Facebook Is Losing Teens

http://www.forbes.com/sites/kellyclay/2013/10/19/facebook-is-losing-teens-and-new-privacy-settings-wont-bring-them-back/

by kellyhclay • 13 years ago

104 91 13 years ago

forbes.com

cookiecaper4• 13 years ago

As the article stated, it's difficult to overcome the "grandma factor" -- once something becomes so pervasive as to be near-universal, even among persons unlikely to be clued in, its cool factor is diminished if not completely obliterated.

Some groups actively crave differentiation, and teenagers seeking to assert their independence are prominent among them. It can be difficult to express and explore in the way teenagers seek when you know all your grandparents, great grandparents, uncles, aunts, great uncles, great aunts, cousins, second cousins, etc. will be reading, as they surely will when you post on Facebook.

argonaut3• 13 years ago

As a 19 year old, I will say that from my perspective, this "coolness" factor is seriously overblown and misunderstood. Facebook was never "cool," even when I first got Facebook back in 9th grade, when I was around 14 years old. Facebook was always a highly addictive and vital necessity - a social utility, the lack of which meant losing touch with friends, not being invited to events, and generally missing out on a large amount of social interaction. It was never cool and I never saw how coolness or differentiation had anything to do with it.

Likewise, Snapchat is not "cool." Snapchat is pretty maisntream now (among my peers). It's popular because it's fun. All my peers use Snapchat as picture messaging for frivolous photos you wouldn't put on Facebook/Instagram.

psbp2• 13 years ago

Facebook was very cool ~2006-2007, when I was a teen.

I think, like anything popular with teens, these services lose novelty fast.

sliverstorm• 13 years ago

Facebook was very cool, right before it was open to the public.

snogglethorpe• 13 years ago

Facebook was never "cool," even when I first got Facebook back in 9th grade, when I was around 14 years old

At the time Facebook was cool, it wasn't open to 14 year olds...

chetanahuja• 13 years ago

"a social utility, the lack of which meant losing touch with friends, not being invited to events, and generally missing out on a large amount of social interaction"

And according to the article (and my own, admittedly limited, survey of teens and "tweens" I know), that utility value doesn't exist anymore. Now, you could argue that the thing they are moving to is also facebook under a different name (instagram)... but I suspect it would be just as ephemeral as a "required" social network as the facebook itself has proven to be.

ea777• 13 years ago

The thing I find interesting about referring to Facebook as a social utility is how different that angle is than just being "social" and that's it.

Instagram (and others) may be more "cool" at this point than Facebook, but they absolutely do not provide the same level of usefulness. Private messages, events with invitations, groups, the level of organization for photos, etc all together in one place connected to everyone you care about is indeed "useful." It's just straight up inefficient to organize events and share specific information on Instagram, Twitter or like services. It's because of this I feel they will continue to thrive, as teens will still use them for the "utility" and other services for the new, trendy social interactions.

gohrt2• 13 years ago

"Coolness" can be handled by branding/skinning and merge/acquisition. When Instagram was cooler than Facebook Photos, Facebook merged/acquired.

specialist• 13 years ago

A social networking site loses its appeal when those ex-coworkers you don't like start "friending" you.

joelrunyon2• 13 years ago

Karp wrote that all of her friends are using Instagram and Snapchat,

Well...Instagram is owned by facebook so there's that...

cookiecaper4• 13 years ago

As of only fairly recently, and it can still be a problem for the Facebook brand even if the same conglomerate owns both units.

joelrunyon2• 13 years ago

Not if you think of facebook like a company & facebook.com & instagram.com as services of the company with many more like it on the way.

treelovinhippie• 13 years ago

Didn't Zuck say recently that the actual numbers weren't concerning, and that they're aware they are past the "cool" stage and instead want to move on to become the social fabric of the Internet, much like a utility.

psbp2• 13 years ago

This would make sense if they actually offered much utility. Even Google+ has them beat when it comes to compelling features.

Myrmornis2• 13 years ago

Err, what? If I closed my facebook account I would lose virtually all contact I have with every friend I have made other than the person I live with and a few people who live near me and my family. How the hell is that not utility?

Geee• 13 years ago

Aren't Instagram and Snapchat completely different products? Of course, these compete on the 'share of time' of the users, in which case everything teens do is competing with Facebook.

tantalor4• 13 years ago

No, Facebook, Instagram, and Shapchat all do the same thing: photo & videos sharing.

So do Twitter, Tumblr, reddit, MySpace, Google+, blogs, etc.

wavesounds2• 13 years ago

Facebooks is priced at 240X Price to Earnings. If they start losing users or even stop growing its hard to imagine how that PE ratio continues to makes any sense. Even with an increase in mobile revenue its still less then desktop revenue and users are certainly flocking to mobile too which is a double wammy. So facebook has to transition to making more money per user if its user base stops growing. Otherwise you're going to have people really questioning the price of the stock which could end up effecting the whole industry.

