Is the party over for Facebook?

Co-authored with Nishant Bhajaria

We have written previously about how Facebook and Google+ grew using divergent models, but ended up at the same destination: rich functionality and a growing user base.

In our follow up, we examine whether Facebook and Google+ are in danger of repeating the mistakes IBM made in the 90s and Microsoft in the previous decade. Other networks are catching up fast in the rear-view mirror, and they are bigger and closer than they appear.

These insurgent networks include not only the conventional networks like Pinterest, Tumblr and Instagram, but also others like Secret, and many more. The threat, like the revolution, is not being televised and actively underway.

Here is why Facebook and Google+ need to worry.

One advantage that greased the skids for Facebook and Google+ was an audience that was ready for social media. Millions, if not billions, were already using email, IM and photo sharing tools. Other fortuitous events helped too. Microsoft and Yahoo, for example, did not unify email and Messenger into a unified social platform. The digital audience was connected and conversant socially, but not yet connected. Facebook and Google+ neatly filled that void.

More than a decade later, what do social audiences want?

According to Smart Insights and Global Web Index, Instagram outpaced all other social networks in active user growth in the second half of 2013. Instagram grew at 23%, while Google+ grew at just 6%. Facebook shrank by 3%.

A report from the Global Web Index shows how rapidly the ground shifted just six months later, as the table below demonstrates.

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TABLE 1: Top Social Platforms: Growth in Members and Active Users during H1 2014 (Source: Global Web Index Link)

Table 1 demonstrates that mobile-friendly platforms like Tumblr, Pinterest and Instagram have surpassed Facebook and Google+ in terms of overall user growth as well as active user growth. Instagram ceded its position of leadership in that it fell from being the fastest growing platform during the second half of 2013 to 3rd during the first half of 2014.

Facebook is still the overall leader in terms of members (over 80% of Internet users have an account), and more than half those members are active users. Additionally, Facebook users are still the most engaged of all social users. More than 50% of Facebook users login multiple times every day.

Dark clouds are approaching the blue Facebook logo, however.

Passive networking is impacting Facebook, in that Facebook users are doing fewer things when logged in. This is at least partially attributed to a growth in mobile computing that creates shorter visits aimed at more targeted interactions.

There has also been a drop in activities that define being a Facebook member. The drop in status updates (down 17%), video uploads (down 10%), messaging (down 20%) and photo uploads (down 24%) shows a network struggling to keep folks coming back for more. It is likely that at least some of these users have moved on to Instagram for photo-sharing and messaging-specific networks for IM.

A significant number of users, especially younger ones, are explicitly moving away from Facebook due to a myriad of reasons (See TABLE 2 below).
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TABLE 2: Why users are less engaged with Facebook (Source: Global Web Index Link)

The risk to Google+ is much higher from these rampant new networks since even though Google+ and Facebook have an almost equal overall user base, a much smaller percentage of Google+ users are active.

These users may not defect to to these newer networks given Google’s unique advantages by way of its widely used features. Google Search, Drive, Maps and Hangouts have legions of dedicated users. While Google does have dedicated users, Google+ only has de facto users. Google has failed to convert feature users to active Google+ platform users. This means that even with a huge audience, Google+ may never become a true social network.

WHAT DOES ALL THIS MEAN?
Social networks typically fall into one of 3 primary groupings: messaging, media and anonymous. There is a great deal of overlap in these categorizations, but these serve to identify trends.

Messaging networks tend to center around directed peer to peer or peer to group communications. These may manifest in differing presentations, but focus on delivering a message. Social networks in this category include Twitter, LinkedIn, Tumblr, Pheed, WhatsApp (owned by Facebook) and Kik.

Media networks act more like bulletin boards where information is posted and awaits a reader. Posted information is most frequently shown as photos, videos or audio. Each post then has the potential to spark a further conversation. However, the primary focus is the posting and presentation of the media. Networks in this category include YouTube, Vimeo, Pinterest, Instagram (owned by Facebook), Tumblr, LastFM and Spotify.

Whisper, Secret, SnapChat and Ello are perhaps the most popular of the anonymous social networks. These networks focus on the namelessness of the members. Members post without name or contact information. Some, such as Secret identify the posters position in the social graph relative to the viewer. Others in this category are Yik Yak, Insider, Awkward and Cloaq.

With the sheer number of focused niche offerings, is it surprising that Facebook usage amongst 13-17 year-olds has declined 26% in the last 3 years? This trend is similar for 18-24 year-olds, down 8% in the same time period. This results in 4.2 million fewer high school aged users and 7 million fewer college aged users than 2011. People are seeking simplicity to express–not converse. This does not bode well for traditional social networks like Facebook and Google+, since their model depends on a communal engagement rather than individual expression.

The features of these upstart networks directly answer weaknesses in Facebook’s platform. Facebook was born on the desktop and is still best viewed there today. Instagram users make up 18% of all mobile phone users. Ello offers a content focused experience without ads. No longer is the social user made to feel like a piece of content being bought and sold. 350 million photos a day appear in Snapchat, and 10 seconds later suddenly cry out and are suddenly silenced. Secret allows users to find refuge by making whatever comments they wish, because no one knows their true identity.

Pre-gen Xers like us found comfort and familiarity in Facebook. We rediscovered long lost friends and acquaintances. The act of discovery and reconnection kept (and keeps) us coming back. However, to the next generation, Facebook has always existed. There have never been lost connections. They never felt the sense of wonderment and discovery. Facebook is the old established brand, the old stuffy brand. Mom and Dad are on Facebook. My corporate employer reads my Facebook posts. Millennials as a group are not brand loyal to begin with. Over 50% will change brands based on peer opinions. In many cultures, when your parents think it’s cool, that’s precisely when you know it’s not.

Facebook is at risk of becoming tomorrow’s landline phone.

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