Facebook Users Take a Break

In the U.S., Facebook (NASDAQ: FB  ) dominates the social media market. An estimated 67% of the U.S. adult population that uses the Internet have a Facebook account. For those keeping track at home, we're talking about more than 150 million users checking in, updating their statuses, and consuming the latest gossip. In a world that's become increasingly connected, it's not surprising to hear that most of us need some time away from the latest viral cat video. According to a recent study conducted by the Pew Research Center, 61% of current Facebook users have voluntarily taken a break from Facebook for several weeks or more. Perhaps even more surprising is the fact that 20% of U.S. Internet-using adults have become ex-Facebook users, as in they aren't planning on coming back. Could this potentially undermine the long-term value of Facebook's business model?

Too busy to care
The most popular reason why users took a break from Facebook was because they were "too busy" to keep up with the never-ending supply of status updates. Although 21% of Facebook escapees felt overburdened with commitments, the following four reasons had something negative to say about the experience. Together, these detractors made up 37% of hiatus takers, with reasons including a lack of interest, a waste of time, too much gossip, and too much time spent on the site.

Risk to advertisers?
Facebook as an advertising platform is very much in its infancy. The company is in the process of developing its ad analytic technology, while simultaneously increasing its monetization efforts. During its most recent conference call, CEO Mark Zuckerberg reiterated Facebook's three main priorities, including earning the trust of marketers by proving the value of the Facebook platform. This all sounds fine and dandy, as long as engagement levels remain high. According to Facebook, the company finished 2012 with strong engagement across its products and expects the momentum to continue into 2013. However, Pew Research found that only 3% of respondents said they plan to spend more time on Facebook in the coming year, 27% of users said they plan to spend less time, and 69% plan on making no changes to their time spent on the social network.

APRU effects
In mature markets where user growth is slower, there's a greater emphasis on monetization. Last quarter, Facebook's worldwide average revenue per user was $1.54, whereas the U.S. and Canadian market brought in $4.08 per user. Despite the fact that member growth has been slower in the U.S. and Canada than elsewhere, APRU saw strong growth, rising 22% sequentially and 38% year over year. Even if 27% of adult U.S. Facebook users plan on spending less time on the site, the impact may be negligible as monetization remains a key focus.

Better priorities
As Facebook users continue to recalibrate their time spent online to better reflect their priorities, some of that time could be directed toward LinkedIn. According to Pew Research, only 20% of U.S. adults use LinkedIn, which pales in comparison to Facebook's 67%. There could be a tremendous opportunity for LinkedIn to increase its market share by better proving its relevance to society. Considering there are only 200 million LinkedIn members worldwide, it seems there's a lot of untapped market share to be had.

A question of worth
Have we reached the point of social overload? Research like what Pew uncovered raises the issue of spending too much time connected with friends. Aside from Facebook proving its worth to marketers, the company also has to prove its long-term value to society. Currently, Facebook's entire business is held together by the thin fabric of sharing information with one another. It's entirely possible that the world may become less enthused with this idea, which could put Facebook's business model at serious risk. Going forward, I think it's important for Facebook to drive new levels of engagement beyond its social core. Good thing it just invented the Holy Grail of mobile advertising.

After the world's most hyped IPO turned out to be a dunce, most investors probably don't even want to think about shares of Facebook. But there are things every investor needs to know about this company. We've outlined them in our newest premium research report. There's a lot more to Facebook than meets the eye, so read up on whether there is anything to "like" about it today, and we'll tell you whether we think Facebook deserves a place in your portfolio. Access your report by clicking here.


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