facebook's privacy features is the use of users’ information without the users authorizing such information. Facebook has been availing the information of its users to third parties for the advertisers to use the information or other third parties such as governmental organizations. Read More