Sunday, April 21, 2013

What Strategic Shifts helped Facebook win over MySpace


MySpace was the biggest player in social networking arena when Facebook marked its beginning. The success of Facebook is replacing MySpace. It can be majorly attributed to three factors – Innovations done by Facebook, how it answered the shortcomings of MySpace and mistakes done by MySpace.

Innovations by Facebook
Third-Party Applications - In May 2007, Facebook opened its platform to third-party developers so they could launch a range of applications on the Facebook site. It was a key turning point as Facebook quickly became the place for people to play games like FarmVille with their friends, as well as share photos and communicate[2].
News Feed - One major step forward for Facebook was its news feed, an initially controversial, then soon very popular feature which let friends know all the latest news about each other, which inspired repeat visits. It took Myspace 18 months to copy this feature[2].
Meaningful Advertising - Unlike other social networking sites, Facebook didn't just collect user data to target ads, it studied how people interacted with their Facebook friends. This provided pointers for companies on how they could design ad campaigns that could allow them to interact with consumers in similar ways. Therefore, the ads on Facebook became quite relevant. Its advertising system, Beacon, sent data from external sites to the Facebook, in order to provide targeted advertisements[1].

Advantages over MySpace
Facebook was quick to learn from MySpace’s mistakes. It not just took care not to repeat them but also came out with better solutions. Following are some examples –
Clean GUI -  MySpace let users design their own pages with widgets, songs, videos, and whatever design they pleased. The result was a wasteland of cluttered and annoying pages that were as garish as the self-designed home pages. Facebook opted for a cleaner interface that resonated with a broader audience. The design was predominantly blue and white. The platform was unadorned, intuitive, structured to reflect how people were already communicating online.
Organized Advertisement System - MySpace eschewed subscriptions, relying instead on ad revenue. Given the personal data that its users freely shared on their pages – everything from location to favorite movies – it offered advertisers a platform for serving targeted ads. But the problem was, no matter how targeted MySpace's ads could be, few clicked on them. The ads were distastefully placed with large, animated banners[1]. Here too, Facebook learned from MySpace's missteps. Users are greeted with a single ad in the right column when they check their news feeds. Users could notify Facebook of ads they find
offensive or repetitive (although this only returned more – hopefully better targeted – ads on the next page).

Mistakes of MySpace 
Underestimating Facebook - MySpace initially ignores the fast growth of  facebook, even though it was building off a much smaller base. Facebook was coming out with a slew of innovative products. Adapting it’s interface according the better options that Facebook provided, could have helped MySpace compete with Facebook but it did not do anything like that.
Shift in focus after NewsCorp Acquisition - Zuckerberg's team were focused on product development and innovation. MySpace had become too concerned with revenue and meeting traffic targets of its Google deal. The Google agreement was started to be viewed by MySpace executives as a double-edged sword. The Google deal required a certain number of MySpace user visits on a regular basis for Google to pay MySpace its guaranteed $300 million a year. This reduced flexibility as MySpace couldn't experiment with its own site without forfeiting revenue.
Technological loopholes - MySpace simply had not innovated much since it was bought by NewsCorp. The site was also built on Microsoft's .NET technology, considered by many to be a grievous handicap. There was a tremendous platform stability problem within the site. The way that the technical infrastructure was set up, it took literally 10 to 15 times longer to build code on the MySpace system than it would on any other technical platform[2].

Importance of making explicit use of social networking functionality for Facebook
Need of Privacy Settings – Facebook initially started as a closed network of few selected communities. The connections were very limited and more real. Therefore people felt it was safe to upload critical information, such as contact number, address, etc. However, as Facebook expanding its user base, it became an obvious choice to provide privacy settings to the already present user base in order to safeguard their critical information.
Provide better user connectivity – The ‘Mutual Friends’ and status updates of friends features implemented by Facebook were instantly popular. People liked knowing what their friends are up to. Also, it was easier to add an unknown person as a friend if there were already mutual friends between the two.
MySpace didn't have it – “People like change”. MySpace implemented this rule by choosing not to have network functionality in contrast to Friendster. And Facebook implemented it by having network functionality in contrast to MySpace. And as expected, people liked this change.

References:

1. How Facebook learned from MySpace's mistakes by Kevin Kelleher (Fortune, November 19, 2010)
2. How News Corp Got Lost in MySpace by Yinka Adegoke (Reuters, April 2011)[Facebook]

More Readings:

"MySpace Developer Platform." MySpace Developer Platform 1 (2009): 1. Print.
Dick Stroud, Social networking: An ageneutral commodity — Social networking becomes a mature web
application, 3 October 2007
Hitwise, http://www.marketingcharts.com/interactive/myspace-got-76-of-us-social-network-traffic-in-07-
facebooks-grew-51-3075/hitwise-social-network-sites-market-share-2007-vs-2006jpg/
http://opensocialapps.com/facebooks-advertising-advantage/

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