Will Facebook Crash? Or, Will They Win in the Alternate Verse?
After changing their name to Meta, Facebook’s entry into 2022 wasn’t exciting at all. Meta faced the biggest ever stock market loss after their Q4 announcement.
There are quite a few reasons for it – their Metaverse projections did not go as planned, Apple’s privacy changes reduced Facebook’s ad revenue, and almost all their products fell short of meeting the projected targets.
But the most stunning trend was that for the first time in its history Facebook’s Daily Active User (DAU) growth went negative. ?
If you look at this graph from Statista, you will see how Facebook’s usage has been rising steadily from Q1 of 2011 to Q3 of 2021. Facebook has never stagnated.
Until Q4 of 2021.
In Q3' 2021 the average Daily Active User count on Facebook was 1.93 billion. In Q4 it came down to 1.929 billion users. Going by their past trend they should have at least added another 30 million active users in Q4. Instead, they went down by a million users.
Is This Even Significant for Facebook?
You might bemoan or celebrate Facebook’s loss, but to analyze it you must first let these numbers sink in.
World’s population right now is 7.9 billion people. And Facebook’s Daily Active User count touched 1.93 billion by end of September in 2021.
Now, if we don’t bother about decimal precision of 10 million in a Billion, then on average every fourth person in the world is using Facebook daily.
See it like this, if you have 3 people around you, then one of you will be on Facebook at least once today.
And it gets even better. Facebook gets 2.89 billion active users in a month. That means approximately 40% of the world's population uses Facebook in a month.
If that be the case, is 30 million such a significant number for Facebook?
From the investor’s perspective, yes. Facebook knew back in Q3, that their growth will be hit. Maybe, that is why they rushed with their Meta & Metaverse announcement in October.
But why has Facebook’s usage growth stagnated?
Besides the regular no-there-is-nothing-really-wrong reasons shared by their CEO, I think there is an underlying trend at play here.
1. No More Room for Growth
Challenges for Facebook are not the same as for the rest of the world.
They might just be hitting a social networking limit.
Realize that none of the other social media platforms have one-fourth of the world population using their services in a day. This means while for other social networks there is plenty of room to grow, for Facebook it is all getting crammed. The faster they grow the slower will be their further growth possibility. ?
Look at it another way, if you have not created a TikTok account yet, you might be tempted to do so in the future. This means there is plenty of room for TikTok to grow.
But if you have not created a Facebook account for all these years, it is less likely that you will do it now or in the future.
You may argue, how about kids who are not yet on Facebook? Wouldn’t they be of age in a few years and add to Facebook’s user base.
That leads me to the next point.
2. Facebook is Not That Exciting Anymore
This is the reason why youngsters might never join Facebook. It is way too mainstream.
Remember how Facebook was all rage in its early days among college students and young professionals. Getting back in touch with friends was exciting back then.
Facebook grew very fast. Everybody loved Facebook. After the movie Social Network, Mark Zuckerberg had almost become an icon.
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Back then parents would counsel their kids not to be on Facebook. But now even those parents have their accounts on Facebook. Facebook is saturated.
Today, youngsters prefer to spend more time on TikTok than on Facebook.
Rather, they might not even consider Facebook as an option.
I am not saying Facebook is irrelevant. I am saying this is where growth for Facebook will continue to stagnate.
And then there is this…
3. Growth is Mostly Psychological
A social media platform’s growth is psychological after a point.
If you are bored of Facebook, you can spend more time on TikTok or if you want to network with professionals, you have LinkedIn. On the side, you can continue to blabber your political views on Twitter.
So, if you decide not to be on Facebook for the next 3 months, because you are having all the fun elsewhere, Facebook’s DAU average will drop.
4. Facebook Killed Organic
This is one of those things where Facebook spoiled its party.
Growth factor of Facebook and Twitter after 2011 coincided with build-up of political polarities across the globe.
Everybody was having a great time expressing their free thought in the free networked world only to realize later that Facebook had sold us all to Cambridge Analytica. Facebook continued to gather bad rap after that.
I think after this debacle, Facebook shackled itself in a wrong way. It killed organic.
So How are they Going to Fix it Now
Meta is now investing in Instagram Reels and Metaverse.
Metaverse is a risky bet. If it clicks, the social network story will swing in favor of Facebook all over again. But, with the kind of spending Meta has done on Metaverse, if the gamble fails, it could be an end of them.
So, to cover the risks, from this January Meta has decided to throw all their weight behind short videos - Instagram Reels.
You can read Zuckerberg's write-up on Facebook. He has minced no words in his announcement.
Fun Fact: Did you know Meta had started a TikTok clone called Lasso in 2018? They were able to garner only 80K active users in Android (not so exciting a number for a social network). The experiment was shut down in 2020.
It is clear Meta is pushing Instagram reels.
For Facebook, odds are hanging on future of Metaverse.
More Questions & Conclusion
What do you think, will Facebook eat the world? Or will their growth plateau? Will Metaverse be a hit?
For one, Meta’s Metaverse has the potential to change the face of marketing forever. If Facebook triumphs in this gamble, advertisers will flood it with their Cryptos. But if it fails, all the faces will be wiped from Meta’s book.
I am sure, like Dr. Strange, Meta’s AI algorithms are digging into all the million choices that they can make in the future to beat the odds against them.
For now, in this Universe, everybody knows TikTok is having the winning streak.