To say that it’s been a tough, albeit self-inflicted, year for Facebook would be quite the understatement. The company was outed by the FBI when it was reported that Facebook inadvertently allowed Russian hackers to spread false news in the days leading up to the 2016 presidential election earlier this year.
Then, of course, there was the whole controversy with Cambridge Analytica and how it inappropriately used data mined from the social network’s users. Then, just when you think things couldn’t get any worse from a public relations perspective, the company lost about 20 percent of its market value – or about $120 billion – in late July when stocks plunged on a massive single-day decline.
Facebook is a company that is definitely in need of some good news, and this didn’t come in a recent Pew survey which gauged the company’s perception and use of its platform among the Millennial generation. Here’s a look at the results.
Survey Says… Not Good
Pew recently surveyed about 3,400 Facebook users ages 19 through 29, a crucial demographic that Facebook covets in order to cater to its current and potential advertisers. The only problem is that advertisers aren’t going to be interested in decreased usage. Among those who were surveyed, more than 40 percent admit to have deleted the app from their mobile phones within the past year. Additionally, about half of those surveyed stated that they’ve taken a break from Facebook for several weeks within the last year.
Now, to put things in context, that’s not great news for Facebook. After all, it’s this younger generation that Facebook wants to engage with on their mobile phones. However, it’s worth noting that just because a user has deleted the Facebook app from their phone doesn’t mean that they still aren’t accessing the social network from a work or personal home computer. The survey also doesn’t take into account whether or not users re-installed Facebook after deleting it from their phones, which would be information that would be helpful in assessing the platform. Finally, the survey is also only North America based, so it doesn’t factor in the growth and increase in usage throughout the rest of the world, which is on the upswing. That much at least is a positive for Facebook.
However, a big part of the reason why Facebook redesigned its algorithm earlier this year was to make the platform more engaging so users saw less news and company information and more status updates from their friends. Delete the app, and you’re not getting this engagement from one of its core access points – the mobile phone. And taking breaks from Facebook for several weeks at a time is certainly not information that’s going to have investors jumping for joy.
Facebook Plays Defense
Another very likely reason for reduced usage is the concern of privacy. This concern has escalated over the past year as reports have shown various data breaches and infiltrations into the platform to influence users. And a recent announcement from Facebook’s former head of security that it’s no better prepared to fend off Russian interference for the upcoming 2018 midterm elections than it was in 2016 also likely have people concerned.
It’s a good bet that Facebook’s stock will continue to stand pat and even marginally dip in the near-term, and part of the reason for it is because the company is spending more of its resources on fighting the spread of fake news and enhancing security efforts. That cuts into profit, but spending money on this is not necessarily a bad thing.
What About Instagram and WhatsApp?
Did you know that Facebook also owns Instagram and WhatsApp? Chances are that lots of people don’t, which is likely the reason why these two platforms are still so poised for much more growth. Even knowing this, however, Instagram and WhatsApp don’t have the negative stigma that Facebook is currently carrying with it when it comes to data breaches and privacy – and that’s another reason why there’s more room for growth in these two platforms.
Facebook has had a rough go lately. Stay tuned to see which steps the social network takes to regain user trust and build engagement.
Regards,
Ethan Warrick
Editor
Wealth Authority
