Should the exodus of teenagers from Facebook be a concerning trend for investors and stakeholders banking on the viability of the social network’s target advertising system?
Facebook is losing teenagers by the millions.
iStrategyLabs’ 2014 Facebook Demographic Report, indicates that the social network has lost 3 million teenage users in three years, or a decline of 25.3 percent from this lucrative demographic, since 2011. In contrast, users above 55 years of age are on a steady growth path, with an 80.4 percent growth over in the same period.
This might spell trouble for the social network, which gets a big part of its revenue and market valuation from its targeted advertising system. The teenage demographic is reportedly among the most lucrative for advertisers because they are more easily influenced in terms of their tastes and preferences in brands and products. This demographic is also expected to become the big spenders in the near future.
In an analyst call late 2013, Facebook CFO David Ebersman admitted some concern over this trend. “We did see a decrease in [teenage] daily users [during the quarter], especially younger teens,” he said. However, Facebook is still confident in the loyalty of this demographic. Addressing the concern that teenagers are flocking to other social networking and communication services, COO Sheryl Sandberg said earlier that this was a matter of utility — people tend to switch services depending on what they need these for.
The analysis can be interpreted differently, however. For instance, iStrategyLabs compared the number of teenage users from 2011 with the 2014 figure. It could be that most of the users aged 13-17 at that time have now grown up to join the 18-24 demographic. But that particular age group also lost users, but at a lower rate.
The statistic on educational attainment might also be cause for concern. The numbers report a drop in high school and college users (58.9 percent and 59.1 percent, respectively), while college alumni use has risen.
The shift in demographics could have a trickle effect in the ability of Facebook to attract the younger set. When it first launched, Facebook was targeted at college students, and the use of social networking sites was deemed to be the cool and trendy thing to do. Now, with Facebook being dominated by an older demographic, users may be looking for alternative services that offer an edge.
For instance, Snapchat, with its disappearing photos and texts, has been deemed an ideal “sexting” app, as it reduces the likelihood of the content being inadvertently accessed by unintended recipients. The increased familiarity of Facebook among parents, teachers and even grandparents might also be a turn-off for teenagers, who would usually prefer interacting within their own age group.
Facebook’s effectiveness as an advertising platform might not simply be limited to its ability to reach a younger demographic, but rather its access to user data and preferences, plus the ability to target advertising to users who will most likely be responsive to the campaigns.
Perhaps this is why Facebook had been adamant at acquiring Snacpchat, or at least running a similar service that attracts teens and younger users.