Facebook and the future of the business model

Dan Levy, Facebook’s Vice President Ads & Business Products, describes developments in personalization and privacy in marketing and commerce and promises “next-generation personalized experiences”. One thing is clear: The Facebook platforms are to be strengthened, especially in the area of ​​e-commerce.

Levy has been on Facebook for more than ten years. His job, as he describes himself, has “the goal of supporting the establishment of meaningful connections and relationships between people and companies.” In the past few years, many challenges have been overcome. The change from stationary to mobile use is just as much a part of it as the development of a standard for personalized ads, says Levy.

Now companies in particular would be confronted with “fundamentally changed consumer behavior”. Caused by the corona pandemic, the trend towards e-commerce made a leap within a year that corresponds to the progress of a whole decade.

In combination with new technologies that correspond to people’s expectations of securing their privacy, Levy sees the opportunity to “be an innovation driver once more”. The goal: “We have to find new ways in which companies can reach their customers and give people more control over how their personal data is used for advertising purposes.”

In his current blog post, he identifies four areas on which Facebook wants to focus on product innovations, and thus also provides an insight into the future of Facebook’s business model. A business model that is also moving more in a direction that is currently dominated by Amazon, Google and the Asian providers.

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Facebook has four main areas of focus when it comes to product innovations. (Graphic: Facebook)

“Basis for digital advertising”

Unsurprisingly, the Facebook Vice President puts the topic of privacy strengthening technologies at the forefront. In this area in particular, Facebook had repeatedly struggled with negative headlines in the past and accordingly lost trust among users and companies. That should change again. Levy said: “Facebook was a leader in the breakthrough in personalized advertising. Now we want to show that personalization and privacy are not mutually exclusive. ”To this end, Facebook is developing technologies to strengthen privacy. These are intended to help minimize the amount of personal data processed, while at the same time making it possible to place relevant advertisements and measure the effectiveness of advertisements.

Levy sets the bar extremely high here. These technologies would form the basis for digital advertising in the future, “to the extent that the microchip is a central component for computer-based processing”. That’s an announcement. At the same time, however, the Facebook man sees industry-wide cooperation as the basis for functioning technology. This also applies to other data protection standards and data protection practices.

Another area that Facebook has identified as a central area for product innovations is the topic of discovery. With 200 million companies using free tools such as a Facebook page or Instagram account, Levy said, discovery and relevance would be central.

In return, Facebook comes up with some ideas for the paid features and tests many functions. This includes, among other things, a test in which users can: tap in the news feed to browse content from companies on topics such as beauty, fitness or clothing and discover content from similar companies. In addition, context information is to be used for more intelligent advertising and the development of communities is to be made easier.

Development of a commerce system

The boost in e-commerce has also ensured that Facebook and Instagram in particular are increasingly becoming channels for purchases and sales. The company clearly sees a great opportunity here for the future business model. In the coming years, Facebook will build a modern commerce system to meet the demand for advertisements, community tools, messaging, shops and payment processing options.

The aim of these changes is “to create a personalized, seamless customer journey so that people can discover products as easily as possible, find out more about them, make a purchase decision, process payment and look forward to delivery.” In other words: the Facebook universe including Instagram and Whatsapp should increasingly develop into an all-in-one offer. Users should simply no longer have the need to visit other platforms. A development that is of course also geared towards the competition with Amazon and the Asian providers.

Business tools beyond marketing

The fourth area, to which Facebook wants to focus on product innovations, goes in a similar direction. In short, Facebook wants to occupy a much more important position in the tech stack of many companies. “We believe that we can help to solve all kinds of business requirements – be it with customer relationship management (CRM), business messaging tools or personnel acquisition via Facebook jobs,” Dan Levy describes the approach. Time is just as important as money, which is why “we are consistently driving the development of products and tools that companies can use with just a few clicks and lean menus and that keep the daily workload low.”

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