The State of Facebook, Summer 2014 Edition

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Would the world be better off without Facebook?

That’s the question the Internet has been wrestling with over the past few months, as more and more data shows a waning interest in the site, especially among teenagers. A recent Princeton study predicted Facebook will lose 80% of its user base over the next three years, and research by SocialBakers shows that the ones who are staying are spending less time checking their news feeds.

Of course, not everyone agrees about Facebook’s impending doom: Nate Elliott of Forrester Research debunked the Princeton study, and Facebook’s data scientists posted a snarky response of their own.

Meanwhile, the social network’s been making headlines for some unexpected business decisions: It purchased the trendy virtual reality company Oculus VR in March and popular chat app WhatsApp in February, and is in the process of rolling out a couple new features—auto-playing video ads, and an “Ask” button people can use to find out their friends’ relationship status. Then there’s “Slingshot,” the video messaging app Facebook is supposedly working on to rival Snapchat.

Love it or hate it, it’s clear that ten years after Facebook’s launch, the social network is reaching a turning point. If this is in fact the beginning of the end, we maybe can expect dramatic, far-reaching cultural changes beyond the way your high school acquaintances share pictures of their sandwiches. Why?

Facebook is a publicly traded company.

Unlike MySpace or Friendster, Facebook went public at the height of its popularity, and stocks continue to rise two years later. Just as the IPO had a major impact on the stock market, a sudden implosion could send traders reeling again, with investors either flocking to other social networks like LinkedIn or Twitter, or pulling out of social media altogether.

Facebook owns a bunch of subsidiaries.

If teenagers are leading a mass exodus from Facebook, where are they going? According to most sources, it’s Instagram—which, as it turns out, is owned by Facebook. Instagram’s popularity could prove a long-term financial boon for Facebook, especially once major advertisers sign on.

The Oculus Rift, on the other hand, could free Facebook from its reliance on ad revenue altogether, if, as the company’s CEO hopes, it becomes the next iPhone. And WhatsApp and Slingshot could allow Facebook to transition from old-fashioned social network into a modern messaging service, increasing its appeal to young people. If Facebook were to tank overnight, it has more than a few back-up plans to rely on.

Facebook’s primary user base is getting older.

It’s easy to forget that, for the first two years it was active, Facebook was only open to college students. It was 2006 when the social network allowed high schoolers and employees of certain corporations to join, soon followed by the general public.

The initial boom, led by high school students, meant that the majority of Facebook’s user base consisted of teenagers and young adults. In 2009, users aged 18–24 made up the majority (53%) of the site, with older users (35-54) showing the largest growth.

Fast forward five years , as the younger group ages out of its demographic, and older users still exhibit steady growth. In fact, in Portland, the user base of Facebook breaks out like this:

*as of June 2014

*as of June 2014

The idea that that "Facebook is for old people" could simply be case of natural evolution rather than a deathknell. And as other demographic information changes—think about income, home ownership, marital and family status—so too may change how Facebook operates. It’s difficult to say whether adults who grew up on Facebook will use the service less, or just differently.

So where does that leave Facebook? It could continue along its present course, catering to an aging user base with its flagship service while picking up other brands that skew younger. It could refocus or re-brand as another kind of company altogether.

On the other hand, if it did fall apart, and cause mass panic on Wall Street, the death of Facebook isn’t necessarily the end of the world. After all, we might be happier, less lonely, and more effective marketers without it.

But then how would we know what that guy from high school had for lunch?

Oh, right.

Post Date
July 16, 2014
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