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The reports of Facebook’s death have been greatly exaggerated "Product people - Product managers, product designers, UX designers, UX researchers, Business analysts, developers, makers & entrepreneurs 4 February 2014 True Average Revenue Per User, Facebook, Snapchat, Social Media, Use Case, Mind the Product Mind the Product Ltd 678 Facebook tombstone Product Management 2.712
· 3 minute read

The reports of Facebook’s death have been greatly exaggerated

Facebook tombstoneA recently published study heralding the death of Facebook among teens has been widely covered over the past few weeks. While the scholarly merits of the original release are questionable at best, this is a recurring theme that the press loves and brings up time and time again. But is it missing the point?

It’s all about the use case

In Danah Boyd’s excellent book It’s Complicated – the social lives of networked teens, she painstakingly researches teen usage of social media and what it means for how they communicate. What she has found is that teenagers aren’t addicted to social media – they’re addicted to each other and use social media to stay in touch even when they’re not together. Especially in the US, where suburban life means it’s harder to actually hang out physically, this becomes the primary use case for social media use.

But hanging out is not what Facebook is for, so are you really surprised that teens don’t use it?

Facebook, love it or hate it, excels at completely different use cases, whether it’s staying in touch with family (something even teens may want to do – but only once they move away from home) or more distant friends you don’t see every day. There’s a reason Facebook started in college campuses – it’s an awesome tool to keep in touch with your friends scattered around the country and even with those annoying parents back home.

The true test for Facebook, therefore, is not if teens use it, but if they start to use it after high-school, when they move away from home or start college and need a different tool set to what Snapchat et al have to offer. So if anyone wants to truly understand whether Facebook is on the decline or not the only important metric is whether those users, in their early to mid twenties, are signing up or not.

It’s also important to note that the social media world isn’t a zero-sum game. Because it’s all about the use-case most social media users will have more than one account. We relish products that focus on a specific use-case and do it well, using for example Snapchat to chat with friends in real-time, Twitter to update friends and colleagues and keep up with industry news and Facebook to stay in touch with family and distant friends.

It’s all about the user value

There are a lot who argue that it’s important for Facebook to attract teens because of the attractiveness of that demographic to advertisers. Say what you want about the spending habits of teens, but there’s no way it competes with some of the products and services now starting to advertise on Facebook. When insurance and wealth management companies start advertising you have to sit up and take notice, they have LTVs in the thousands to hundreds of thousands of dollars and can therefore afford to advertise a lot more than someone who is trying to sell a pair of trendy sneakers. Facebook’s recent numbers bear this out, with average revenue per user consistently growing to around $5 in 2013. Snapchat’s ARPU is precisely $0 with no immediate plans for advertising or evidence that it will work.

Sure, Snapchat will figure out a way to monetise their user base in time, but Facebook is already making over $2 billion in revenue and $425 million in profits – per quarter.

Mark TwainBottom line? Don’t count Facebook out just yet, as Mark Twain once said “The reports of my death have been greatly exaggerated”.

And he would know, doesn’t he look a bit like the average Facebook user?

UPDATE (February 4, 2014): According to the Pew Research Centre “Facebook turns 10 tomorrow and reaches that milestone as the dominant social networking platform, used by 57% of all adults and 73% of all those ages 12-17. Adult Facebook use is intensifying: 64% of Facebook users visit the site on a daily basis, up from 51% of users who were daily users in 2010. Among teens, the total number of users remains high, according to Pew Research Center surveys, and they are not abandoning the site.”

Comments 3

There are two areas where I see people beginning to leave Facebook: Teens and a segment of adults.

Losing teens is part of the process of focus. Facebook started out for college students but quickly became a social network for everyone. The product tried to appeal universally, but is now fighting more specialized services that address more targeted needs. Teens don’t want to be on a network with their parents, and for that among many other reasons, they’ve latched on to Twitter, Snapchat, etc.

Among adults, I see several problems. Some are bothered by the security aspects of Facebook’s ad targeting, perceiving it as “sharing my info with advertisers.” Some are tired of the games and “funnies” shared by their network, and are investing more in platforms like G+ or Twitter that allow them to focus on their interests. Relatedly, others are deliberately withdrawing from social media overload, and choosing to spend less time on the platform that they feel is more addictive / delivers less value.

While I see the monthly user count and revenue continue to go up, I’m not convinced it’s clear sailing ahead.

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