Facebook "crisis"

Interesting. I’m not sure what to make of it since I don’t use Facebook myself much.
Saul

http://www.inc.com/jeff-bercovici/facebook-sharing-crisis.ht…

The Worst Thing That Could Happen to Facebook Is Already Happening: Users are sharing less–way less.

Have you by any chance noticed yourself feeling less friendly toward Facebook lately? Perhaps you still open the app a few times a day to check your notifications and scroll through a few posts, comment on a viral video, “like” a story from The New York Times. But when it comes to the personal stuff–your vacation photos, your job announcements, your gripes about the wait at the DMV–you’re just not sharing it like you used to.

If so, you’re not alone. Far from it. In the past few months, Facebook has quietly shifted into crisis mode. According to The Information, “original broadcast sharing”–i.e., posts consisting of users’ own words and images–fell 21 percent from 2014 to 2015, contributing to a 5.5 percent decrease in total sharing. In response, the company created a task force in London whose mission is to devise a strategy to stem the ebb…

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That is interesting Saul. I suspended my account years ago, so its hard for me to say whether people are sharing less.

What I do know is that user engagement and audience penetration are at all-time highs for Facebook. Even for younger audiences. Facebook is the dot in the far right corner.

http://staticseekingalpha.a.ssl.fastly.net/uploads/2016/4/2/…

Chart is based off of data in this whitepaper:

http://www.comscore.com/Insights/Presentations-and-Whitepape…

And according to The Economist, Americans spend more than a fifth of their mobile-internet time on Facebook (and that number doesn’t include Messenger, WhatsApp or Instagram):

Facebook also focused on engineering a highly addictive product that people would come back frequently to check. This meant investing in perfecting algorithms that surfaced relevant content for users. Today Americans spend 22% of their mobile-internet time on Facebook’s flagship social network, compared to 11% with Google search and YouTube combined.

From http://www.economist.com/blogs/economist-explains/2016/04/ec…

In total, all of its apps account for 30% of American users mobile internet time and a billion of its users are on the site for more than 20 minutes a day.

From http://www.economist.com/news/leaders/21696521-mark-zuckerbe…

At the end of the day, as long as more and more users are flocking to its sites and spending more and more time there, that’s all I care about.

Matt
Long FB
MasterCard (MA) Ticker Guide
See all my holdings at http://my.fool.com/profile/CMFCochrane/info.aspx

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My view on this, based on my own behavior and my FB community, is that people start using FB for more and more reasons:

Communicate with friends
Read up on News
Share pictures
Check in to places
Watch videos
Follow businesses they love
Track market places (in Charlotte we have a FB based market place for road bikers to sell/trade anything regarding their bicycles)
etc
etc

I think people are using FB in many more ways and that cuts into the time available to actually “type” words.

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Today Americans spend 22% of their mobile-internet time on Facebook’s flagship social network,

What a fantastic waste of time. I never had a FB account. I was on Twitter for a while but it got boring. Occasionally I’ll look up a stock on Twitter when something strange is happening. TMF seems to be the exception to public boards in that you can find quality boards of interest and skip the the crap.

Denny Schlesinger

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This is anecdotal and only applies to me but I check Facebook all the time. It is on my task bar. My children (millenials)post pictures of my grandchildren all the time. My son is on vacation and I am seeing where they are and what they are doing. It is a fast and easy way of finding out what my friends are doing without an extended conversation. I love Facebook and am an owner of the stock with a very nice gain on it too. I am a full time trader so it gives me a break to check it and only takes a second.

Rob

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I would say I agree with this. I know quite a few people that use Facebook more for their Businesses than for personal use. My fiance frequently checks out for sale/garage sale pages.

There’s also so much more content available now, I see lots of people spending significant amounts of time just browsing and watching videos as opposed to posting content on their walls.

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Communicate with friends
Read up on News
Share pictures
Check in to places
Watch videos
Follow businesses they love
Track market places (in Charlotte we have a FB based market place for road bikers to sell/trade anything regarding their bicycles)
etc
etc

Groups of various specialized interests are huge on Facebook.
There may be Millions of them by now.

JT - a member of about 30 FB groups, 3 local community, and various hobby groups.

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Wouldn’t surprise me, based on my declining usage and that of others in my age group (X-boomers). I’ve also never clicked on a FB ad. But anecdotally - speaking with my younger employees and my friends’ kids - my impression is that Millennials and younger have essentially jumped ship en masse and now spend most of their time on Instagram (owned by FB) and Snap Chat, among others. They might have FB accounts, but they don’t use them.

Those of us who own businesses or run NGO’s recognize that having a FB presence is a prerequisite just like having a website; it’s another store front. But because of the shift by one of our target audiences (Millennials) to Instagram, we’re now devoting more time and energy there. Clearly, social media is a moving target.

If FB is prescient enough to anticipate each new trend, and jump on them in a timely way, then it’s probably a good investment over time. I just don’t have that confidence, particularly with their size, that they’ll have that ability.

