All the talk and free publicity about Twitter lately, one can’t help but feeling reminded of the pets.com era in the late 90′s when the internet hype machine was in full swing. One company that rose out of the ashes of the last bubble, Facebook, seems to have successfully navigated itself to a business model with real revenue, but its current volume may represent or be close to a high water mark.
Facebook is experiencing skyrocketing growth lately, especially in the over-30 crowd. At least that’s the impression that Facebook wants you, and potential acquirers to believe, but having become a Facebook user myself recently and wondering how sticky the idea was, I decided to nose around some statistics and try to verify my own suspicions.
Mark Zuckerberg, the CEO of Facebook, recently claimed that Facebook was growing at an astonishing 600,000 new users per day, which is quite amazing. However, there’s more to the story than that, and your BS senses ought to be tingling a little as you hear that number.
My own anecdotal experience may be reflective of what a lot of “over 30″ users are getting out of Facebook. I signed up for it, found a few friends, and now I check it every few weeks. I suspect that the new users that Facebook is signing up do not spend nearly as much time on the site as the existing, younger users, and further, I suspect that a lot of the younger users are not using the site nearly as much as they used to (probably due to Twitter usage).
Let’s look at some numbers. Here is a graph that shows total Facebook traffic for the past 7 months. The data was retrieved from Compete.
There is some dispute about traffic numbers between the various traffic monitoring sites, but that dispute should only be concerned with the total number of unique visitors, and not changes in that number. We should expect that each tracking site uses a consistent methodology from month to month, so a change in traffic should be reliable (and consistent across all tracking sites). Here are Facebook’s growth rates for the same months (there are only 6 months now because we are taking the differences between months):
I’m no expert, but that growth rate looks to me to be declining. Total traffic and change in traffic are important, but if the growth rate is declining at an increasing rate, that means that Facebook’s growth decay is accelerating. Let’s hope it’s not. Here are the numbers:
Wow! This tells us that Facebook’s change in growth rate is in fact, accelerating, and not in a good way. The rate of growth is decreasing at an increasing rate. This means, Facebook’s growth appears to be free falling.
Now let’s go back to those claims of 600,000 new users per day. That converts to 18 million new users per month. We can see from Facebook’s statistics page that they have 175 million active users. If every one of those new 18 million users returned regularly, and nobody left (no previous active users stopped using the service) then we should expect a steady 10% growth, month to month (18/175 = 10.2%).
Looking at the second graph, we can see that the unique visitor growth grew around Christmas, then started to fizzle. But, it appears that more and more of those new users are not returning. Alternatively, again, existing users not returning are offsetting the new users returning. I suspect it’s a combination of both.
So, what can we conclude from this data? Well, to be fair, the sample size is so small and the Internet is so trendy and cyclical, that we can’t conclude much as far as Facebook’s future. But we can conclude that Facebook is not experiencing unstoppable, runaway growth, the kind suggested by their press releases and supported by many willing and anxious tech pundits.
Given my own personal experiences with Facebook, and the current runaway growth of Twitter, coupled with the increasingly decaying growth rates of Facebook, I believe that Facebook has, or is about to peak. They have had an incredible run and have achieved unbelievable success in redefining the Internet, but I believe this is as far as it goes for them. Do you agree?