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  |  June 25, 2012   |  Comments   |  

Facebook has started to lose some of its glitter. Here's why.

I created my Facebook account in July 2007 at the request of one of our agency partners. Our creative agency had suggested that Facebook was going to be the next big thing and the time was ripe to launch a branded app. Our app, The "Acuvue® Wink" was launched in August 2007 and received an overwhelmingly positive response, with over a million winks sent in just four months.

Since then, Facebook has been marching toward its goal of 1 billion users. However, in the last year, signs of Facebook's popularity waning in mature markets like the U.S. and Australia have started to emerge. According to Experian Hitwise Australia, the time users spent on Facebook is down by roughly 21 percent in the last year (Fosum, 2012). In addition, the number of active accounts in the U.S. declined for the first time in 2011 (Lee, 2011).

Having been part of the Facebook journey from the beginning, I would like to share a few reasons behind why Facebook has started losing some of its glitter:

  • Being all things to all people: In order to boast its members, Facebook began to lose its original purpose, a cool place to hang out for young people where parents were off limits. Recent data suggests that 46 percent of Facebook users are over the age of 45. No wonder high school and college students referring to Facebook losing its sense of cool in the same way MySpace and Friendster did at one time.
  • Shifting from a cozy corner to advertising portal: In the early days, Facebook was a portal where you could interact with your close friends and family members without being disturbed. People identified themselves, found old friends, shared their experiences, and had fun. Then came the advertising, app requests, social media games, and Facebook ceased to be the warm, closed sharing environment and turned itself into a giant advertising portal with too much spam.
  • Adopting a big brother approach: Most of us hate change especially when the change is forced on us. Initially, Facebook would give you a choice on whether you wanted to select a specific change. The change would only be implemented if 30 percent of the user base voted for it. As Facebook grew bigger, it adopted the big brother approach and would force changes on the users, only because it could. Sharing our private information with advertisers and the Facebook timeline are two examples of such behavior, which could potentially damage the trust that users have with Facebook.
  • Increasing competition: In the last few years, competition has heated up in the social media world. Twitter, Google+, and LinkedIn have all caught up with Facebook. According to comScore data, twice as many Facebook members use at least one additional social networking site in 2012 as they did this time last year. Forty percent of Facebook users are on another social network, compared to 20 percent at this time last year (Fox, 2012).
  • Lack of mobile monetization: According to The Economist, Facebook has over 500 million mobile users but its apps still need work to make the transition from the PC to mobile (The Economist, 2012). The Facebook mobile site has little advertising and its revenue stream is vulnerable if significant traffic shifts from PCs to mobile.

With Facebook's ad revenues down in the first quarter and the stock price still languishing below its launch price, it's time for Facebook to define how it will continue to be relevant to its 900 million users and at the same time deliver to its stockholders.

Home page photo from Shutterstock.

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ABOUT THE AUTHOR

Mandeep Grover

Mandeep has over thirteen years experience of building brands with blue-chip organizations like Johnson & Johnson and Pfizer across FMCG & Medical Device categories. His latest assignment is to launch a newly acquired medical technology start-up business across Asia-Pacific.

Mandeep is a recognized expert in integrating emerging media to drive business results. In 2007, he led the launch of one of the first branded apps on Facebook. The app was a finalist at Cannes and won the highest recognition for marketing excellence in J&J. In 2009, he pioneered the launch of the first iPhone app in J&J, which was featured in the Sydney Morning Herald as an example of innovation.

Mandeep has spoken widely on social media, mobile marketing & multichannel marketing at conferences across Asia-Pacific. He writes regularly for ClickZ and has been a judge for the Australian Marketing Institute (AMI) Awards for Marketing Excellence.

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