Deck 11: Facebook: Building a Business From the Social Graph

Question 1

Facebook purchased Oculus VR because, like Zuckerberg, the firm's youthful founder had already built a platform with a massive customer base.

Answer 1

False

Question 2

Facebook can be completely indexed by search engines, like Google and Bing, being able to index all of Facebook content.

Answer 2

False

Question 3

Investor groups that provide funding in exchange for an ownership stake in the firm are called _____.

A) credit unions
B) venture capital firms
C) hedge fund managers
D) mutual fund executives
E) greenfield investors

Answer 3

B

Question 4

Facebook founder and CEO Mark Zuckerberg maintains a majority of voting rights in the public company, virtually guaranteeing that his control of the firm continues, regardless of what investors say.

Question 5

When a firm _____, it sells stock to the public for the first time.

Question 6

When a firm has an IPO, it is said to have:

A) been liquidated due to short selling.
B) gone public, selling shares on a public stock exchange for the first time.
C) received government funding.
D) been liquidated due to switching costs.
E) issued a dividend.

Question 7

Facebook (and other apps the firm owns) collectively represent the largest photo-sharing service on the Web, ahead of Picasa, Flickr, and Photobucket, even though all of these other efforts got started before Facebook.

Question 8

Facebook's key resources for competitive advantage are the sophisticated technological tools it provides to its users.

Question 9

A significant portion of Facebook's underlying technical infrastructure consists of open source software.

Question 10

Mark Zuckerberg, the founder of Facebook, ensured that he remained in control of the firm even after it went public by:

A) running the organization single-handedly.
B) valuing the firm at $15 billion, which exceeded investor expectations.
C) employing antitrust laws and limiting the investors' degree of control.
D) appointing 3 additional directors instead of 5.
E) retaining a majority of voting rights in the public company.

Question 11

Today, mobile makes up the vast majority of Facebook advertising revenue.

Question 12

Which of the following statements is true about Facebook?

A) Global growth of Facebook is saturated, with most of the planet's population already having Facebook accounts.
B) Approximately 20 percent of Facebook users reside in China.
C) Entrepreneurs beware: Mark Zuckerberg lost most of the value in the firm he founded to the Winklevoss twins, providing evidence that entrepreneurs should have a founder with a strong legal background.
D) Facebook has largely avoided privacy concerns by allowing posts to expire over time.
E) Facebook is highly profitable, with a growing ad business on mobile platforms.

Question 13

A stockbroker trades shares she does not own with an obligation of later repayment, and in the hope that the price of traded shares will fall. She then repays share debt with shares purchased at a lower price and pockets the spread between initial share price and repayment price. This attempt to profit from a falling stock price is known as _____.

A) insider trading
B) churning
C) arbitrage trading
D) short selling
E) going long

Question 14

Facebook's phenomenal growth implies that it requires minimal infrastructure investment.

Question 15

Roughly one in every seven people on the planet has a Facebook account.

Question 16

Write a short note on how Mark Zuckerberg has retained control of Facebook.

Question 17

Firms that grow quickly may seem less risky/more likely to succeed; therefore fast growth may help an entrepreneur extract better ownership terms from potential investors.

Question 18

Facebook was one of the first social networking sites where users actually identified themselves using their real names.

Question 19

Many analysts were skeptical of Facebook's ability to create a business from mobile. Mobile revenue just before the IPO was zero.

Question 20

Why is Sheryl Sandberg considered to be the copilot of Facebook?

Question 21

When others take advantage of a user or a service without providing any sort of reciprocal benefit, it is called localization.

Question 22

In the context of Facebook's business strategy, the walled garden refers to the connections between individuals and organizations.

Question 23

Systems distributed throughout the Internet that help improve the delivery speeds of Web pages and other media, typically by spreading access across multiple sites located closer to users are known as:

A) Internet exchange points.
B) private clouds.
C) colocation centers.
D) content delivery networks.
E) cookies.

Question 24

Which of the following statements holds true of network effects?

A) It refers to a collection of resources available for access over the Internet.
B) It refers to adapting products and services for different languages and regional differences.
C) It refers to a situation when the value of a product or service increases as the number of its users expands.
D) It refers to a situation when others take advantage of a user or a service without providing any kind of reciprocal benefit.
E) It refers to a closed network or a single set of services controlled by one dominant firm.

Question 25

How has Facebook been able to gain a share in the photo-sharing and video-sharing markets at the expense of established firms?

Question 26

How are News Feeds a source of value for users on Facebook?

A) It fosters the virality of information sharing vital to delivering value from the social graph.
B) They are innovative and Facebook is the only social network to offer the feature.
C) They are effective in protecting a user's personal information from others.
D) They ensure that a single post will reach all friends and fans.
E) They offer cross connectivity for users across several social networking sites.

Question 27

Which of the following statements is true of the term "cloud"?

