Analysis: Has the Facebook bubble burst?

At the beginning of February, Facebook’s parent company Meta’s share price tumbled by more than 20% after it revealed it had lost users for the first time in its history.

The platform, which shaped social media for large sections of today’s youth, saw its active users fall from 1.930 billion to 1.929 billion.

While a loss of 1 million users may not seem like a big deal in the grand scheme of things, the bigger picture could be more concerning for Mark Zuckerberg amid his plans to take social media into the metaverse. Has the bubble finally burst for Facebook?

When news of the fall in users first emerged, Meta blamed Apple’s privacy changes for the decline, which made it more difficult for brands to measure ads on Facebook and Instagram.

However, social media rivals Twitter and TikTok both managed to dodge the privacy changes with Twitter unveiling a better-than-expected 22% sales in the fourth quarter of 2021. This would imply that falling users is a Facebook-specific issue.

A study conducted by Charged also found that 45% of people said that they had lost interest in Facebook, with a further 41% saying that they still used it, however not as much as they once did.

Just 14% of those surveyed admitted to still using the platform as much as they used to.

The numbers point towards a fall in interest in Facebook amid the rising popularity of short-form video content which has been popularised on Chinese social media platform TikTok.

Murray Dare Marketing Consultancy content manager Emma-Jane Stogdon believes that Facebook’s small decline in users mask a much bigger problem.

“Facebook is dying. It used to be the place where companies could guarantee getting their service or product in front of an interested audience with a great ROI,” she tells Charged.

Why is Facebook losing interest?

TikTok’s well-curated algorithm has taken the social media world by storm and shifted attention away from written content and further towards video.

Around 885 million people watch or make videos on the app. This works out at approximately 15.9% of the worldwide population of people over 18.

It was also the most downloaded app of 2021, with 656 million downloads, according to Hootsuite.

The new form of content has become so popular that Meta has tried to cash in on the growing trend by copying TikTok’s short-form video strategy with its Reels, which it has rolled out and tried to grow on both Facebook and Instagram.

However, Stogdon believes that Facebook has itself to blame for its decline in users and not the rise of other platforms or forms of content.

“The Cambridge Analytica scandal and the increase in fake news has made it an echo chamber platform, with little room for new trends or innovation,” she says.

“Incendiary posts, click-bait headlines and inflammatory content intended to cause outrage or stir up a strong emotive response are rewarded the highest engagement.

“In addition, the huge socio-political divide caused by Brexit in the UK and the influx of fake news during elections in the US have made Facebook an antagonistic, argumentative environment.”

Reasons for the decline

The news of the decline comes at a bad time given Mark Zuckerberg’s goal to take social media into virtual reality with his metaverse vision. To make this plan a reality, he is trying to convince investors that his company is still the hottest prospect in social media.

But the figures do not back him up as Facebook‘s primary demographic is now those aged from 35-44, which implies that the younger generation is moving on from the platform.

However, Digital Natives strategy director Daniel Lee doesn’t think the Facebook bubble has burst and believes that retailers can still take advantage of the platform’s audience, declining or not.

“In my opinion, the Facebook bubble has matured, rather than burst. It still has the largest reach, but the media spend required to take advantage of this audience suggests that other platforms may be better to utilise,” he says.

Lee explains that his company picks its media strategically dependent on its client’s objective and insists that Facebook is still relevant.

“If brands want to take advantage of the platform’s audience mindsets to supercharge relevance through local community groups such as Facebook marketplace then Facebook is still a highly viable option and I doubt is going anywhere fast.”

Is the situation as bad as it seems?

There is clearly an issue to address for Meta but just how big an issue it is will not be revealed until its next quarterly results are released where it reveals how many people are still using the site.

But social media consultancy company BizPix’s chief executive Jordan Gilmour thinks that there is no reason to panic yet.

He says: “There may not be a bursting but there is a gradual deflation occurring.

“Facebook has enjoyed being the dominant force for over a decade. But as consumers become savvier about what they want from social media and competitors offer different experiences, younger users are drifting away from the platform.

“Yet the core of what Facebook tapped into isn’t going anywhere, it is simply morphing, becoming a part of something greater instead of being the flagship product.” Gilmour said.

Until Zuckerberg manages to make his metaverse vision come true, he is likely to see a fluctuating stock price as investors weigh up the declining user base with the potential of the next big thing in social media – virtual reality.

Currently the buzz around the metaverse is serving as PR for the company as none of its virtual reality products have yet to hit the mainstream. This is despite the company’s reinvention to Meta and the teasing of products such as Horizon Workrooms, its VR answer to Zoom calls.

“The Metaverse is Facebook’s attempt to shake off some of the [negative] public perception that’s developed around itself and turn Facebook into a key part of an all-encompassing platform, Gilmour added.

“This is to help ensure users stay within Meta’s ecosystem but more importantly that their activity and data stays within that ecosystem.”

Fishing social media brand, Fishbrain’s (which is backed by Facebook co-founder Eduardo Saverin) CEO Johan Attby believes that Meta may still have a huge part to play in the ever-changing social media sector and that the metaverse could hold the key: “Ultimately, it comes down to the users. In the last five years, we have seen a radical shift in the expectations and values of online communities. Simply connecting people is not enough anymore.

“Today, users want to be part of transparent platforms, which empower them to create content and succeed. Gone are the days when users would patiently wait for new features and updates. Similarly, the proliferation of social networking platforms has meant that users can be pickier than ever and, in order to survive, platforms must be multifunctional.”

From a commercial perspective, Facebook still has a lot to offer and online advertising plays a huge role for the business.

According to Hootsuite, users spend an average of 19.6 hours a month on Facebook, which is second only to YouTube’s 23.7 hours a month and notably more than Instagram’s 11.2 hours per month.

This means that Facebook is still able to retain a huge proportion of social media users and keep them in the Meta ecosystem, an important figure for advertisers.

Also, Facebook’s potential advertising reach is 2.11 billion people, which works out at more than a third (approximately 34.1%) of the global population, providing huge commercial possibilities for brands worldwide.

While Facebook may not be the ‘coolest’ social media platform in the eyes of the younger demographic, a huge proportion of people still use it.

However the metaverse and its launch will ultimately be make or break for Zuckerberg’s company. Succeed in captivating the youth of today again and the internet will once more change forever. Fail and Facebook could end up buried in the same graveyard as MySpace.

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