A decent read to better understand why big guys can’t sustain innovation is, “Adapt: Why Success Always Starts with Failure.” (Think recommended originally by John Sergent on a Tesla board).

http://www.amazon.com/Adapt-Success-Always-Starts-Failure/dp…

  • Khleb
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I do not use facebook either so my information is also anecdotal.
My three daughters, between the ages of 36 and 49 have commented several times in the past few months that they just don’t use it like they did. It just takes too much time to stay up with posting, they say.
Then I have four teenage granddaughters and one teenage grandson. One of the granddaughters explained it to me this way, when I asked her for her current email address. “Grandpa, old people use facebook and really really old people use email, we use Snapchat, and you don’t even have a smart phone, your phone is like 30 years old or something, so just call me if you need to tell me something”.
I don’t use emojis either, but I can type, LOL.
Mike

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Anecdotes can be wonderfully illustrative when it comes to investing, but only if they back up the larger trend. And right now all stats point to Facebook’s number of users and user engagement going up…quite rapidly. Those are the facts.

Again, 20% of Americans’ mobile online time is spent on Facebook and 30% is spent on Facebook or one of its apps (e.g. Instagram, Messenger, etc.). That’s incredible!

Let me try to voice more of my reasoning for liking it so much. First, from my perspective, it enjoys one of the strongest network effect moat in business today:

The network effect occurs when the value of a particular good or service increases for both new and existing users as more people use that good or service. It can also occur when other firms design products that complement an existing product, thereby enhancing that product’s value. The network effect is arguably one of the most potent competitive advantages, and it can also quickly catapult firms to the lead in new industries.

From https://news.morningstar.com/classroom2/course.asp?docId=144…

No other social media site has ever come close to the amount of users or level of user engagement that Facebook currently possesses.

And consider what type of value Facebook offers to advertisers. Just take one small niche of advertising: political ads. Every two years the spending for these ads jump prior to election season. Candidates have to two reasons to advertise: to energize their base and to convince undecided voters to vote for them.

With the kind of amazing targeting abilities Facebook offers, a candidate can tailor ads specifically for these two different audiences and pay for only voters who fall within the targeted group.

Polls show that married Hispanic women between the ages of 40-55 who attend religious ceremonies at least once a week are having a hard time making up their mind? Find out what matters most to this demographic, tailor your message to it and pay only for the intended audience to see it. Why pay for your message to this group to be seen by young white millenial males?

Advertising on Facebook is just far more efficient than traditional advertising. Take another small example. What if advertisers want to reach Super Bowl viewers but don’t have millions of dollars to drop on one 30 second ad. No problem. Just use Facebook:

The Super Bowl drew 114.4 million viewers on TV last year. At the same time, more than 65 million people were talking about the Super Bowl on Facebook (FB). According to the social media company, 85 percent of Super Bowl TV viewers were on their mobile phones while watching the game.

“Eighty percent of our revenue is mobile,” said Matt Idema, a marketing executive at Facebook. “It’s significant and it’s grown year over year. We are a mobile ad company.”

The social network launched an ad program in August 2015 that’s designed for companies that want to market to people during live events. Even some Super Bowl television advertisers are using the service, Idema said. For example, website development company Wix will run simultaneous ads on Facebook, Instagram and through various Google platforms, throughout the game and especially around the time of its TV commercial.

“The reach that mobile devices have, and the fact that Facebook and Instagram are two of the most important mobile platforms, means you can get a lot of reach and engagement on mobile even if you’re not buying a Super Bowl ad,” said Idema.

From http://www.msn.com/en-us/money/topstories/how-to-do-a-super-…

And they don’t just have a few advertisers on their site. They have three million active advertisers - a 50% jump in one year. Think about the safety that kind of revenue diversification brings!

From http://www.cnbc.com/2016/03/02/facebook-announces-jump-in-ad…

Facebook is also exploring directly getting involved in e-commerce. Their plans for FB Messenger and WhatsApp might offer the most holistic customer service experience ever offered. The plans are for them to be a one stop place for everything in the business-to-consumer model. Want to order and pay for a product? Check. Want to ask a customer representative a question about assembling the product or installing it? Check. Want to inquire about the shipping status of an order? Check. Want to leave feedback to the business? Check. Want to review or rate the business and product? Check.

With their unique ability to offer 3 million advertisers the most direct way to reach their targeted audience across different platforms, I don’t think this can be written off as a fad.

Now maybe the trends are changing. Maybe user engagement and number of users will stall or even start to drop. We’ll see. But thus far there is no evidence of that whatsoever.

Matt
Long FB

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I have owned shares of Facebook for several years now, and am sitting on a nice gain.

I sometimes don’t like using Facebook because of all the ads and because I tire of seeing photos of what my friends have cooked for dinner…so silly!

