On Wednesday’s earnings call, Facebook reported revenue of $2.02 billion, noting that mobile is now generating half of Ad revenue and that mobile daily active users were on the rise. One notable negative item that cropped up on the call was that there was a “decrease in daily users specifically among younger teens.”
This caused a buzz that other networks like Snapchat, and (the Facebook owned) Instagram are gaining steam on the social giant. Techcrunch reported that after the news of the decline in “younger teens,” the after-hours share price saw a huge decrease after the announcement of that fact.
These claims come in the face of previous teen disengagement denials earlier this summer. Facebook did also note that they “remain close to fully penetrated among teens in the US.” When you currently have near full saturation on a market, it’s a significant battle to increase users. Facebook has considered combating this issue by lowering the age required for accounts, something that has yet to come to fruition.
If Facebook’s “young teen” audience is dropping, what networks are gaining? Earlier this Fall, the photosharing app, Snapchat, reported a 1650% increase in photo shares in just under a year, with users now sharing 350 million photos each day. Additionally, Instagram usage is on the rise. Last week, a report showed that Instagram was found to be the fastest growing social network.
While each of these networks shows significant growth, they are very different types of social networks that really don’t take Facebook on as a head-to-head competitor like a Google+ would. For starters, Facebook is nearly the exact opposite of Snapchat. Facebook allows for documenting one’s life and communicating with others in a meaningful way, while Snapchat allows users to send temporary photos. Facebook’s Instagram is thriving, but also has very different goals. Instagram lets users connect through images, and locations, but does not cater to those looking for general updates, information sharing or communication.
While this overall drop may draw hesitation from marketers and investors, the fact that a direct competitor has yet to emerge should calm any fears.