Worrisome trends continue to emerge for the world’s largest social media company Facebook Inc. (FB) in terms of retaining its users and their interest on the online platform. Citing data from Nielsen's digital content ratings solution, Brian Wieser, a senior analyst at Pivotal Research Group, said in a research note that the amount of time people spend on the company's main social network has declined by around 7 percent over the last year, according to Business Insider (BI).
Pivotal's analysis finds that though users’ engagement with Facebook’s other property Instagram has increased considerably, its relatively small user base does not make up for the loss of Facebook’s primary service. Instagram users spent 38 percent more time on the photo sharing platform compared to the previous year. Instagram's user base grew 15 percent this year, compared to the 3.5 percent growth observed for Facebook users. (See also, Without Facebook, Instagram Valued at $100 Billion.)
Wieser, who specializes in covering the Advertising/Media/Internet segment at Pivotal, said in his research note "Overall, including Facebook, Messenger, Instagram and WhatsApp, Facebook's share of digital consumption was at 15.2% vs. 16.9% in the year-ago period." The decline is not a recent trend. He further suggests that Facebook’s share of digital content consumption across all its apps has declined to around 15 percent from around 20 percent over the past two years.
However, the silver lining is that despite the declining share in content consumption, Facebook can still expect to garner nearly 23 percent of U.S. digital advertisement revenue this year, predicts Wieser. "To the extent that Facebook continues to hold a share of consumption at around 15%, it implies Facebook is over-monetizing vs. the industry to a significant degree," Wieser said.
Facebook’s Loss is Competitors' Gain
Alphabet Inc.'s (GOOGL) Google has emerged as the biggest beneficiary of this decline. The dominant search engine company has managed to increase its share from 25 percent two years ago to around 35 percent by July 2018, primarily attributed to its YouTube video streaming service. (See also, How YouTube Makes Money Off Videos.)
Facebook continues to struggle with the ongoing probes around data breach scandals on its platform like the Cambridge Analytica and the Russian fake news campaigns that allegedly meddled in the U.S. elections.
The findings add to the list of similar reports published in recent times highlighting the challenges faced by the Menlo Park, California-based company. In June, a Pew Research survey cited that Facebook is rapidly losing the younger audience to rivals like Snapchat, and last week a report saw a quarter of Americans deleting the Facebook app from their smartphones. BI also cites another recent independent study by Common Sense Media which claims that “only 15 percent of those ages 13 to 17 said their ‘go-to social site’ was Facebook, down from 68% in 2012.” (See also, Aging Facebook Losing Teens: Pew Research Survey.)