The Guardian reports Facebook loses millions of users as biggest markets peak. It says newer services like Instagram and Path threaten the site’s social media dominance.

In the last month, the world’s largest social network has lost 6m US visitors, a 4% fall, according to analysis firm SocialBakers. In the UK, 1.4m fewer users checked in last month, a fall of 4.5%. The declines are sustained. In the last six months, Facebook has lost nearly 9m monthly visitors in the US and 2m in the UK.

While rivals may hurt Facebook, that’s not the real problem facing Facebook.

In most advanced countries Facebook has reached saturation point. It can’t go up because there are no more customers out there. It can go down if it fails to deliver value to existing customers. 

That’s what I see happening.

I visit Facebook because it is the only place I can communicate with certain people who are important to me. They don’t do email or belong to other online communities.

Aside from reading their updates, there’s nothing of interest to me on Facebook, so I spend the least amount of time there. I never click on advertising, sponsored links or whatever, mainly because Facebook’s advertising is appalling.

The advertising isn’t just inappropriate, Facebook advertisers are the worst bottom feeders in the business. And that tells you everything about Facebook as a business – advertisers don’t value it, users don’t value it.

4 thoughts on “Facebook under threat as users decamp

  1. I am like you in that I only have an active account because of a couple of people who won’t communicate in any other way. All my details on there are randomised and not representative of me. I even use a different browser for it to keep it’s fingers off my regular browsing.

    I don’t think facebook is at it’s maximum in the US, but I think for what it is right it is at saturation. With all the stuff they are trying right now they want to basically be an integral part of anyone’s life; not just for connecting to people you know, but buying stuff, watching stuff, logging in and identifying yourself (even out of the online context, i.e. at nightclubs).

  2. Interesting statistics, I take the point about saturation but there are also segments that use it significantly including for messaging instead of email. Of course you don’t belong in that segment:)

    • That’s a good point – Facebook has plenty to offer people in a particular segment and provides them with key services – like messaging. In some ways it is like the AOL walled garden all over again, but then we know how that ended up.

  3. Bill, The initial growth of Facebook was driven by a very young demographic (mostly the same crowd that popularized and then abandoned MySpace.com) and its demise will be driven by that same demographic. When you talk to “kids” these days (ranging from pre-teen to college age), there is very little excitement about Facebook. Many will tell you that they no longer use Facebook, and now use Twitter instead. Although Facebook has penetrated other demographic segments, clearly the bloom is off the rose, and many older people have grown very tired of baby and puppy photos, or political and religious rantings from friends and family. B2B companies have zero interest in the site. And unless Facebook is able to create some new and compelling reasons for people to visit regularly, and unless they’re able to drive significantly higher ad revenue (and demonstrate a tangible ROI for B2C advertisers) we’ll see lots of investors bailing out of (and shorting) the stock. Zuckerberg should be using Facebook’s current market capitalization to purchase something with a business model that provides the company with sustained revenue, unrelated to social media, that’s aligned with predictable demographic trends rather than the whims of online entertainment…Like a hospice care company, or a manufacturer of artificial hips and knees. Although he was unable to make the marriage with Time Warner work, AOL founder Steve Case understood the unstable nature of online assets, and leveraged his asset at the right time. Zuckerberg would benefit from a long talk with Warren Buffett right now.

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