FACEBOOK INITIAL PUBLIC

OFFERING

ZENITH SOLUTIONS ALPHA KAPPA PSI

We will provide solutions for the following:

1. Decision between monetizing through advertisements or third party platform apps

2. Adapting to social media trends

3. Facebook's privacy issues

4. Facebook’s decision to go IPO

5. How Facebook performed since the IPO

KEY ISSUES

- Going public- Advertisement & third party app revenue- Adapt to social media trends- Streamline privacy issues

Key Conclusions

• “Facebook’s mission is to give people the power to share and make the world more open and connected”

• World’s largest and most successful social network

• Over 1 billion monthly active users

• 2011 revenues of $3.7 billion come from: 90% advertising, 10% commissions on sales of virtual goods by third party developers

COMPANY BACKGROUND

USER GROWTH (IN MILLIONS)20

04

2005

2006

2007

2008

2009

2010

2011

2012

1 6 12 58 145 360608 845 1,056

PROS & CONS OF IPOPROS

CONS

• Stock options can be offered to employees

• Increased prestige and visibility of brand

• Expand growth through investment

• Finance acquisitions of other companies

• Stability and support over time

• Obligated to please share holders

• Centralized around revenue instead of UX

• Need approval of majority of shareholders

• Company is required to be transparent

Company Incentives

Long-term Growth

Change in User Interest

Decrease in Control

1

2

1

2

FACEBOOK IPO MAY 18TH, 2012

PERFORMANCE POST IPO

FACEBOOK VS. GOOGLE - POST IPO

STOCK COMPARISON

Google

Facebook

Mobile Relevance

Search International

Mobile

HOW WE CONNECT97%

94%

37%

46%

3%

16%

7% 7%

3% 4%2% 4%

2% 3%

HANDHELD MUSIC PLAYER

GAME CONSOLE

INTERNET ENABLED TV

COMPUTER

MOBILE PHONE

TABLET

E-READER

2011 | 2012

Mobile

July '12

July '11

74

59.5

(in billions of minutes)

Tablet

Apps

PC

40.8

5.3

23.2

4.2

5.4

TIME SPENT ON SOCIAL MEDIA

Mobile

IS ADVERTISING EFFECTIVE?

MobileMobileMobile

ADVERTISING AND USER EXPERIENCE

Yes19%

No70%

Other11%

Has the increase in Facebook advertisements affected your frequency of use?

Mobile

2010 $1.86 billion TR = $1.97 billion

2011 $3.1 billion TR = $3.7 billion

2012 $4.28 billion TR = $5.09 billion

2013 $5.48 billion TR = $6.6 billion

FACEBOOK REVENUE

2010 2011 2012 20130

1

2

3

4

5

6

7

Facebook Payments & Other Revenue

Ad Revenue

Mobile

REVENUE THROUGH PLATFORM APPS

Mobile

Mobile Relevance

Search International

POPULAR FEATURES

Relevance

AREAS FOR IMPROVEMENT

Relevance

FACEBOOK USERS’ PRIVACY CONCERNS

SearchRelevance

Relevance

Mobile Relevance

Search International

SOCIAL SEARCH

Mobile Relevance

Search International

International

Facebook Products

Display Ads

Payments

Sponsored Stories

Sponsored Search Results

Facebook Exchange

Promoted PostsGifts

Logout Page Ads

Suggested Posts

Customer Audience

Ads

Mobile Apps

Install Ads

International

SUMMARY