Trading places
Facebook is losing ground to its younger sibling Instagram, especially among a younger audience, writes Robert McGovern
Facebook might be the undisputed king of social media when it comes to the scale of its digital advertising machine, but for how long? It’s a well-worn trope over the last few years that younger users are eschewing the platform in favour of photo and messaging apps such as Instagram and Snapchat, but more concrete evidence of this continues to come to the surface.
A Pew Research Centre survey released earlier this summer has shone some more light on this trend with a study of the social media habits of users between the ages of 13 and 17 in the US. In 2018, the most popular social media platform for this group is Instagram, with 72 per cent of users claiming to use it. Snapchat was close behind at 69 per cent. Further down the field was Facebook, with just over half of this group (51 per cent) claiming to use it, and only 10 per cent admitting to it being their most-used platform. This is in stark contrast to the results from a corresponding study in 2015. Since then, Facebook and Instagram have almost perfectly switched places; Facebook is down from 71 per cent to 51 per cent, and Instagram up from 52 per cent to 72 per cent. Quite a staggering role reversal in just three years.
Mark Zuckerberg last year announced a shift in focus from ‘passive consumption’ of news and media to ‘meaningful interactions’ between friends and family. But it seems that Facebook is losing ground on both fronts, with YouTube being preferred for passive consumption, and Instagram and Snapchat for social interaction and self-expression. The Facebook News Feed, and its focus on a never ending cycle of ‘news’, seems to have a diminishing pull for younger users, and they are voting with their feet, more interested in pictures of their friends’ lunch and pets.
Teens leaving Facebook en masse is indicative of a wider trend. Over the last couple of years, the company has had to battle with scandals involving ‘fake news’ and privacy breaches, and it seems that many users have used this as an excuse (or an opportunity) to leave the network. In Europe alone, 3 million daily active users have left in just the last quarter (likely as a result of the implementation of GDPR), while daily users in the US have remained flat. In the Middle East in particular, Facebook usage declined by 20 percentage points between 2013 and 2017, according to research conducted by Northwestern University (from 94 per cent in 2013, down to 74 per cent in 2017), with GCC states accounting for the biggest declines. In the grand scheme of things, this is just a drop in the ocean, but as new user sign-ups slow down (monthly active user growth is down from 13 per cent to 11 per cent year-on-year), users that visit the platform less, or even leave it altogether, will be more strongly felt. Meanwhile, Instagram’s user numbers continue to skyrocket, doubling from 500 million monthly active users to 1 billion in the last two years.
Where eyeballs go, ad dollars eventually follow. Facebook’s stock price plummeted by more than 20 per cent in one day last month, following a weak earnings announcement, the largest one-day loss in market value by any company in US stock market history. Not because of a fall in revenue (ad revenue was up 42 per cent year-on-year), but simply because this growth had slowed (down from 49 per cent). Facebook’s chief financial officer, David Wehner, said that revenue growth would likely continue to decline for the rest of the year, partly because Facebook is planning to give users more options with their privacy settings, including letting them limit the kinds of ads they see.
Enter Instagram to save the day. In 2012, Facebook paid $1bn to acquire the photo-sharing app, a price that many people balked at at the time. While Facebook doesn’t break out revenue from Instagram individually, data marketing technology company 4C estimated a 204 per cent growth in Instagram ad spend year-on-year during the last quarter, and the unit is expected to generate $8.06bn in revenue in 2018, according to research firm eMarketer. By 2020, Instagram could contribute $20bn to Facebook’s revenue, according to some analysts, accounting for roughly a quarter of total revenue. In hindsight, it looks like that was $1bn very well spent.