Facebook's future is in developing markets

16 Jun 2011

Facebook Fatigue is the industry’s latest buzzword, with wires humming to reports the firm’s growth is slowing in the US, UK, and even Russia and Norway.

News site Inside Facebook sparked the reports, publishing figures that show the social network’s active user base in the US had fallen from 155 million to 149 million during May. A stark drop indeed, until you look at the firm’s regular tracker figures – based on Facebook’s advertising numbers – which show active US users actually grew 18.6% in the year to June 1.

Active users in the UK, Russia and Norway fell by around 100,000 each during May, while in Canada around 1.5 million were lost. Year-on-year, though, UK users grew 11.1% and Canadian users 7.4%.

But the site acknowledges Facebook is still growing globally, with South America and Asia Pacific leading the charge. Mexico tops its list of the fastest growing countries for May – active users grew 7.6% to 25.6 million -, followed by Brazil (up 10% to 19 million) and India (up 6.7% to 26.6 million).

A Facebook spokeswoman claimed Inside Facebook uses the wrong methodology to measure user numbers, noting that the firm’s advertising figures aren’t configured to be an accurate measure of user numbers in a statement to AFP. She directed journalists to comScore figures, which show steady growth over the second quarter to date.

On a personal level, the reports intrigue me because I quit the site over a year ago – precisely because I was weary of constant “John Doe can’t decide what to have for lunch” style updates, and a slew of information regarding how far up the criminal chain my friends had traveled on Mafia Wars. My social life hasn’t fallen apart during that time, and I no longer waste an hour a day looking at the wedding pictures of people I don’t know simply because one friend is tagged in one photo.

It’s not unreasonable to suppose that Facebook will suffer some declines in its user base in well-established markets like the US and UK. The cellular industry has long displayed similar trends – its called saturation, and the growth in wireless user numbers has similarly shifted to emerging markets.

Gartner figures for PC shipments in the first quarter show a similar trend towards emerging markets. Shipments in Asia Pacific grew 4.1% year-on-year, and by 5.4% in Latin America, compared to declines in North America and EMEA.

With such trends in the equipment markets, isn’t it inevitable that’s where the growth for operators and social networks now lies?

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