Facebook Nation

MACROECONOMICS

OPTIONAL MACROECONOMICS PROJECT:

FACEBOOK’S ECONOMIC IMPACT

Matt

TABLE OF CONTENTS

Introduction 2

Facebook’s Economic Impact 3

Employment 4

The End of Spam E-Mails 5

Spurring Innovation 6

Democratization 7

Facebook Nation 8

Case Study: WIR Bank 9

FaceBucks 10

Conclusion 12

INTRODUCTION

In recent years and much more so in recent months and weeks, there has been a wealth of discussion about Facebook’s pending IPO . Since its foundation in 2004, Facebook has displayed impressive growth and steadily increased the active user base. Due to the recent filing to go public, a lot of previously closely guarded information about Facebook has become available. Some of the most impressive numbers:

Figure 1: Facebook Users Worldwide in millions (Source: www.rentbits.com)

Initially only available on a select group of university campuses, Facebook soon expanded across the world. Facebook’s user base as a fraction of the world population has reached impressive heights and keeps growing.

Since the early years when the average Facebook user was between 18 and 24, the user demographics have changed dramatically. Younger people are still more likely to be active, but over a third of today’s users are over the age of 35 . With the changing user demographic and global growth in user base, Facebook has evolved from a somewhat primitive tool to stay in touch with college friends to a behemoth in social networking. It has identified several online revenue streams and is now a powerhouse in the technology industry, competing on revenue and talent recruiting with slightly older and more established players like Google, Apple, or Amazon. Facebook has become one of the most popular online search terms and ranks in the top ten globally .

Facebook has created several revenue streams across its platform. It has become a hugely popular gaming platform and derives about 12% of its income through online game provider Zynga . The main revenue stream, however, is display advertising. Facebook has developed clever ways to use the information it collects