It comes as no surprise that Facebook appears to be reaching saturation in its country of origin, as the massive social network now counts just over half the U.S. population as members. But this slowing growth rate makes it all the more urgent that Facebook monetize its existing audience more effectively, especially if it is to support the huge valuations assigned by analysts and private investors.
There has been an unmistakable drop-off in the number of new members added by Facebook beginning last fall: from August 2010-January 2011, in the U.S. Facebook has grown from 148 million to 153 million unique visitors, according to comScore, for an average rate of increase of about one million per month. True, there have been slow periods in the fall and winter seasons in the past -- but this time around is even slower. From August 2009-January 2011, it grew from 92.2 million to 112.4 million, adding 20.2 million new visitors, or just over four million per month.
Looking at the full year, Facebook added new visitors at an average rate of about 4.8 million per month in 2009; in 2010 that slowed to 3.5 million per month, and 2010 is off to a pretty weak start with a drop of 0.9 million unique visitors in January (the second time Facebook has ever posted a decrease in month-to-month figures for unique visitors -- the first time was February 2010, when it fell 0.4 million, also according to comScore).
Put another way, from January-June 2009, Facebook added 19.8 million unique visitors; from July-December 2009, it added 24.3 million; from January-June 2010, it added 29.2 million; but from July-December 2010, it added just 8.4 million.
On the positive side, Facebook's is still growing by leaps and bounds overseas: from January- December 2010, Facebook's total non-U.S. membership grew from about 250 million to about 500 million, increasing roughly 100% (compared to a U.S. growth rate of 37% over the same period).
COMMENTARY: It's a pretty well known fact that Facebook's U.S. penetration is very close to peaking or has peaked and they will be entering a period of very slow growth in new members and unique visitors. Most of their growth is now being driven by other countries.
I wrote about Facebook's Top 10 growth markets in a previous blog post dated September 5, 2010 titled, "Facebook's Top Ten Growth Markets For New Members" and recently posted another article dated February 5, 2011 titled, "Facebook Will Capture 67% of Global Social Media Revenues in 2011, But Can It Reach 1 Billion Members?" In both articles, I pointed out that membership growth in the U.S. , where Facebook first started, was reaching maximum penetration. The same is true of the U.K. and Canada.
Facebook's current growth is being driven primarily by Asian countries, but Facebook has made little progress in penetrating India, Korea and Japan, where its penetration is in the low single digits. I have written about this before, but most of the blame falls on Facebook itself, there is a wide cultural divide and user experience issues that Facebook can't seem surmount. China has banned Facebook, but there is no guarantee that it will gain traction there, even if the doors were open.
Across the five Southeast Asian markets of Indonesia, The Philippines, India, Malaysia and Thailand, there are close to 85 million registered Facebook users, given that there were a shade over 110 registered users across the whole of Asia on 1 January 2011, according to Social Media Today, South East Asia has emerged as the dominant force for growth across the continent with the five biggest SE Asian countries seeing almost 150% growth collectively in 2010 and a staggering 2,404% increase in members since January 2008.
The total number of social network users is a finite number, and Facebook, as well as other social network sites like Twitter, will be reaching a critical inflection point, where the user penetration finally peaks and advertising revenues stop growing. I am writing a future piece about this eventuality.
China has banned all social networks, and if China continues to ban Facebook from entering their market, the inflection point will materialize a lot sooner. The wildcard is still China, but I believe that even if the doors were opened for Facebook, they would struggle like they have in other Asian countries like India, Japan and South Korea, where their market penetration is in the low single digits. That's not a good sign.
Having said this, Facebook's user growth rates are already steeply declining. I have estimated that Facebook will have 775 million users by the end of 2011, and it is definitely tracking that way with 29 million new users in the first two months of 2011. Other social mdia experts believe Facebook will reach 1 billion users by the end of 2011, but I believe that Facebook will not reach that magic number until at least 2014 or 2015. If you believe otherwise, please comment below.
Courtesy of an article dated March 3, 2011 appearing in MediaPost Publications The Social Graf
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