InclinedPlane2• 13 years ago

The only way that valuation made sense is if facebook managed to capture an enormous fraction of all worldwide ad revenue. That always seemed extremely unlikely to me.

MichaelApproved• 13 years ago

OP is only giving half the story. FB earnings are, in a sense, artificially low. They are dumping money into expanding and growing. FB wants good earnings but, right now, that's not as important as growing users and use. Of course there will always be money spent on growth but to what extent. When they go from dumping money into growth, P/E will be more meaningful in the typical sense.

gohrt2• 13 years ago

I don't know Facebook's details, but in theory another possibility to lower P/E: "Stop pouring money into expansion, to lower expenses and increase bottom-line earnings."

For example, Amazon could certainly do that, since they spend heavily on expansion

logn• 13 years ago

But the flip side is, as soon as they stop investing in expansion, the market will immediately start to wonder if their P/E is justified and might cause a decline in price. The signal from the market to Facebook now is that the shareholders want to invest in growth. And given FB's dominance, size, and talent, it's hard to argue otherwise. Facebook could still change a lot, and I think we're only seeing the beginning of social sharing/search/commerce/media into our lives.

fauigerzigerk2• 13 years ago

That is an important aspect, but let's consider the P/S (price/sales) ratio to gauge that savings potential:

Facebook: 22.3

Google: 5.9

Amazon: 2.3

(source: money.msn.com)

Of course, comparing to Amazon doesn't make sense. Retailers are always going to have very low margins and low P/S ratios. But comparing to Google does make sense. Assuming Facebook's potential margins are similar to Google's, Facebook would have to have incredible sales growth or incredible cost cutting in order to lower their P/E significantly.

I think it may be possible for Facebook to achieve that goal. People will put up with incredible levels of spam and harrassment in exchange for not losing "friends". So they might be able sell four times as many ads as they do now and cut costs dramatically on top of it.

tantalor4• 13 years ago

[citation needed]

jamesaguilar2• 13 years ago

Normally you use this when there is a fact in dispute (on Reddit, not here). There are no facts in question in the comment you're responding to. There are arguments you may disagree with, but you don't need a citation to make an argument.

Silhouette3• 13 years ago

Facebooks is priced at 240X Price to Earnings. If they start losing users or even stop growing its hard to imagine how that PE ratio continues to makes any sense.

Does a 240x P/E ever make sense? Maybe if you just patented a fix for global warming or a cure for a common cancer or something of that sort of magnitude, but for a non-essential technology company?

I know only a few very successful investors, both professional and private, and I've often asked them how they do it. Almost invariably, the answer is that they do their homework, use common sense, and play the long game rather than trying to beat the short-term markets. A recurring theme on the common sense score is that they have a personal threshold for P/E above which they will just walk away. None of these people I know would invest at 24x, other than under exceptional circumstances. At 240x, they'd be seriously considering shorting the stock.

In Facebook's case, the maths is disturbing: to justify a 240 P/E objectively, they need to double revenues year-on-year for about 7 years just to break even. Unfortunately, in less than 3 of those years, they've run out of people in the world they can sign up to advertise to, so even if they could sign up everyone in the entire world they would still need to figure out how to make about 20x as much money per user depending on how you count inflation.

Of course there is an argument that Facebook's P/E is artificially low because growth and mobile and stuff, but if you're spending 95% of your revenues just to keep things going and attract new users, and the idealised global market for your service is less than 7x your current user base, that still looks like you're doing it wrong from here.

I am genuinely curious here: Can anyone suggest a sound reason why they would buy into Facebook at the current price, other than as a speculative short-term investment? Put another way, is anything keeping FB's stock price up other than a bubble effect?

cookiecaper4• 13 years ago

At 240x, they'd be seriously considering shorting the stock.

I have associates involved in the management of a hedge fund, and they inform me that shorts are so highly demanded for the web IPOs of 2011 and 2012 that they've actually had trouble getting them.

Most professional investors aren't buying the hype this time around, I think. Even Facebook's IPO last year vastly underperformed. The consequences of the inevitable fold of Facebook will be very interesting.

ajiang• 13 years ago

So it is misleading to make conclusions from a PE ratio at any given time, simply because earnings for any particular quarter or even year is very situational. If for perfectly legitimate reasons (say to fuel growth) my earnings this quarter are $1, then my P/E ratio might be astronomical. In the context of pro-forma financials, taking out one time costs and special events, my P/E ratio is more telling. Amazon is a great example of this. There are quarters where AMZN has negative earnings. Does that mean that Amazon is overvalued? Not necessarily. Dig a bit deeper, take out things like acquisitions and restructuring costs for example, take earnings over time and that will give you a much stronger case to make a decision on valuation.

yeukhon2• 13 years ago

Teens are attracted to Twitter, Instagram and Vine. They like these mini social network where they could gain followers by posing interesting tweets or photos or videos.

