RSS
Will slowing user growth doom Facebook?
The social network is no longer expanding at a rapid clip, which may be evidence that the company has maxed out its capacity to grow
 
Facebook's users growth may be slowing, but 71 percent of the country's 221 million internet users still visited the social network in April.
Facebook's users growth may be slowing, but 71 percent of the country's 221 million internet users still visited the social network in April.
North County Times/ZUMA Press/Corbis

Facebook is still taking over the Earth, but it's doing so at a slowing rate. Market researcher ComScore says the company had 158 million unique U.S. visitors to the site in April, up just 5 percent from the previous year. It's Facebook's lowest user growth rate in four years; by comparison, the company's year-over-year growth rate in April 2011 was 24 percent, and a scorching 89 percent in April 2010. The new numbers come at a particularly bad time for Facebook, whose newly launched stock remains stuck in the doldrums due to fears that the company does not have an effective model for revenue growth. Is the latest news another sign that the company has little room to expand its profits?

Yes. Facebook is reaching a limit: Facebook went public with the expectation that it would expand, "but in some key areas, the social network's growth rates are already maturing," says Shayndi Raice at The Wall Street Journal. And the amount of time Facebook users are spending on the site — a metric known in tech speak as engagement — is decelerating as well. Facebook's total numbers are impressive, but the company "framed itself as a growth story to Wall Street," and investors expected "triple-digit and double-digit" growth rates. The latest report is evidence that it won't be reaching those heights.
"Days of wild user growth appear over at Facebook"

No. This was inevitable — and isn't a big deal: The only reason "Facebook's user growth is slowing in the U.S. is that almost everyone in the U.S. is already using Facebook," says Nicholas Carlson at Business Insider. Similarly, while engagement is also slowing down, it's because people on average already spend "a stunning six hours on the site" per month, which is more than they spent on "all of Google's sites, including YouTube, combined." These are problems any social media company would be glad to have.
"Facebook's upside has never been higher"

Facebook must get more from each user:  Facebook has plenty of room to boost profits, by extracting more from the users it already has, says Robert Hof at Forbes. The company's "television-scale audience" will be a gold mine if Facebook can maximize advertising dollars per user. But the social network needs to get better at slotting ads into the right places and targeting users with products they might actually buy. Facebook also needs to exploit its unique ability to "appeal to people based on what their friends like," a social-ad model that has recently shown signs of taking off.
"7 reasons Facebook's slowing user growth doesn't matter"

 

THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER

Subscribe to the Week