E Business Model - Facebook

E-BUSINESS MODELS

As defined by Canzer, a consumer – to – consumer ( C2C) business model is one in which firms facilitate the exchange of data directly between its users over the internet. It does not use the peer - to – peer ( P2P) software which allows direct access to the individual’s computer files but instead provides a platform to load text, images, music / video files, etc for sharing among users. This platform for sharing and interaction has a commercial dimension with the aid of advertising. Social networking sites like Facebook draws the attention of millions of users which is a mine stone for advertisers targeting a particular market segment.

Facebook follows advertising e-business model for earning revenues in exchange for displaying advertisements on its website. As Canzer points out sponsorship of online distributed entertainment or information is accepted by customers who see advertising as a price for receiving free content. Distinguishing itself from the conventional media, social networking sites like Facebook engage its users with unique designs and sponsored online content. According to Canzer, the level of traffic to a particular website acts as a tool to understand how appealing the site is to its users, its effectiveness in its brand awareness and an attraction to marketers and advertisers.

Facebook also incorporates community e-business model which according to Canzer is an e-business model built around the notion that a group of online users can be regularly brought to a common platform. Facebook successfully makes communities within its own community. Started in 2004 as a community website for Harvard students which was later extended to other U.S. universities students. Even the Facebook users form an part of the virtual brand or community of Facebook users in contrast to users of other sites such as MySpace. Within this virtual community lies thousands of other communities built by users, band groups, advertisers, etc. These communities within facebook acts as niche markets which can be targeted by marketers and advertisers effectively.

Extending itself to a portal e-business model, Facebook acts as an intermediary that earns revenue (partial) by attracting users to its site and serving as a gateway to another website located elsewhere. Most of the advertising funded applications acts as a gateway to the advertiser’s parent website.