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Facebook now has a billion active members, but are they locked in?


Posted by
4 October 2012
19:54
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Facebook taking over

Consider that the global online population is just over 2 billion. Consider that Facebook is now claiming it has a billion registrations. Twitter has 745 million registrations, millions of which will be spam bots, duplicates, company and dead accounts.

One billion active users is a remarkable number.

Alexis Mardigral points out, Facebook is still adding about 500,000 new users each and every day.

Facebook User Growth

Ad war

Still Facebook has come under scrutiny of late over its ability to make money.

Put in perspective the company is not doing too badly. It currently takes 11% of all US online advertising, beating Yahoo!, AOL and Microsoft and it looks on track to grab a bigger share.

It does not, however, grab nearly as much revenue as the large amounts of time spent on the site would dictate it should. Google takes more than 60% of the US’s ad revenue, with more or less similar levels of eyeballs, but much less time with users.

US ad online ad revenue

If you think of modern media as an interactive medium where users’ different mental states matter – this makes sense. On Google people have the right intention to convert ads. On Facebook we’re being social. Or as Henry Blodget puts it, Google is like advertising in a shop. Facebook like advertising at a party (or a funeral).

Others are arguing that the real power of Facebook lies in the fact that it knows who your friends are, and it is making this available as a platform, but how does Facebook make money from this knowledge?

The competitive threat – does Facebook have an Achilles heel?

There was a time when conventional wisdom coalesced around the idea that network services like Instant Messaging could lock in users because – besides normal human inertia – it is hard to move all your friends to a new platform. Competitors to Facebook face the same dilemma.

We’d argue it is easier to recreate a strong tie (family and friends) social network like Facebook than it is to recreate your Skype list or even your Twitter network.

Why?

Skype is essentially a private service. Unlike Skype, Social Network services operate public or semi-public. Facebook’s rapid growth is partly powered when existing networks help find each other. You and your friends crowdsource the discovery of mutual people you know. It happens in a flash.

Twitter is a weak tie network – a network of loose contacts that tickle your intellectual curiosity. Many of the people you follow and befriend won’t necessarily know the other people you know. You can’t help each other find your other friends.

Perhaps this is why Twitter is becoming more protective of the data it has.

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