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Facebook growth over, onset of slow decline

The Facebook juggernaut has run out of steam in the U.S.  According to Nielsen Wire the unique visitors has settled in between 130M and 135M per month (lower than the ComScore data in the graph below) and time spent on Facebook each month continues to decline. 

What growth there is in the U.S. is with retirees and pre-teens with a net loss of users in the 20-something demographic - basically the early adopters of Facebook are bored with it and have moved on now that their Grandparents signed up.

If you have been on Facebook more than 1 year, do you spend more time on Facebook now than you did a year ago?  How often to you post to Facebook every month now compared to one year ago?  (If you are selling social media consulting and services keep in mind your answers are probably well outside the norm)

 

http://tommytoy.typepad.com/tommy-toy-pbt-consultin/2011/03/faceboo...

Views: 76

Tags: Facebook, decline, media, social

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Comment by Stan Bradbury on June 13, 2011 at 10:43am

Agreed as an ad platform with PPC model it works but over time with declining page views per person and more businesses chasing those people it may get tougher.  Plus the whole history of display advertising is that over time users tune out, click through rates plummet and rates drop (they better hit that IPO soon).

 

You are correct I am more talking about the industry of social media gurus who want you to devote time a resources into managing your Facebook page and collecting fans and the misconception that this is radically changing how dealerships communicate with their guests.  It's not.  Now that the Facebook novelty has worn off that value proposition is getting harder and harder to accept and the claims of 'don't worry about ROI - its about _____ (insert your favorite social media guru statement here)' rings more hollow.

Comment by Brad Kelly on June 13, 2011 at 9:56am

Good comment Ralph, I wish I had seen it before posting.

 

There are definitely two sides to Facebook, and I think the social side is what a lot of folks focus on when seeing Facebook as over-hyped for any business. I definitely find that to be true in many cases; much time can be spent with little return unless you really know what you're doing when it comes to cultivating online relationships.

 

It can be done, and I believe social networking can yield results, but it is very difficult to do "the right way."

Comment by Brad Kelly on June 13, 2011 at 9:45am

If there's one thing I've learned from investing, it's that past trends are not always indicative of future performance. While it's certainly valuable to keep an eye on trends, a month-to-month decline of 3.73% in US users is not terribly significant when you consider the sheer size of the user base that we're discussing. MySpace used to fluctuate by more than 10,000 users up or down in any given 15 second span with a much smaller user base.

That said, I think you allude to a very good point Stan, that dealers could lose focus with the time spent on Facebook. However, I think we may be talking about two different things. I sense that you are referring to the social, relationship-building side of Facebook.

While I find that to be valuable in doing business online, it is too easy to do wrong. When it is done wrong, too much time and effort will be sunk into a presence that doesn't deliver for the customer. That's a complete drain on resources.

 

What I'm referring to though, is Facebook purely as an advertising platform, one with an audience as large as Google's. The targeting capabilities of Facebook exceed those of Google AdWords and other advertising platforms. The ability to pre-qualify those who see your ads based on their demographics in real time is a very powerful tool.

 

If you're selling Buicks, you can make sure people under age 40 don't see your ad. If you're selling F-150s, why not direct an ad campaign only at people that have clicked "like" to a "ford trucks" page? This kind of ad targeting is difficult to accomplish without the massive amounts of data that Facebook has.

 

Facebook doesn't need to grow anymore to be attractive as an ad platform, it already has one of the largest audiences. It trades back and forth with Google as either the #1 or #2 most visited site on the internet consistently. It matters very little at that point whether that have 687 million active users globally or 693 million active users globally.

The difference is that while Google infers users' demographic data from their searches, Facebook knows their demographic data because they've willingly handed it over.

Comment by Ralph Paglia on June 13, 2011 at 9:28am

I do not necessarily disagree with Stan's assessment that Facebook is "extraordinarily over-hyped and dealers need to focus on the digital marketing that actually drives value." However, I definitely agree with Brad that Facebook represents a tremendous advertising opportunity for car dealers. My team runs PPC Facebook advertising for dozens of dealers and the ROI is higher than what we get for them from Google Search Advertising.  I would not want to give up or diminish the value of Google Search Ads, but the Facebook advertising is far easier to target specific groups of people with very defined interests using messages designed to appeal to those interests.  There is no doubt in my mind that ANY effective Digital Advertising strategy for car dealers should include a Facebook PPC Advertising campaign, tied with a Facebook page designed to promote the dealerships products and services, with links to the dealer's eCommerce sites and applications, such as a DealerCentric talking credit app...

 

So, is Facebook over-hyped? In my opinion that's a big YES! Does Facebook Advertising work for car dealers? I have the facts that prove the answer is YES!

Comment by Stan Bradbury on June 13, 2011 at 9:18am

It is about trends.  Facebook is on the wane.  The concept of same store sales is the most important in retail which is why things like Facebook and Groupon are in trouble.  If you look at the average customer lifecycle - high use up front, declining use over time, finally just tuning out all together - you see where things are headed.  They only keep the illusion of growth by adding more territories but over time they experience the same gradual decline.

Facebook is not changing the automotive industry or how to sell cars.  It is extraordinarily over-hyped and dealers need to focus on the digital marketing that actually drives value.

 

Comment by Brad Kelly on June 13, 2011 at 8:50am
So the marketable audience of US consumers on Facebook is 149.4 million instead of 155.2 million? Still sounds like an incredibly powerful ad platform to me.
Comment by Stan Bradbury on June 13, 2011 at 7:40am

More bad news for Facebook - lost 6M Users in the U.S. last month.  Average time spent on Facebook per user continues to fall month-over month as well as people are running out of boring things to tell their 'friends' and finding less valuable content from their friends.

 

http://www.insidefacebook.com/2011/06/12/facebook-sees-big-traffic-...

Comment by Brad Kelly on April 27, 2011 at 1:11pm

Facebook is the largest collection of consumer data ever compiled. The data-mining possibilities are mind-numbing. Facebook growth is slowing because it's beginning to approach a saturation level, where just about anyone that would use the serve is using the service.

 

Early adopters are not moving on, because there's no place for them to move on to. Facebook caused the decline of MySpace, and MySpace caused the decline of Friendster. Facebook has reached a dominance of the social networking space not unlike Microsoft's dominance of the PC operating system market that took hold in the early 90's. This makes Facebook very difficult to topple, even if a better solution comes along.

 

Smaller social networks like LinkedIn will continue to thrive because they serve a niche need. Networks like LinkedIn, however, are not mutually exclusive with Facebook, and people will maintain a presence on both.

 

Facebook's 2012 IPO will very likely be the biggest the markets have ever seen. It currently has a $60b valuation and is making money hand over fist. This contrasts them greatly with dot com IPOs from 12 years ago.

 

Facebook isn't going anywhere, and any dealer not utilizing it is seriously missing the boat.

 

 

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