A) It refers to a collection of computing resources available for access over the Internet.
B) It refers to the phenomenon of adapting products and services for different languages and regional differences.
C) It refers to a situation when the value of a product or service increases as the number of its users expands.
D) It refers to a situation when others take advantage of a user or a service without providing any sort of reciprocal benefit.
E) It refers to a closed network or a single set of services controlled by one dominant firm.

Question 28

Facebook will reduce the rank of posts that request reshares.

Question 29

Which of the following factors has helped Facebook build up trust among its users?

A) Superior technology compared to rivals
B) Mutual and reciprocal approval of friend requests
C) Free nature of applications available to users
D) Low switching costs
E) Availability of venture capital funds

Question 30

Describe the two strategic resources that are most critical to Facebook's competitive advantage.

Question 31

The term "social graph" refers to:

A) user-generated content that is shared by a broad community of users.
B) an online community that allows users to establish personal profiles.
C) the global mapping of users and organizations, and how they are related.
D) the sum total of the economic and social value created by a network of individuals.
E) the effects that emerge from individuals who use the same products or services.

Question 32

Facebook is especially appealing to organizations looking to share messages with fans since anyone who has "liked" an organization on Facebook will see all of that organization's posts in their newsfeed.

Question 33

Facebook's acquisition of WhatsApp was a way for Zuckerberg's firm to gain leadership in the fast-growing mobile messaging market.

Question 34

The dark Web refers to:

A) peer-to-peer file sharing networks that are used to illegally share copyrighted material.
B) seemingly innocent Web sites, containing malware that infects computers.
C) sites that cannot be indexed by Google and other search engines.
D) networks that allow only mutually trusted peers to participate in file-sharing activities.
E) Web sites that advocate violence toward people of a specific race, ethnicity, or religion.

Question 35

Facebook has dominated the desktop, but why is mobile, specifically apps offered on smartphones, considered different than browser-based services, potentially limiting the likelihood that browser-dominant platforms will also lead with app-centric offerings?

Question 36

There's an old computer science saying that a computer should never ask you a question that it should be able to work out the answer to. How can a smartphone work out much more?

Question 37

_____ is the biggest photo-sharing site on the Web, taking in around three billion photos each month.

A) Facebook
B) Picasa
C) Shutterfly
D) Flickr
E) Photobucket

Question 38

Software that is free and whose code can be accessed and potentially modified by anyone is referred to as _____.

A) shared source files
B) proprietary software
C) available files
D) licensed documents
E) open source software

Question 39

_____ are systems distributed throughout the Internet (or other network) that help to improve the delivery (and hence loading) speeds of Web pages and other media, typically by spreading access across multiple sites located closer to users.

Question 40

One of Facebook's key resources for competitive advantage is:

A) technology.
B) network internalities.
C) open source software.
D) high switching costs.
E) low venture capital investment.

Question 41

The term "content adjacency" refers to:

A) placing advertisements to reach consumers based on various traits such as demographics and purchase history.
B) a technique used by online publishers to increase the effectiveness of their campaigns.
C) advertisements that are targeted based on a user's query.
D) a concern that an advertisement will run near offensive material, embarrassing an advertiser and/or degrading their products or brands.
E) problems associated with advertisements that run before a user arrives at the home page of a website.

Question 42

Users tend to have more focused intent (often focused on purchase decision-making) when using Google as compared to Facebook.

Question 43

For years, which of the following is the only major media category that has seen an increase in spending?

A) Online advertising
B) Radio jingles
C) Television ads
D) Print media
E) Telemarketing

Question 44

The bulk of Facebook's revenue comes from:

A) data aggregation services.
B) application development.
C) subscription fees.
D) data harvesting.
E) advertising.

Question 45

In terms of generating ad revenue on a CPM basis, information and news-oriented sites do much better than social networking sites.

Question 46

Third-party Web sites can choose to accept a user's Facebook credentials to allow the user to access their content.

Question 47

Facebook enjoys significantly higher click-through rates than Google.

Question 48

Most Facebook applications are focused on businesses and educational services.

Question 49

WeChat has proven to be a successful app-based platform in China. What does WeChat offer? How has Facebook tried to expand Messenger into a platform?

Question 50

Advertisers have relatively low performance on Facebook because they must rely entirely on Facebook-provided data. Ads on Facebook cannot be targeted using any data collected outside of Facebook.

Question 51

Facebook has offered a system where Web site operators can choose to accept a user's Facebook credentials for logging in. Web site operators appreciate this feature because:

A) they can charge users for accessing their content and hence, generate revenue.
B) they can afford to spend less on Web site maintenance.
C) users can access websites without creating an account, reducing a potential barrier to customer acquisition.
D) Facebook's advertising programs offer better revenue for viewed content.
E) they can associate their offerings with the Facebook brand.

Question 52

When others take advantage of a user or service without providing any sort of reciprocal benefit it is called a _____.

