Facebook Hits A Wall

Usage data suggests that something unusual has happened to Facebook's membership growth in the U.S. and Canada in the last couple of months ... it's shriveled. Facebook may have exhaled just before an IPO.

Facebook ceiling

The business of sharing is slightly off.

Facebook has seen "big traffic drops" in the U.S. and Canada, even while it slowly closes in on 700 million members globally, according to Inside Facebook, which monitors membership rates of the social network. The behavior of the social network's North American and (some) European membership suggests its growth potential in these nations is now limited. And that's potentially a big detriment to a Facebook IPO.

Facebook's membership contracted by nearly 6 million users in the U.S. during the month of May, falling to 149.4 million (a drop of nearly 4%). Canadian membership declined by 1.52 million in an 8% fall over the same period. Inside Facebook notes that this is typical up-down behavior for Canada over the last year, but it's the first time U.S. figures have fallen in 12 months. Small losses were also shown in the U.K.'s, Russia's, and Norway's figures. Furthermore, while overall membership grew by 11.8 million in May, this is a drop over the 13.9 million new users in April, and is down significantly over the 20 million-per-month typical rate over the last year. Plus, it's also the first time two months have shown lower growth figures back to back.

A Facebook spokesperson offered this response via email:

From time to time, we see stories about Facebook losing users in some regions. Some of these reports use data extracted from our advertising tool, which provides broad estimates on the reach of Facebook ads and isn't designed to be a source for tracking the overall growth of Facebook. We are very pleased with our growth and with the way people are engaged with Facebook. More than 50% of our active users log on to Facebook on any given day.

 

The data's not all grim. Mexico's membership grew 7.6% in the month to June 2011, Brazil's soared 10%, and India's up 6.7%—over the last 12 months these nations have grown 94.2%, 294.1%, and 160% respectively. It's fair to say Facebook adoption in these three nations, plus a list of developing nations elsewhere around the world, is soaring.

Facebook's IPO is upcoming in early 2012 we think, and in order to make a lot of money Facebook's got to sell the story that it's future is getting brighter. It's easy to convince people of that when your main commodity—users—are joining in droves. And that's easiest to believe when it's developed nations driving the growth, because though developing nations are definitely expanding, Internet penetration isn't particularly high, usually, and people are perhaps less likely to have disposable income to spend. And it's user cash that Facebook's really all about, directly through services like Facebook Credits and indirectly via on-site advertising.

No one's saying Facebook is going to fail, and it's still a success story ... 700 million users is over 10% of humans alive. But Facebook is now going to have to show how it plans to improve its monetization in the future, and that's a much more complex story to tell. It was always going to have to convince investors of this plan, in fact, but the details now may require some extra scrutiny in order to prove Facebook's got monetizable sticking power, and isn't going to "pull a MySpace" and evaporate almost as quickly as it arrived—the sting of MySpace's failure still hasn't fully been soothed yet.

Suddenly, rumors of Facebook's expansion plans into the totally new market in China make even more sense.

[Image: Flickr user marismith]

Chat about this news with Kit Eaton on Twitter and Fast Company too.

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2 Comments

  • David Kaiser, PhD

    One can get exhausted from FaceBook. It is cool, and it's fun to stay in touch with friends, and cool for business, but it can also be a distraction from what's really important, too. The new face recognition technology is creepy. I'm glad I opted out of that.

    David Kaiser, PhD
    Time Management Coach to Authentic Leaders
    www.DarkMatterConsulting.com 

  • OnlyMeWorld

    As Facebook is losing millions in north america, ONLYMEWORLD the new alternative to Facebook, according to recent data gathered from Alexa has grown in that same period 1800%.ONLYMEWORLD, doesn’t ask users for their real names, email addresses, and allows custom privacy settings. ONLYMEWORLD, has opted out of tracking it’s members with any “Like” buttons while on the web(See Wall Street Journal Like Button Articles).According to a recent statement by facebook with regards to it’s Privacy Violations of it’s users, and Facial Recognition Programs, facebook had stated that “We haven’t had any complaints from our users”, well if losing over 6 million users from the united states last month isn’t enough evidence of how dissatisfied users are with facebook, then I don’t know what is!