Facebook Will Decline Like AOL

Osaka Hour Glass
Image by caribb

Yesterday in my weekly Washington Business Journal blog, I suggested that businesses and marketers should start investing in networks beyond Facebook.

Having watched my fair share of social networks rise and fall over the years, I feel pretty safe in saying we’re looking at an AOL-esque decline for Facebook.

We watched AOL fall from its ISP and online community peak in 2002 to what has become a struggling content holding company with a diverse brands like the Huffington Post, TechCrunch and more.

I would argue that Facebook has peaked in developed countries. Further, Facebook’s public status has exposed many weaknesses that some investors suggest begin with Mark Zuckerberg.

Like AOL, because so many stakeholders are vested in Facebook’s success (Wall Street, corporate America and those who simply love the social network) the decline will be slow, but steady, just like sand falling through an hour glass.

Some data is emerging to substantiate this theory:

  • Forbes reported that Facebook saw a 1.1% decline in U.S. users, and that in the 23 countries where Facebook’s penetration exceeded 50 percent, only nine expanded their user base over the past three months.
  • A recent study shows that the U.S. population is growing weary of the ultimate social network with most Americans expecting to spend less time on the network in the future.
  • The Like culture has become so pervasive that has devalued the impact of a thumbs up on content.
  • Early investors are fleeing the company further dropping an underperforming stock, including one mass sale from Peter Thiel.

      You may think that Wall Street makes a lot of bad decisions, and I’d agree with you. But when you see a plummeting stock price and early investors fleeing a new stock en masse, it gives you pause. The stock price issue is so bad Facebook is desperately trying to rally morale inside the company to get employees focused.

      Should You Jump Ship?

      Bear or Bull Market ?

      Image by ilovepiano

      So in my book, the writing seems to be on the wall for Facebook, just like it was for AOL when broadband began to take away its subscribers.

      Facebook simply has not adapted to the mobile era with its social network, and its user interface is still a nightmare in spite of the Timeline change.

      The less business friendly advertising-centric Timeline platform has serious issues in Madison Avenue’s eyes. Businesses want more return from Facebook efforts.

      Finally, consider that 15 months ago Pinterest, Path, Instagram (owned by Facebook), and Google+ were all non-factors in this picture. Now they are all vying for significant pieces of Facebook’s traffic and user base.

      With Facebook’s decline upon us, it’s time for social strategists to start investing elsewhere to make sure we move with our communities. Otherwise, we’ll be left behind, waiting for the next shiny object to jump on, and over invest in.

      The good news is if you are heavily vested in Facebook, the social network won’t collapse anytime soon. There’s time to watch for further signs of deterioration and/or migrate intelligently.

      What do you think? Is Facebook in decline?