Is the Age of Facebook over?

  • Facebook posts good profits in Q1
  • But questions of relevance rising
  • Will Facebook see another decade of dominance?

Over the past decade, Facebook has become synonymous with the idea of success on the internet. The noughties have been typified by three great tech companies: for software, Google; for hardware, Apple; and for the web and the way we interact with it, Facebook.

Love it or hate it, the influence of Facebook on our society is impossible to deny. Facebook is both a noun and a verb in today’s culture; it’s a movie star in its own way, and the subject of multiple books and a great deal of academic study. In movies, television, and fiction, Facebook is a ubiquitous concept that no longer requires explanation. One wonders how, in the future, Facebook will be perceived: whether the flashes of it from movies made in 2010 will be an old-fashioned version of a very current piece of daily life (like the phones used in 1940s movies - instantly recognisable, despite the fact that we never use them), or whether it will be an antique, recognisable but no longer relevant, if it’s recognised at all.

This is the great question of the next decade. The noughties were all about Facebook proving its dominance: now it’s time for Mark Zuckerberg to step up to the plate and prove its sustainability and adaptability.


By the numbers

With the end of the first quarter, Facebook have announced to their stocktakers and spectators how they’re doing.

As always with the giant company, it’s fairly impressive. The two major results are in revenue and users, where Facebook has reported:

  • a total revenue of $1.46 billion, with mobile ad revenue constituting 30 percent of the overall ad revenue, and beating Wall Street analyst expectation of $1.44 billion - however, down from last quarter’s revenues of $1.59 billion;
  • 1.1 billion users every month;
  • with an average 665 million daily active users in March, up from 618 million in Q4 2012.

It’s a very slight slump from the profits of quarters before, but Facebook and their investors were expecting it. In fact, Facebook has already referred to 2013 as an “investment year”, focusing on profits in the future rather than profits right now.

Facebook has taken a step back from the profit generating focus for the past few months, focusing instead on long term investment and adaptability for the future. The $1bn purchase of Instagram - as of yet not monetized - helped to take out one of their biggest competitors, they’ve been investing a lot in getting their mobile platform up and running - better late than never - and focusing on new ideas, such as the Android app Facebook Home, which turns your phone’s lock screen into a revolving set of images and updates from your Facebook feed.

Read more about Facebook Home and why it’s not such a bad idea.

This year of investment is an important moment for any company, as they reassess their product and what they can do to improve it and ensure its sustainability and adaptability. However, with Facebook, the sudden surge of new products and new ideas, right down to the way your Facebook feed itself operates, has the slight scent of desperation.

Facebook are doing pretty well when it comes to profits. However, they may be losing out on a more crucial quantity: the ever necessary cool factor.

By the teens

There has been growing murmurs amongst the tech and internet crowd that Facebook is no longer the social network of choice for teenagers - and teenagers, no matter your opinion of them, are usually a pretty telling group in terms of social trends.

In a humourous letter explaining his resignation this February, the Facebook Director of Product Blake Ross wrote: “I’m leaving because a Forbes writer asked his son’s best friend Todd if Facebook was still cool, and the friend said no, and plus none of HIS friends think so either, even Leila who used to love it, and this journalism made me reconsider the long-term viability of the company.”

Though he clarified later in the letter that he was joking, the letter itself was taken down pretty quickly, as it finally put a voice to whispers within and without Facebook: that Facebook itself was no longer cool.

With the growth of a new range of apps and social network sites - from Twitter to Instagram, but also newcomers Snapchat, Incredibooth, and the new heavyweight Tumblr - Facebook users are drifting. The appeal of a news feed made up of everybody you have ever met is losing its charm next to a cultivated “dashboard” of blogs that you love, as the Tumblr experience offers.

Read about the way new apps like Twitter are doing more than just posting photos of holidays.

While the number of Facebook users holds strong, the amount of time people spend on Facebook is rapidly going down. Facebook is becoming, in many ways, a glorified calendar and text messaging service - useful for keeping in touch and scheduling events, but not for much else. The amount of time spent using Facebook’s instant message service is rapidly going down, and recent studies have shown that most people rarely look past the top seven updates on their news feed.

Facebook themselves have remained positive about the new range of social networks competing with them for teens’ time.

David Ebersman, CFO, spoke at a conference recently, saying: “I’d start by saying we remain really pleased with the high level of engagement by people of all ages around the world. We continue to have really high penetration rates among that age group both in the US and globally. And younger users remain among the most active and engaged users that we have on Facebook.”

Responding to the criticism of Facebook’s “cool” status and the threat of other websites, Ebersman said: “We take this feedback seriously. But our sense is that much of the concern stems from the assumption that this is a zero-sum game, and that’s not how we see it.”

Facebook in the future

It’s clear that the Facebook as we know it will not be around in another decade. However, whether this will be because its been driven into extinction or because it will have metamorphosed into something entirely new (and useful!).

Enders Analysis new media specialist Ian Maude said: “The problem is that, in the US and UK, most people who want to sign up for Facebook have already done it. There is a boredom factor where people like to try something new. Is Facebook going to go the way of Myspace? The risk is relatively small, but that is not to say it isn’t there.”

The major point that Facebook holds in its favour over past sob stories like Myspace is its sheer dominance. Myspace may have been the social media heavyweight for a few years, but its audience was mainly teenagers - typically flighty, and an easy fanbase to convert.

Facebook, on the other hand, has succeeded in grabbing people from just about every demographic. Though teens and young adults remain its biggest users, the fact that so many people are on it will continue to make it more appealing than other social networks - it’s the easiest way to find friends and get in touch with the largest possible pool of people. In order for people to leave Facebook en masse, there would have to be a really, really attractive new option.

Which is not to say that it won’t happen - remember how quickly Google seemed to spring up? Does anyone still use Ask Jeeves? Yeah, didn’t think so.

However, Facebook is not the sinking ship that MySpace became, and particularly it’s not willfully denying the fact that it needs to maybe mop up the decks. Facebook is embracing change and the possibility of adapting - particularly notable is its mobile advertising revenue, after a shaky start to the mobile platform.

Facebook is, more than ever, a company to watch. However, whether it will be a company to watch die is another question entirely.


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