At the same time, Facebook has allowed me to, among other things, reconnect with college friends from more than 35 years ago. For the past few years, we have been using Facebook to maintain that reconnection and to plan reunions, etc., as we are pretty much spread all across the country. What was the tagline for that old credit card commercial: “Priceless”?

az5speedy
Long FB

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I don’t like to say this, but Facebook is getting a lot of trolls lately.

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Thank you for the well-reasoned post, Matt. I’ve been hearing that Facebook is overwith for every one of the several years I have owned the stock, always via anecdotal evidence. The actual numbers say otherwise.

Speaksthetruth, what does your post mean?

No other social media site has ever come close to the amount of users or level of user engagement that Facebook currently possesses.

It’s interesting how comments of this sort are made without taking a world-wide perspective. FB was barred from China in 2008 when it was being used by a number of Uygurs in Xianjiang as a means for organizing protests. I recently returned from China, the only way I was able to use FB was with the aid of a VPN which I installed in the US prior to leaving for China.

However, the Chinese who have an immensely social society are not without a network. Weixin (We Chat) from Tencent is in widespread use in China and other Asian countries as well as all over the world where expat Chinese wish to stay connected to friends and family back home. Also, in places where the Chinese have a large presence and a lot of influence (that would be the African continent and large portions of South American and the Mideast). I wouldn’t venture a guess about how many hours my wife spends on Weixin, but it’s a lot. The first thing she looks at when she wakes up and the last thing she looks at before going to bed is Weixin.

Do they have the same number of users and FB? I have no idea, but they have a stickiness with their user base which I’m sure rivals if not surpasses FB. Because I’m plugged into both communities (although I personally use FB more than We Chat) I get a lot of anecdotal comments comparing the two platforms. We Chat gets near 100% higher marks for ease of use and extended functionality.

Will We Chat displace FB? I doubt it. I don’t think it’s a loyalty thing, it’s more that people stick with what they are most familiar with and that you can’t really change platforms independently - if important members of your community don’t transition to a different platform, there’s not much motivation to do so on your own.

So We Chat and FB are rivals in much the same way as Baidu and Google are rivals. They serve up pretty much the same functionality and address two large, disparate communities.

Just the same, it’s unwise to ignore We Chat when discussing the competitive landscape of FB.

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It’s interesting how comments of this sort are made without taking a world-wide perspective…Weixin (We Chat) from Tencent is in widespread use in China and other Asian countries as well as all over the world where expat Chinese wish to stay connected to friends and family back home…Do they have the same number of users and FB?

Brittlerock, my comment was made with a world-wide perspective? Maybe you shouldn’t assume otherwise?

WeChat has 700 million MAUs. Not bad by any stretch!

http://www.statista.com/statistics/255778/number-of-active-w…

But Facebook has 1.6 billion, more than twice as much. And that’s with WeChat’s unfair advantage of having Facebook “banned” in China. So I stand by my statement:

No other social media site has ever come close to the amount of users or level of user engagement that Facebook currently possesses.

Matt
Long FB
MasterCard (MA) and PayPal (PYPL) Ticker Guide
See all my holdings at http://my.fool.com/profile/CMFCochrane/info.aspx

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We spent several weeks in China recently and became heavy users of WeChat which caused me to take a deeper look at this app and company. I would be very careful about dismissing its power and possibilities. I own FB and believe in its potential but for anyone studying the social media space and competition check out this linked article. It’s a bit long but I came away wondering if there was anything WeChat doesn’t do. And they have definitely figured out the monetization thing. Seven times the average revenue per user than FB’s WhatsApp.

http://a16z.com/2015/08/06/wechat-china-mobile-first/

David

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We spent several weeks in China recently and became heavy users of WeChat which caused me to take a deeper look at this app and company.

Wow, David, that’s an amazing article. Thanks,
Saul

We spent several weeks in China recently and became heavy users of WeChat which caused me to take a deeper look at this app and company. I would be very careful about dismissing its power and possibilities.

I’m not sure how my post became about me dismissing WeChat or any other social media platform. That was not my intent at all. WeChat sounds like a pretty amazing company. I was merely pointing out that Facebook has more users and more engagement. That’s all.

In fact, it’s worth noting that Facebook has more users on three of its four platforms (Facebook, Messenger and WhatsApp) with Instagram not too far behind WeChat’s numbers.

Also, Facebook has not yet begun monetizing WhatsApp, so that’s not much of a surprise that WeChat generates far more revenue per user than WhatsApp does.

It does sound like Facebook is planning to evolve Messenger and WhatsApp into something similar to what WeChat is already doing today, which I find fascinating. I have long been thinking these were more original plans by Zuck and the FB team, but it does appear they are simply heading where WeChat already is.

Very interesting stuff. Thanks for the articles and info on WeChat.

Matt
Long FB
MasterCard (MA) and PayPal (PYPL) Ticker Guide
See all my holdings at http://my.fool.com/profile/CMFCochrane/info.aspx

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