Is Facebook losing momentum?

by Gareth Jones Marketing 26-Feb-08, 06:30

LONDON - Facebook has suffered its first decline in UK user numbers for 18 months, suggesting that the social networking craze has peaked before advertisers have had chance to cash in on consumer interest.

The web 2.0 site, which has enjoyed phenomenal growth since it first allowed non-university students to join in September 2006, experienced a 5% fall in unique UK users to 8.5m last month.

Facebook is the UK's most popular social networking site, ahead of MySpace and Bebo, which also experienced a decline in user numbers last month, down by 5% and 2% respectively, according to Nielsen//NetRatings.

However, the loss of 400,000 Facebook users in a single month gives the first significant indication that social networking is plateauing, causing concern among advertisers who have yet to capitalise on its popularity.

'It is difficult to determine which social networks will be a flash in the pan,' admitted Robin Auld, UK marketing director at Domino's Pizza. 'We are hoping that Facebook has long-term sustainability as a marketing tool.'

Brands including Adidas, Coca-Cola and Microsoft have signed up to the Facebook Ads platform, which enables marketers to build branded pages on the site.

Initially, demand was high, with marketers setting up more than 100,000 pages within 24 hours of its launch last November. But four months on, the site has fallen short of establishing itself as a mainstream media buy.

'Facebook has benefited from the "digital lemming" brands setting up sponsored groups for the sake of it,' said Mark Schultz, advertising manager at O2. 'Brands need to take a more intelligent approach to social networking.'

MySpace and Bebo have also been working to create opportunities for advertisers. The former is in talks with record labels about an ad-supported music download service, while Bebo has appointed Yahoo! to sell ads across its site.

Despite this, the Internet Advertising Bureau claims that social networks have yet to contribute significantly to the rise of online advertising in the UK.

With their growth apparently starting to slow, time could be running out for Facebook, MySpace and Bebo to convince advertisers to include social networking in their media plan.

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Comments

Jonathan Keane - 26/02/2008

The first drop in unique users for 18 months might just be a flash in the pan in itself. Far too early to assume this is start of the demise for social networking sites. Facebook itself is not just a fad I don't think, mainly because it offers something very useful to its users- being able to organise social lives through one platform. That is something that has much longevity potential. They also have very ambitious international expansion model for 2008 with and it's worldwide popularity will only grow and grow. Whilst UK growth might slow (after a ridiculously successful 18 months) I don't think advertisers need to panic just yet, there will be time to try and subtlety sell out facebook!

Nuts n Seeds - 26/02/2008

Facebook is built on customer acquisition by stealth. A 'friend' sends you an invite, and literally before you know what you've done, via a cunningly confusing interface you've given over colossal amounts of personal information and had invites to others sent out on your behalf. It's quite pernicious stuff, and it's how facebook have got so far so quickly. Users are realising this out. For every one who thinks it's brilliant (and there are quite a few of those) there are others who find Facebook intrusive, sly, badly put together and a bit tacky. Facebook won't die, but the honeymoon is over. It had to happen.