Youtube's top celerity usually started their channels when they were teen (high school, freshman). Certainly getting your channel popular now is harder, so the best way to get attention is either by posting photos or posting a 6-second videos.

Vine and Instavideos took the spike. Kids are spending more time watching videos and looking at photos than reading statuses.

Ironically, IMO, Vine and instavideos took off partly because people could publish to FB and Twitter. I spend most of my FB time either reading memes or vine videos. i don't pay much attention to status anymore.

XorNot3• 13 years ago

Vines is going to crash hard suddenly IMO. At it's core it's just not versatile enough for anyone to actually try and become "popular" from Vines videos - what you do their, you can do on YouTube as well, but with more versatility. You can't do much with 5 second videos as a limit - but the 5 second movie/10 second movie etc. was a format that people were using on YouTube well before Vines.

yeukhon2• 13 years ago

Maybe. I think there is a value running a 5-10 seconds show. It's supposed to be funny, capturing attention. Youtube to me and possibly to many people is formal, it's a website you go to for a full talk. You would watch a 5 minutes show instead. This is why you don't blog on twitter. You write status and you chat and that's "blog" for some people.

Since vine is a twitter company, I am sure twitter is trying to monetize it.

laichzeit0• 13 years ago

I noticed this as well. Personally I feel that twitter/instagram/vine is more informal and disposable. Facebook and its albums, status, friend lists, etc., it's all so formal to the point of being old-fashioned.

It feels like the current zeitgeist is not to give a crap about anything older than a few hours. Instagram feels like it's only about about making "now" look cool, hash-tagging it and then forgetting about it. Vine gives you a few seconds of entertainment, about the threshold at when boredom kicks in.

Honestly about 99.999% of the time I never re-read a tweet, look at the same instagram or vine. It's disposable social media. Facebook feels like the exact opposite.

FkZ2• 13 years ago

I think that's probably a large reason along with two others:

They're more content focused. Twitter is about what people write, Instagram is about the pictures people take. Facebook is about... the network? Facebook is more muddled, and clarity is valued today.

Asymmetry. Yes, I know you can "like" things and get updates and you can join groups, but ultimately the relationship between two users on Facebook has to be agreed to by both.

klipt• 13 years ago

It's disposable social media.

Or so they think ... until one of those kids grows up, runs for office, and the press digs through their twitter archive to dig up evidence of teenage bad decisions.

ktd• 13 years ago

I suppose the coming months/years will be when we see whether Facebook becomes the "backbone of the social Internet" or just another MySpace. I honestly don't know where the smart money is here-- it's an exciting time!

tantalor4• 13 years ago

This inevitability is an assumption of Facebook's strategy (see Zuckerberg's Letter), and the reason they bought Instagram.

My suspicion is that teenagers will engage Facebook as they become adults and the social pressures shift.

hawkharris2• 13 years ago

As more teenagers gravitate toward online social networks (if not Facebook, then Instagram, etc.), I'm concerned that not enough of them will feel lonely.

I recently watched a Louis C.K. interview about young people and technology, which struck a chord with me. I agree that adolescents benefit from a sense of boredom and isolation because it encourages them to cultivate stronger in-person social networks:

http://teamcoco.com/video/louis-ck-springsteen-cell-phone

gonehome• 13 years ago

I wouldn't worry about facebook preventing people from feeling lonely - it doesn't really solve that problem.

If anything facebook allows you to more easily cultivate in person social networks by making preliminary communication much easier.

vdaniuk7• 13 years ago

I am flabbergasted. Adolescents benefit from isolation? And you're citing a comedian? Care to cite some serious sources?

dwaltrip• 13 years ago

What the parent comment is trying to get at is that many people today do not know how to sit quietly alone with their thoughts. If they have a single spare moment, in less than half a second they whip out their phones and mindlessly check fb, etc. Due to this, they are less pensive and self reflective. While hard to test, it seems like a reasonable theory.

hawkharris2• 13 years ago

I presented my concern as a matter of opinion. I never asserted that it was a scientific fact.

If you would like to take the conversation in a more scientific direction, you're welcome to introduce studies.

libovness• 13 years ago

There are really two hypotheses:

1) _Teenagers in general_ do not use Facebook (which does _not_ rule out that they will become avid Facebook users once they grow out of their teenage years)

2) _Today's teenagers_ disinterest in Facebook is fundamentally different than it was for teenagers' of several years ago (which would suggest they'll never get attached to Facebook the way previous teenagers once did, and therefore never become avid Facebook users).

The 10-K report suggests #2 ("younger users were less engaged with the social network than previously") but my hunch is that it's more like #1 (I argued this here: http://whoo.ps/2013/03/04/teens-go-where-identity-isnt).

