You Know What's Cool? 1 Billion Users. You Know What's Really Hard? 2 Billion.
Throughout this Facebook IPO fail advertising has gotten a lot of the blame for the social network's lack of stock market success, but today another possible money-making problem has come to our attention: user growth.
Throughout this Facebook IPO fail advertising has gotten a lot of the blame for the social network's lack of stock market success, but today another possible money-making problem has come to our attention: user growth. Facebook's well on its way to reaching 1 billion users with its ginormous 800 million-plus user-base. And that huge number of people is its biggest appeal to advertisers. Really, it's the first item listed under the "How We Create Value for Advertisers and Marketers" section of its S1. The document calls it "reach" but that really means popularity. And, like all of the things that give Facebook value, the social network has to keep up the rapid growth it has thus far seen to continue proving its worth. Facebook can't rely on organic explosion forever, especially as it alienates users with more advertising lameness, today we see a new strategy via The Wall Street Journal's Anton Troianovski and Shayndi Raice, who say Facebook's thinking about opening up the social network to those under the age of 13. But this move, like the Internet company's attempts at improving things for advertisers, risks alienating its current users, leaving Facebook back where it started.
Pre-teens aren't Facebook's only option for growth. It can (and already has) turn to foreign markets, where Facebook can still rely on organic growth. Some of Facebook's fastest growing markets, we learned from The Altantic's Max Fisher, are in developing countries, which makes sense as the network is newer there. Though, Fisher also attributes the crazy growth to lack of other types of infrastructure in these places -- it's easier to connect with people on the Internets than navigate bad roads, he reasons.
The problem with these emerging markets, however, it that growth is worth less than adding more people to the service here. To advertisers, American children's eyes are more valuable than adults from less affluent countries. As this trend continues Facebook will encounter the following, as outlined by Fisher: "With the number of developing-world users rising so rapidly, the proportion of users in the rich developed world is likely to continue dropping, which may have implications for Facebook's efforts to make money off of its growing but decreasingly wealthy users."
So we see Facebook attempting to attract users in other, more creative ways. But this too has its pitfalls. Facebook, for example, hasn't even announced this supposed expansion to babies through 13, yet we're already seeing the criticism emerge.
The technology Facebook is apparently testing addresses many of these concerns. It gives parents control over their children's Facebook accounts, giving them a sort of overlord control of the account, meaning parents will know exactly what their children are doing on the site. (Assuming parents actually pay attention to these things.) And, for every critical voice, we've seen others applaud this possible move. Forbes' Joshua Gans calls it the equivalent of Internet training wheels. And many, including The Wall Street Journal's Digits blog point out that many pre-teens have already found their way on the network that technically forbids them. Shayndi Raice writing for Digits says something like 7.5 million underage Facebookers have signed up for the site.
No matter the legitimate reasons, however, this move will anger and alienate some parent users and that's the real issue for Facebook, considering this whole move is about growth. The official statement from the consumer watchdog organization Common Sense Media, for example, finds the idea more harmful for children. "There is absolutely no proof of any meaningful social or educational value of Facebook for children under 13," Common Sense Media CEO said in an official statement. "There are very legitimate concerns about privacy as well as the impact on the social, emotional, and cognitive development of children," he continued. And alienation means people will leave, or at the very least, Facebook will lose face.
So Facebook has gotten itself stuck in one of these eerie and confusing Twilight Zone situations. As Facebook gets more popular, it loses value, but it needs to attract users to continue growing, and therefore justify its value to advertisers. Our head hurts just thinking about it.