Question 53

Why is A/B Testing harder on mobile?

Question 54

_____ is a term that refers to a closed network or single set of services controlled by one dominant firm.

A) Walled garden
B) Cloud
C) Network effects
D) Free rider problem
E) Localization

Question 55

Why is Facebook's Open Graph series of APIs for third-party websites significant for the firm?

Question 56

Facebook's growing dominance has given rise to the fear that if increasingly large parts of the Web reside inside a single service, innovation, competition, and exchange may suffer.

Question 57

Firms spend more advertising online than they do on radio and magazine ads.

Question 58

Which of the following issues raises advertiser concerns on promoting products and services on social networking sites?

A) Low marketing budgets
B) Inflation
C) DNS cache poisoning
D) Phishing
E) Content adjacency

Question 59

Developers who make applications create _____ that have the potential to add value to Facebook beyond what the firm itself provides to its users.

A) switching costs
B) distribution channels
C) one-sided markets
D) complementary benefits
E) private equity shares

Question 60

_____ refer to programming hooks, or guidelines, published by firms that tell other programs how to get a service to perform a task such as sending or receiving data.

Question 61

Critics of Internet.org worry that for billions of low-income users, Facebook will come to represent the only Internet they know and have access to, deepening the roots and entanglement vines of the firm's walled garden.

Question 62

_____ is considered to be the most persuasive and valuable method of promoting products and services.

A) Online advertising
B) Vertical integration
C) Swiping
D) Word of mouth
E) Search marketing

Question 63

The acronym ARPU represents the phrase ______.

Question 64

_____ is a term used to describe each time an ad is served to a user for viewing.

Question 65

Users of Google and other search engines are said to be on a hunt because they:

A) are acquiring profiling data which acts as ammunition to improve their search results.
B) want to explore and look around.
C) are there to seek information to drive a specific action.
D) allocate time for activities such as looking for news and friend updates.
E) are unwilling to leave the Web page when they are having conversations.

Question 66

Facebook feeds

A) are limiting the reach of organic posts, prompting many firms to spend on Facebook ads to connect with more users.
B) ensure that any post from an organization's fan page will arrive in the feed of anyone who has "Liked" that page.
C) prohibit content promoting apps that run outside the Facebook platform, since such content competes with user attention and Facebook wants users to spend as much time as possible on its own services.
D) will show identical ads to all users, worldwide, if they are of the same age and gender.
E) are entirely ad-free. Zuckerberg refuses to run ads in feeds because he feels this will degrade the user experience, even though Facebook would likely earn significantly more if it did so.

Question 67

Brand advertisers largely consider user-generated content as low-quality, brand-unsafe inventory for running advertisements. This can be attributed to:

A) content adjacency.
B) audience matching.
C) collaborative filtering.
D) search engine marketing.
E) negative keyword usage.

Question 68

What are Facebook Instant Articles and why would a firm want to take advantage of this offering?

Question 69

The advertising acronym CPM is defined as ______.

Question 70

Banner ads are often billed based on _____.

A) clickable numbers
B) frequency tracking scores
C) quality scores
D) cost per thousand impressions
E) their relative popularity

Question 71

Facebook's Beacon effort was a failure largely because it was "opt-out" instead of "opt-in."

Question 72

What are the hurdles encountered by Facebook in advertising? Compare Facebook's ad model with other successful online advertising firms.

Question 73

Write a brief note on the factors that have led to the spectacular growth of advertising on Facebook.

Question 74

Analysts are so bullish on Facebook's mobile advertising prospects because

A) Mobile ad revenue from the Facebook app has grown steadily since the firm's IPO.
B) Instagram is new to advertising and WhatsApp hasn't advertised much, suggesting that Facebook has lots of unrealized growth potential in its app stable.
C) Ads on Facebook mobile show up in a user's feed, the area of the screen they pay most attention to, suggesting mobile ads will be tougher to ignore than those on the side of a browser screen.
D) All of the above
E) None of the above - analysts remain very pessimistic about Facebook's prospects for mobile advertising.

Question 75

The online advertising acronym CPC is defined as ____________.

Question 76

Every eighteen months, employees are required to leave their teams and work on something different for at least a month

Question 77

CPM refers to:

A) each instance of an advertisement being viewed by a user.
B) cost per thousand impressions.
C) a concept where advertisers do not pay unless someone clicks on their ad.
D) the maximum amounts of money advertisers are willing to pay for each click on their ads.
E) the number of users who clicked an ad divided by the number of times the ad was delivered.

Question 78

How is Facebook partnering with third-party data providers to improve ad targeting?

Question 79

Describe how Facebook 'leveraged Econ 101' or fundamental economics principals, for better performance and user experience with its ad products.

Question 80

Issues of content adjacency and ______ can make social networking ads less attractive than ads running alongside search and professionally produced content sites.