Facebook in decline? It’s a matter of trust

June 22, 2011

The trouble with urban myths is they have a habit of gaining credibility if enough people retweet them. No, not the one about Jemima Khan and Jeremy Clarkson. This one is practically cosmic in its significance. Facebook, they say, is perched on the edge of vertiginous decline and will never make the 1 billion users its avid investors are banking on for an IPO.

The rumour appears to have begun with a plausible article, whose headline says nearly everything you need to know: ‘Facebook sees big traffic drops in US and Canada as it nears 700 million users worldwide’. I don’t want to become entwined in a discussion which has all the nit-picking allure of a symposium on the Arian heresy conducted by the early Roman Catholic church. So I won’t. The gist is that Facebook’s tsunami-like growth in developing countries conceals an actual audience decline of 6 million people in the USA during the month of May.

So far as the statistics are concerned, they seem to have been robustly rebutted by Henry Blodgett over at Business Insider. His distilled point is that the so-called decline ignores mobile use, which in fact increases steeply as high school kids and students pack up for the long vacation. So investors and advertisers can relax. There’s no decline at all, just a bit of a hiccup.

Whatever, it’s started people thinking – and many of these people seem to be older-profile Facebook users. A poll conducted by OnePoll among 1300 UK users for Marketing magazine reveals that a majority of over-45 year olds are considering exiting from Facebook. Youngers ones aren’t that chuffed either – more than a third said they had thought of quitting recently.

This may indeed illustrate Facebook fatigue, but more likely reflects growing alarm about Facebook’s perceived abuse of privacy (58% said they were unhappy about Facebook’s use of personal information).

Either way, Facebook should be concerned (although it says it is not). Forget the statistics. What matters here is engagement. As growth inevitably slows in the more advanced economies such as the USA and Britain, so Facebook will have to expend more effort on creating greater dwell time, by launching new and more useful tools. Alas, these tools come at a certain cost, if they are to be of use to advertisers – they involve ever-more sophisticated manipulation of personal information.

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