Why Facebook is Dying - And How it's Trying to Survive

when trying to analyze and understand the company always think about how is it making money starting from this you can pretty much understand these company's motivations strategy and struggles when it comes to Facebook that this simple question explains why Mark Zuckerberg learned Chinese why they bought Instagram whatsapp and oculus why they launched free basics to provide free internet access in poor countries what's the point of the cryptocurrency Libre and pretty much everything else that Facebook does but things don't look good at all and Facebook is failing when it comes to one of its most important strategies in this video I will explain exactly what Facebook does to stay relevant as it desperately tries to avoid the fate of MySpace Facebook makes money by selling advertising companies of all sizes and from all industries pay Facebook to show their ads to Facebook users in their markets and the reason they pay is because one Facebook has access to more than two billion people and two Facebook knows a lot of personal information about these people in some countries Facebook can reach the majority of the population for example in the United States about 68 percent of people use Facebook so as an advertiser if you want your product to appear on the screens of most people you know you can do that through Facebook and because Facebook knows so much about us advertisers benefit from very detailed targeting they can reach people by gender age occupation relationship status location interests and much more every single action that should do on Facebook whether it's setting your relationship status as single or liking a certain article video page etc these are all data points that Facebook uses to better target you none of these features are designed for the user in mind they're all for advertising purposes and that's a problem Facebook's product is you and me and that's why they have so many privacy scandals Facebook must know more and more about us in order to make money and Facebook can't really respect us because we are the product not the customers because of this privacy scandals and the general realization that social media is a problem for mental health and social cohesion the attitude towards Facebook is changing so as of today in order to keep growing remain relevant and make money Facebook has three main goals get more people to use Facebook meaning find new users retain the existing users on its platforms give them something more to hold on to then just for the social network experience and finally show more ads to its users in order to increase revenue these three goals explain everything that Facebook does but they're particularly failing in one of them because technically Facebook is still just a social network and social networks can die like myspace as I explained in my previous video by the way I have some amazing links for you in the description other cool informative videos and great quality online courses so don't forget to check it out below the video Facebook leadership understands that the risk of everything crumbling down in a relatively short period of time is very real even a gigantic social network like this can fail pretty fast so is Facebook at a higher risk failure there is definitely a risk but it depends what you look at the current statistics show that on the contrary Facebook is doing great but several problems are lurking in the background and the huge one of them are teenage users that have already mostly abandoned Facebook itself and without the supply of new users from subsequent new generations Facebook will eventually be doomed in the long run but that's where acquisitions of apps like Instagram come into play to counter that but I'll get back to it later in the video first of all let's take a look at the latest statistics they show that Facebook has reached the plateau in terms of users in developed countries like the United States Canada and in Europe but there is no decline in users yet however in developing countries its number of users is growing particularly in Asia and Africa that's why Facebook keeps posting an overall growth in terms of users but eventually it will reach a critical mass in those countries as well so what do you do when you reach a maximum limit of people in the world that use your service but still want to grow that's the first goal that I mentioned in the beginning of this video find new use well that's why Facebook launched free basics in developing countries in the rich countries most people have access to the Internet and among them most are already on Facebook but in the poor countries lots of people simply have no access to the Internet at all and Facebook can't reach them based on this simple reality Facebook decided to provide them with a free internet access named free basics it's a mobile app that lets you access some basic web sites that don't use your mobile data these web sites can provide weather notifications local and world news a few other things and all of that of course only if you sign up to Facebook itself in order to push the service around the world Facebook masqueraded it as a philanthropic act with all the PR declarations like connecting the world opportunities blah blah blah however this strategy soon backfired in some countries the most dramatic of all being India where critics argued that this service was only designed