Wednesday 18 June, 2014

Has Facebook Stopped Growing?

Facebook is the biggest and fastest growing social network on earth. Your friends, family, coworkers, acquaintances from kindergarten, fans, stalkers, customers, clients, hairdresser, dog groomer, and local convenience store clerk are all there. It’s still booming like crazy, but all signs seem to indicate that its spectacular growth is starting to slow.

According to a report by Capstone Investments, the number of Facebook users has actually dropped 1.1 percent. In July 2012, just months after it went public, shares fell. This year, revenue slipped for the first time in two years.

Facebook has grown steadily since it started in 2004 but this year for the first time, that growth is showing signs of slowing. This includes revenue growth, growth in users, and even the steady growth in the amount of time the typical user is on the site.

Why Facebook Is Slowing Down

Why would a site that’s taken the universe by storm start getting sluggish now? For one thing, the site boasts over 900 million users. Are there still people on earth who haven’t heard of it? How do you keep growing beyond that?

The reason shares fell is that investors are nervous about the site’s ability to make revenue as a publicly traded company. It went public in May but experts feel it needs to develop new ways of monetizing.

Placing ads is the number one method for monetizing a website, but this doesn’t seem to be a viable strategy for Facebook. For one thing, there are ads already and users largely ignore them (ask anybody who has use Facebook Ads and they’ll confirm this). Furthermore, it’s felt that a full-scale ad campaign would alienate the site’s users, who aren’t there to be marketed to.

What Facebook Is Doing About It

Facebook hasn’t slowed down its efforts to reach out to new users, even though the number of new sign-ups has slowed down. The site is continually looking for new markets to reach. There’s talk of opening its services up to pre-teens (as of the time of writing, you must be 13 to have an account). Kids would be able to set up accounts under adult supervision.

The site could also focus its efforts on finding new users overseas. Facebook use is growing in countries like India, which it’s predicted will pass up the US in number of Facebook users by 2014. There’s a huge market for social media in India with lots of young people active on the Internet.

Facebook has also been focusing its efforts on mobile integration. It’s opened its own app store and has been expanding its mobile apps.

Slowing growth is a regular part of the cycle, but Facebook prides itself on being a high growth company and that’s key to its attraction to investors. While its growth may be slowing, it’s still got nearly three-quarters of American Internet users on it, with people spending more time on Facebook than on all of Google’s services combined, including YouTube.

Bob Steele

Bob Steele is an entrepreneur, software developer, marketer, and author living in the Denver metropolitan area. He’s an avid outdoorsman who loves skiing, hiking, fishing, boating, and just plain having fun. His interests include games, space, technology, physics, cooking (well eating actually), economics, business, internationalism, and team sports. With over thirty years of professional consulting experience, Bob has been exposed to many diverse business models and has gained a sensible approach to life. Bob’s company, WaveCentric is focused on commerce, marketing, and entertainment related products.

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