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Nonetheless, all external factors in the Internet advertising industry environment are significant in affecting the company’s business performance relative to the performance of competitors like Google LLC, Twitter Inc., and Snap Inc. Facebook’s market position as one of the world’s leading online social media businesses provides a variety of benefits.
The high demand for online advertising buffers the potential shift of advertisers and slightly weakens the bargaining power of customers.
Facebook’s social networking website’s homepage in December 2012. shows external factors that highlight customers and substitution as the strongest forces on the social media company.
(Photo: Public Domain) A Five Forces analysis of Facebook Inc.
In addition, the low switching costs (low difficulty of transferring from one provider to another) make it easier for advertisers to shift away from the company toward competitors.
These external factors create the moderate force of competition. The impact of consumers or buyers on the online display advertising industry environment is examined in this element of Porter’s Five Forces Analysis model.