to benefit Facebook itself and transgress net neutrality Facebook could control which web sites can be accessed through it we'll learn more and more information about its users and show ads to them it makes sense no one should ever fall for corporate philanthropic bull there is always a very valid reason behind every decision that supposedly gives away free money without getting anything in return but of course that this doesn't take away the benefits that such a service can actually provide it just seems that more and more people now prefer that companies be straight about their goals and motivations instead of hypocritical statements another way for Facebook to keep growing its user base is to access the market where it is forbidden and unfortunately for Facebook this market happens to be the biggest in the world China has forbidden Facebook in 2009 because of political reasons and if you ask me I definitely find it unfair from an economic standpoint that's why you see Mark Zuckerberg speaking great Chinese and running around in Beijing the whole point of it is to somehow get access to the Chinese market again through goodwill finally the third way for Facebook to keep growing its user numbers is to acquire apps where these users have migrated to or that they prefer as I already said teenagers have mostly abandoned Facebook but haven't abandoned Instagram and Instagram is currently the main driver of advertising revenue growth for Facebook coincidence of course not Instagram is basically the future of Facebook together with messenger that's how Facebook sees them Instagram was a brilliant and totally under paid acquisition Mark Zuckerberg has also desperately tried to purchase snapchat back in time exactly for that reason all the teenagers were on it but cocky Evan Spiegel refused and decided to carry snapchat all the way through IPO but the future of snapchat doesn't look great because Instagram is beating it in almost all aspects lastly Facebook has acquired whatsapp for the same reason the number of users everybody wondered how Facebook would monetize its watts of audience given that it's a free service well now we know what's up recently introduced whatsapp status which is basically the same thing as Instagram stories and we'll start to show ads inside giving that story's ads for Instagram are very efficient Facebook will be able to monetize whatsapp without changing the messaging experience for the people who are used to it so these were all the ways that Facebook uses to acquire new users to stay relevant but what about keeping those users on its platforms because after all they can still migrate to another service if they want you and they probably will because of the general negative attitude towards Facebook that is building up that's the second goal I mentioned in the beginning of this video retain users on the platform that's where messenger chat BOTS Libra cryptocurrency and even oculus rift come in all of them are designed to keep Facebook users using its services in Mark Zuckerberg sweat dreams Facebook basically becomes the Western reach at if you don't know WeChat you should read about it it's an iconic app because of its tremendous success in China it's a social network a messaging service but most of all a platform for so many other things in life like payments a ride hailing online shopping money transfers doctor appointments driver records and the list goes on and on at this point it's probably easier to make a list of things that you can't do through which ad so facebook just wants to become the same thing as WeChat because that would allow it to keep users locked to its platform and services as long as Facebook is just a social network the benefits that it provides to its users are dangerously weak for a company of its size and easy to substitute even today already there seems to be less interaction and engagement on Facebook than before back in time people used to have heated debates of all kinds in facebook comments and now everyone is tired of it and barely commenting on anything so the real sustainable way for Facebook to survive is to actually become a practical useful service for its users like WeChat that's why they launched the chat bot trend a few years ago by inviting companies to build services on messenger the results are still mitigated as of today and clearly didn't live up to the hype the liberal cryptocurrency is yet another attempt to offer something tangible to users to hang on to whether facebook will make money directly with liberal or not doesn't even matter the point is to lock liberal users on its platforms and sustain its ad based business model this way payments are a major part of everyone's life so if you're a payment provider or a bank you become unavoidable that's what Facebook wants so Libra would be one big part of the same old strategy designed to turn messenger into something more than just a chat app but for now as much as Facebook is succeeding with Instagram which is still nothing more than a social network they are failing when it comes to turning messenger into the western version of WeChat finally just to mention oculus rift here at first people wondered how would Facebook benefit from acquiring a hardware gadget startup but from Facebook's point of view there is actually perfect cultural fit between both once again Facebook needs to lock users on its platform in order for it to survive so they will