Since its inception, Facebook has been transforming the social networking landscape. They streamlined communications and in the process altered the colloquial definition of friendship. For businesses, it became a new way of targeting customers with advertising, whilst for people seeking to have their voice heard it has been a powerful tool for social and political activation. Following the failed attempts of Myspace, Friendster, and a few other lesser-known social networks to create lasting digital communities, Facebook has been an important step forward in the digital revolution.
The social network is now approaching a turning point. According to The Information, ‘original broadcast sharing’ (posts consisting of users’ own words and images) fell 21% from 2014 to 2015, contributing to a 5.5% decrease in total sharing. As a company whose primary revenue comes from advertising, Facebook cannot afford to lose the engagement of the very people the ad companies are trying to reach. It leaves Facebook with a dilemma.
There’s no clear reason for the decline in personal sharing, but theories suggest it may be a combination of a few not-so-great decisions and the natural evolution of tech trends. Recently, Facebook has focused on recruiting media companies and celebrities to generate premium content. The hope was to attract more users and thus attract more advertisers. But this content has only made Facebook feel more like a public stage, encouraging passive consumption but discouraging personal sharing. This shift towards consumption has created an imbalance in the user sharing profile, with only 39% of people sharing an average of 5 posts per week. Overall, this ratio equates to a collective average of 1.95 posts per user per week – a number significantly down on the average of 22.5 posts per user per week of just 6 years ago.
But the decline isn’t entirely the result of poor decisions; social networking demands are also evolving. An article in Bloomberg Technology explains, “As Facebook ages, users may have more than a decade’s worth of acquaintances added as friends. People may not always feel comfortable sharing their lies, knowing these updates may not be relevant to all their connections.” This reality compounds reservations about sharing personal information, because larger networks add to the feeling that you’re posting for a public audience. So, as the network grows, and individuals acquire more diverse social networks, personal sharing naturally dwindles.
Facebook has announced plans to combat this decline in personal sharing by incentivising users to share, increasing the accessibility of newsfeed content and competing more directly in the market. There may even be plans to pay users for the content they create. Possible strategies include a ’tip jar’ (giving some of the money earned from ads on user posts back to the users themselves), and a sponsor marketplace (matching users with brands targeting their marketing to certain demographics). Facebook is also trying to compete more directly with other social networks through features like Live Video (the Facebook alternative to Twitter’s Periscope), and acquiring potential future competitors like Instagram and Whatsapp.
Facebook has also hinted at some longer term plays to reinvigorate its product. One of these is developing advanced artificial intelligence that can help Facebook gauge what matters to users. Another is virtual reality with Facebook acquiring Oculus VR in March 2014 for $2 billion – an unsurprising development given Mark Zuckerberg’s claims that virtual reality will be the next frontier of social networking. The third part of the plan is to bring the Internet, including Facebook, to the 4 billion-plus people not currently connected. Broadly, these goals fall under Facebook’s larger objective “to give everyone in the world the power to share and make the world more open and connected.” Sustainability and a focus on aligning global improvements with innovation are on the rise across market sectors but for Facebook it can also improve their market performance in the process.
Facebook’s financial success so far is undoubtedly due to its ability to capitalise on the breadth of its consumer base and the extent of its market share, both online and on mobile. But social networks and their consumer demands are constantly changing as users find new and better ways to interact online. As a result, success is determined not only by performance today, but also by investments made to anticipate and innovate for the next phase of the networking evolution. Tech has always been a rapidly evolving industry where the next phase can be as unpredictable as it is exciting for users to behold, so keeping up as an established tech giant is no small feat. That said, by investing in its base and expanding its products, Facebook may yet transform the definition of a social network once again and live on long after facebook.com has been forgotten.