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It's no secret how Facebook (NASDAQ: FB ) was able to (finally) blow past its inflated IPO price of $38 and climb to the $50-a-share range the past month: It's all thanks to exploding advertising revenues in general, and mobile in particular. CEO Mark Zuckerberg's commitment to mobile, and the results of those efforts, is what everyone will look at again come its third-quarter earnings announcement on Oct. 30.
What's that got to do with the results of a recent report demonstrating that Twitter (NYSE: TWTR ) surpassed Facebook as the most "important" social media site by teens? The report does confirm what many suspected: Teens are abandoning Facebook for Twitter. For investors, the bigger question is: Does it even matter? Turns out, not so much.
The semi-annual teen market research report, issued by Piper Jaffray and supported by data from Pew Research, shows that Facebook's importance with teens dropped to 23% this fall compared to 42% last year -- a precipitous decline, to be sure. At the same time, Twitter's relevance with teens stayed relatively flat, falling from 27% in 2012 to 26% this year.
And Facebook was hardly the only social media outlet losing importance with teens. Google (NASDAQ: GOOGL ) and its once-rapidly growing Google Plus does have a ton of registered users -- about 500 million at last count -- but dropped from 6% to 3% in relevancy among teens. The 3% of teens that still consider Google Plus important is in line with the latest figures overall, too. In terms of "social sharing," Google Plus accounts for a mere 2% of the market. Clearly, teens aren't the only demographic ignoring Google's social media efforts.
There are a couple of points worth considering before Fools lament the death of Facebook coolness among our youngsters. One, Instagram's importance among teens nearly doubled year-over-year, from 12% to 23% in 2013. Last year's $1 billion deal to acquire the fast-growing, picture-sharing social media site is looking pretty good about now. As Facebook noted in its Q2 earnings release, the introduction of video on Instagram was also a hit, resulting in five million new uploads the first day.
Certainly, many teen Facebook users are also Instagram aficionados, so determining the number of total Facebook, or Facebook-owned, sites deemed important by teens isn't as easy as adding 23% and 23%. But it's safe to say between the two, Facebook is doing fine with the kids.
The second, and most important point to note in examining the loss of teens on Facebook is what the demographic contributes to what's most important to its shareholders: advertising revenue.
It's all about the (mobile) ads
Online advertising in general, according to Nielsen research, is most successful when targeting users in the 21-34 age group. As for advertising on mobile devices, those targeting women aged 25 to 34 are far and away the most profitable demographic for advertisers -- and by extension, Facebook and Google, which live on ad revenues. Teens? It's not even close. Young women generate more than double the revenue than that of teens, and 25 to 34 year-old males are also considerably more profitable for advertisers.
Ads targeting folks aged 55 and over is the only group seeing worse mobile results, dollar for dollar, than those shooting for the teenage market. And you can bet advertisers using Facebook and Google as a medium, not to mention Facebook and Google themselves, are well aware of who's clicking on what and how often.
Ignoring teens with their overwhelming adoption of mobile devices isn't the answer for Facebook or Google; neither should leave money on the table. For Facebook, that's not where its bread is buttered, anyway, so investors shouldn't be overly concerned about how "important" Facebook is to teens.
Just as with Facebook's Q2, Fools can expect to see significant year-over-year growth in advertising revenues, especially in its mobile segment. It's difficult to imagine that slowing anytime soon. The growth may not come from teens, but who cares? Don't tell your teenage son or daughter this, but they're really not that "important" to Facebook, either.
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