do anything to keep you scrolling those news feeds and oculus well what a better way to keep a person immersed inside the virtual reality for hours like zombie that's the same thing as we emerge with our mobile phone screens while browsing Facebook and Instagram news feeds we could even more so merge with a fully virtual reality headset but here again this acquisition didn't work out well for Facebook just as virtual reality as a whole didn't succeed yet but it's not over just you wait until 5g is deployed and this whole thing might explode for real and finally the third goal here considering all what I said previously Facebook still must show more and more ads to its users even if they manage to turn messenger into a more elaborate platform Facebook is just taking too much money from ads at this point to be able to replace this revenue source by another one it might not even be possible at all no matter how potentially successful an ideal messenger would look like and Facebook knows that people have a limited tolerance for ads for example the newsfeed has already reached its ad saturation but the video not yet Instagram stories also not so that's why you'll see more and more of them they're just as what's up stories or sorry status now this is also why Facebook suddenly started to advertise Facebook groups on TV yeah it's a weird thing if you don't live in the United States you probably didn't see them but there are real ads on TV to push people to use Facebook groups to discuss things between fathers of girls or baseball lovers and stuff like this Facebook wants to develop its groups create real forums out of them why to be able to display more ads there since they represent a different newsfeed and so another location to show them that's how desperate they are however from the advertiser standpoint the site that actually pays Facebook this is more of an insider information but Facebook ads are not very efficient for most of them I have a very detailed video about how Facebook and Google Ads compare and so far for a lot of businesses Facebook is more of a gimmick while Google is still the major money-making machine this gets a bit technical but Facebook is great to raise awareness about the brand but not so much to actually sell a certain product except for some specific where products are very visual Google on the other hand is excellent at selling the product and advertising to actually sell products is more important for businesses and that's why more and more of them will soon start to realize the limits of Facebook's invasive ads if you want to learn more about it just to watch my video about this topic it's a really good video all the links are in the description so make sure to check it out below and while I'm at it do subscribe to my channel to watch more videos like this with all this being said I'd rather say that Facebook's future doesn't look very bright despite the recent revenue and user growth reports most of the new growth is driven by Instagram and even Instagram will one day reach its limit and this rather sooner than later also people might start to realize that Instagram is actually Facebook the product is much better there's no doubt about that but the leadership and the way they treat user data is exactly the same because from the user side facebook.com/ already suffers from a disastrous image because of privacy and fake new scandals most people recognize that their data is being abused but still keep using Facebook out of convenience because all their friends are there and teenagers well they don't have this convenience problem because they are not using Facebook in the first place facebook.com starts to look a lot like MySpace concerning the turn of messenger into WeChat there is still a very long way to go and the process has been so slow and unsuccessful so far that we can rather say that nothing meaningful was accomplished the messenger is still just a chat app and even if Facebook would somehow manage to do that there's another danger the same danger lurking over all tech giant's which is regulation not only there are now political voices calling to break up tech giants but Facebook already faced a huge institutional backlash to its Libra cryptocurrency project without even having launched anything tangible at this point pretty sure that politicians will break Libra even before it is born actually Facebook already decided to not even launch it in India because of anti cryptocurrency regulation yep India is giving quite a lot of hard time to Facebook and oculus well the didn't sell anywhere close to the numbers that were expected as you can see from here although Facebook keeps growing its user base and ad revenue it's still not managing to turn itself into a practical everyday platform that would solidify its usefulness for its users more than just for the social networking part if you enjoy this video give it a like subscribe to my channel and don't forget to click on the bell icon to turn on the notifications about my next videos and do check the description below you will find a lot of amazing links there to learn cool stuff and acquire new skills [Music]

Channel: Business Disruptors

Views: 333,222

Rating: 4.8918133 out of 5

Keywords: facebook, instagram, whatsapp, libra, cryptocurrency, strategy, business, dying, free basics, oculus, rift, oculus rift

Id: Oh6iX6gDU6k

Length: 16min 3sec (963 seconds)

Published: Thu Jul 11 2019