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If Teens Don't Think Facebook Is Cool Anymore, Should Facebook Worry?

"We did see a decrease in daily users, specifically among younger teens," Facebook acknowledged. Here's why that matters.
Reuters

The good news for Facebook is that its business model is maturing.

The bad news for Facebook is that its audience is maturing, too.

Remember when Facebook was just something that kids used to procrastinate— a digital time-suck for kids and not a digital business? Well, now that's switched. Facebook is definitely a digital business now, with last quarter's revenue up 60 percent since last year and half of that coming from mobile, an astonishing achievement for a company that barely had a mobile business a year ago.

But where are the kids going? After months of denials, Facebook acknowledged yesterday that teens are losing interest in the site. "Our best analysis on youth engagement in the U.S. reveals that usage of Facebook among US teens overall was stable from Q2 to Q3, but we did see a decrease in daily users, specifically among younger teens," CFO David Ebersman said.

In fact, this is a long time coming. Twitter finally eclipsed Facebook as the most popular social network for teens, according to a recent Piper Jaffray study. Among young people, Zuckerberg's site is now tied with Instagram (his $1 billion purchase) for second place, having crashed from a huge lead last year.

Mary Meeker's big fat State of the Internet slideshow showed a similar trend, writ larger. Facebook is still dominant, but its dominance, as a time-suck, is slipping, just as its mobile business is growing.

Facebook is still a monster, claiming more than 500 million mobile daily active users.That's more than the combined populations of the United States, Russia, France, and the UK visiting Facebook (and likely seeing ads on their phone) every day. It's an astonishing thing ...

... but falling engagement and enthusiasm among teens is a real problem, and perhaps not for the reason you think.

It doesn't merely suggest that Facebook is getting grayer. Look at that "other line" in the graph above. Programs like Snapchat and other social sites are taking off, and the way these things usually work is that whatever technology teenagers are using today, young adults, and then older adults, will be using tomorrow. Tumblr, Pinterest, Snapchat: All billion-dollar valuations today, and all got their start among the high school and college crowd. Young people's Internet behavior predicts everybody's Internet behavior. The fact that they're getting bored could mean that Facebook is becoming boring—a dangerous idea for a company that relies on the idle time of average people.

Or it could just mean that Facebook has grown up right in line with its audience.

Presented by

Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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