Teenagers now have more social networking options (Instagram, Snapchat, etc.) to choose from than previous generations of teenagers - which explains why today's teenagers are less engaged with Facebook than previously - but that doesn't mean they won't want/need the kind of canonical identity that Facebook provides (once that awkward, impressionable teenager actually grows into an adult with a firmer identify).

6d0debc071• 13 years ago

However, teenagers have made it clear with their quick adoption of social networks such as Instagram and Snapchat they want to share everything and with as many people as possible.

Alternative explanation - teens want to share ephemerally and with a certain degree of anonymity. They don't want their parents looking over their shoulder at their friends or conversations, and seek to avoid entanglement with sections of their social network that are going to bully them or have a significantly lasting effect tied to a persistent searchable identity.

FkZ2• 13 years ago

The lack of anonymity and pseudonymity on Facebook is definitely a factor. Facebook works under the assumption that we have one unified "identity" to which we can and want to tie everything we do. In reality, we share different parts of ourselves with different people at different times.

smoyer2• 13 years ago

MySpace is laughing ... not maliciously but because they now understand that teens are a migratory species. You can't expect them to stay anywhere.

ISL• 13 years ago

If only Facebook had a product like Instagram, perhaps they could use it as a gateway drug...

tonydiv• 13 years ago

For those referring to the social utility of Facebook, I recommend hiding your news feed. The newsfeed is not a social utility, whereas messages, profiles, looking up mutual friends, etc. IS a social utility. Here's how to hide your newsfeed without affecting your experience on the rest of the site:

https://medium.com/productivity-efficiency/631ed8f466e1

Basically, this trick uses a Chrome extension that hides the newsfeed using custom CSS.

VLM3• 13 years ago

At the peak of the CB "bubble" around 1978, roughly 10% of all cars had a CB radio installed in them as a lower bound, although claims were it was higher, like 15% to 20%.

That percentage has dropped somewhat since then...

There is no particular reason to assume the peaking and decline of a socializing technology must result in its similar competitors growth in a nearly identical field. It could be home video conferencing or terminals built into vehicle seatbacks or far more likely, something we can't imagine at this time.

And no, for you youngsters, the smartphone was not the social technology replacement for CB, for basically all of the 80s and a substantial part of the 90s average people simply completely stopped technologically socializing in their cars. I see no reason to prevent future people from simply not socializing via handheld devices.

That doesn't mean the death of the industry, truck drivers still have CBs, but your grandpa probably does not (not since Carter was president, anyway)

The industry can only make money on the up slope, but investors and innovators can make money on both up and down slopes. Might be time to start thinking of money making schemes for the down slope.

rietta• 13 years ago

I never played with CB other than low power walkie talkies from radio shack. I did get into amateur radio in 2003 and do have a radio that can be mounted in the car. There seems to be quite a lot of activity on the air where I live. It's still a fun hobby in 2013 and is a nice break from the daily grind of the internet startup scene. It's funny how different various subcultures are - even among technical people.

VLM3• 13 years ago

Even just within ham radio the subcultures are pretty wide, there's the HF guys, the digital mode guys, the contesters, the microwave builder/experimenters, the public service volunteer guys, the dxpedition ops, the antenna system designers, the satellite/moonbounce ops... The good news is it only takes several decades experience (and $$$$$$) to try everything by which time someone's gone and invented something new.

shadesandcolour• 13 years ago

I don't even think that the reason is "Facebook isn't cool anymore". Facebook is just annoying at this point. When Facebook was for your friends from college and/or high school, things were great. You could post embarrassing things that people did, inside jokes, whatever. Now your mom is on Facebook. your grandma is on Facebook, and so is your boss. Yes you can stop them from seeing everything you post or everything your friends post, but no one knows that. There's probably a 50/50 chance that if I were to post something funny and slightly embarrassing on a friends wall, BAM, there's their grandma who is a tad bit confused. Then of course your friends grow up and all they post is baby pictures.

Teenagers, who are looking to keep things private between them and their friends, can't have their mom popping up on their Facebook pages all the time.

xdd• 13 years ago

Facebook was cool until weaponized.

moinnadeem• 13 years ago

As a teenager, Twitter is what everyone is using currently. Don't complicate it, teens just want to be on what their friends are on, and their parents are not on.

Twitter just fits the need.

ta_24278• 13 years ago

They've been losing teens for a while now, and once you start losing teens, a so-called "social networking" website is dead, it doesn't know it yet because the agony may take a while.

Due to its unusual size for facebook it might take a longer while, but it's on the path to irrelevance that many others have walked before: friendster, myspace, msn, etc.

it's funy that the 10-13 years demographics adoption will make or kill an online website.

Facebook Is Losing Teens

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