The decline of Facebook
Mark Zuckerberg said that the company had 500 million active users. An impressive number. However, a little thought could make you wonder just how accurate the claim of "actively using Facebook" might be, and whether some trends indicate that Facebook has already reached the highest point.
Look at some stats from Alexa.com. The traffic measurement site pegs the percentage of global Internet users who visit Facebook.com at around 35 percent. But that’s an estimate. According to the latest numbers from Internet World Stats, there are over 1.8 billion Internet users in the world, so 35 percent would be something north of 630 million. So Alexa may underestimate traffic which is not surprising, as it estimates numbers from samples.
Next: Alexa estimates that users spend an average of 31.5 minutes a day on Facebook. That's a great number if you compare it to a number of other popular websites. However, that time has begun to trend down since the beginning of the year and there are several causes for that: after some playing around users don't have anything new to discover, surfers are more efficient in their Facebook use, and many people with accounts are on the website rarely, which would lower the average use.
With so many websites and content on the web, one place can't attract and keep a majority of users. Furthermore, most high tech companies don't have a good idea on how to deal with a fashion-driven market. They assume that the customers who come today will always stay, and that's just wrong. And there are some big questions facing Facebook management which hardly come to mind to a computer-driven manager.
In the U.S., reports have started to indicate that growth has stopped, particularly among young adults. Now, take a country like Germany where Facebook has only 39 percent market penetration. A regional social network StudiVZ is a tough rival, and German authorities' hostility toward Facebook's privacy policies can make things tougher. Then there's Brazil where Facebook's market penetration at just over 22 percent. From the other side, Orkut never was popular the U.S. but Brazilians love it, and Facebook simply doesn't have a chance.
The most dangerous thing is that the company has begun to lose the 18 to 35 demographic in the U.S., typically seen by advertisers as a key group. That could mean that Facebook has lost its cool factor which would ultimately be a disaster. Add to that that Facebook has an catastrophic user satisfaction rating and you'll get the picture why it is not "the ultimate social network". Time are changing and it seems that Facebook managers are not aware of that. ■