Tomahawk, WI 9/18/2013 (BasicsMedia) – Facebook Inc (NASDAQ:FB) has created a product through which people are able to stay in touch with each other regardless of their location on the earth. It offers a level of connection between friends and among family members which has been hard to achieve in the past. It boasts of more than 900 million monthly active users which therefore, provide a platform through which advertisers can use to reach out to a massive group of customers with their products and services. There have been concerns regarding FB”s business model and its viability or lack of.

Which Are the Main Issues with FB’s Business Model?

The main issue which FB has been forced to address or at least try addressing has always been regarding its security and privacy. Some of its competitors, such as LinkedIn, have recently been hacked and millions of its users had their privacy breached, passwords and close to 6.5 million usernames were compromised as a result of this breach. There has always been apprehension within the industry as to whether FB has put enough measures and security features in place to ensure it doesn’t suffer the same fate which befell its competitors such as LinkedIn.

The other issue which FB has been forced to take a keen interest on has to do with its ability to maneuver its way out of the potential risky mobile ads and apps fields. There was a time when the overriding feeling was that FB was about to see major fallout as a result of its inability to navigate its way successfully out of the problems brought about by mobile ads. Fortunately, the company has been able to overcome this challenge and is now enjoying massive revenue from its mobile ads and apps. Mobile users are on the rise and this has helped FB to enjoy more revenue.

FB Decides to place Ads inside New Feeds

FB’s decision to start placing ads inside news feeds has augured well for the company since it has augmented what the company has been receiving from mobile ads. The applications which have a strong Facebook integration, or require the same levels in order to be operated are to start being served using a centralized source. Facebook’s revenue hovers around the $1 billion quarterly mark, thus ensuring that the company receives not less than $4 billion every year. If its business model is tweaked to increase this amount, I will have no further complaints to raise.

Even if Facebook is to consistently enjoy revenues in the tune of $4 billion every year, it will require a lot of work to convince investors that this amount justifies the $100 billion market cap which it has been reported to possess. In 2011, Facebook’s major competitor, Google, enjoyed $37 billion as revenue based on a market cap of around $200 billion. This is a clear evidence as to the amount of work which the company still has to do in order to raise revenues which are similar to what Google managed a couple of years ago. This all depends on its business model.

Facebook’s future will depend majorly on whether its business model is the best or not.

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