Facebook Q2 Numbers: User Growth Slows, Raising Concerns About Future Potential
Facebook has released its’ Q2 2018 earnings report, and the numbers highlight some interesting trends to consider in Facebook usage.
First off, on active users – Facebook added 22 million DAU in the quarter, taking it to 1.47 billion logging on daily.
On overall active users – or monthly actives – Facebook saw an increase of 38 million to 2.23 billion.
And that seems pretty good, right? Facebook continues to add users, despite the fact that the platform must be reaching saturation point. The problem is that Facebook growth is slowing, a lot – as highlighted in this graph from TechCrunch.
As you can see, Q2 '18 was Facebook’s slowest quarter of growth ever. That spooked the market – Facebook shares declined more than 20% following the announcement.
And another key point of concern – look at the stats relating to Europe specifically. Facebook’s actually losing active users in European markets, which has also never happened.
While Zuckerberg’s social behemoth remains the largest social platform by a big margin, the data suggests that Facebook may finally be losing its shine. Facebook doesn’t provide data on active time spent per user, but it would be interesting to see what those figures are, whether users are really losing interest in The Social Network.
In terms of revenue, Facebook posted another solid result – up 42% year-over-year.
Average revenue per user was also up across the board from the previous report.
But that said, Facebook did also warn that revenue results would decline moving forward, with the focus on growing newer products, like Stories, and the increased emphasis on user privacy likely to impact the figures.
How you view those stats overall will come down to your perspective. Clearly, with the emphasis on Stories, Facebook knows that it needs to boost engagement, and that the News Feed itself just isn’t doing that. Privacy too is a major consideration for the company’s long-term viability – and as such, both elements are clearly important. But the short-term pain could cause headaches for investors.
As a means to deflect such concerns, Facebook also announced that, combined, their family of apps sees over 2.5 billion monthly active users. That figure counts every individual user of their apps once - so if you have, say, accounts on Instagram, Messenger and Facebook, you would only count as one in this stat.
That is an impressive number, but impressive numbers are what we’re used to from Facebook. In some ways, the platform is a victim of its own success in today’s announcement – the declines at Facebook are not significant, yet, but it’s the first time we’ve seen such from The Social Network. Facebook is still growing, its audience is still rising, but the figures shake the company’s foundations just a little, and show that no business is immune to market shifts.
What we really need to consider, though, is what’s behind Facebook’s slowing growth - and how they can reverse it.
Earlier this year, when Facebook announced its major News Feed change that would put more emphasis on person-to-person engagement, and further reduce Page reach, many put the move down to greed - an effort to squeeze more dollars out of businesses seeking to connect with the platform’s massive audience.
But Facebook is actually looking to address real engagement issues and concerns. Despite the platform continuing to add new users every quarter, engagement on the platform has slowed.
Reports from as far back as 2015 show that users have gradually been sharing less original content to The Social Network. Original sharing – posting of photos and status updates – has become a smaller piece of Facebook’s content pie, while various studies also suggest that Facebook's been losing its grip on younger audiences, with YouTube, Instagram and Snapchat all now more popular among teens.
It may not seem, on the outside, that Facebook is facing any significant challenges on this front – the platform, as noted, is used by more than 25% of the entire world’s population. But while Facebook itself has become an essential connector for many, a platform everyone checks in on every day, it’s also become less of a focus for posting, less of an engagement medium. Facebook is the place where you post your updates to keep your broader set of friends and family updated, while you actually seek out content and engage with close friends on other apps.
Of course, Facebook still owns Instagram, it still owns both Messenger and WhatsApp, which, in combination, gives the company its noted 2.5 billion monthly active users combined. But its main platform is still Facebook’s money maker – it’s where its ad options are most advanced, where brand Pages and engagement are already well facilitated. None of these options are as complete on Facebook’s other platforms.
Do the numbers suggest that Facebook needs to switch focus, to leave well-enough alone on Facebook and look to its other tools to prop-up future revenue growth? No doubt they’re already doing this, but moving Facebook to the side is also not going to help them, and as such, you can expect to see even more algorithm shifts and engagement-fuelling efforts rolled out across the platform in the coming months.
Zuck and Co. will be hoping that they can get more people more interested in sharing on Facebook again - the whole effort may be best represented by those Facebook memory reminders. Remember how you did all these cool things on Facebook, how Facebook was so good to you, how you loved Facebook before these other apps came in?
Facebook will be hoping to rekindle that spark – prepare for more changes on the horizon.
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