3 Reasons Facebook Inc. Users Are Getting Tired

With over 1.2 billion people on the site, is Facebook becoming like the old Yogi Berra quote? "Nobody goes there anymore, it's too crowded."

Apr 17, 2014 at 3:15PM

"You don't have a Facebook (NASDAQ:FB) account?" In a world where over 1.2 billion people have one, running across someone who isn't on the site is rare. In fact, when someone doesn't have a Facebook account, their friends often try to convince them to establish one. However, Facebook is beginning to remind me of the Yogi Berra saying, "Nobody goes there anymore, it's too crowded."

A cluttered desk
One of the reasons Facebook users are getting tired is the traditional desktop is getting less user friendly every day. One of the biggest benefits of using Facebook when the site was less popular was the simplicity of its design. Today, Facebook's desktop site is a crowded jumble of links. On the left side are groups of links for the News Feed, Messages, and Events, but there are tons of links for Apps, Groups, Friends, Interests, and Pages. As if this wasn't enough, the right side of the News Feed shows trending topics and multiple advertisements.

When you add all of this to the advertisements and Suggested Posts in the middle of the News Feed, users get a lot of stuff, and less of their friends' and family's information. Twitter (NYSE:TWTR) may have just 240 million users, but the site is far less crowded than Facebook. There are a few boxes for Trends and Who to Follow, but that's it.

Yahoo! (NASDAQ:YHOO) may not get as much press as Facebook, but the company reports that over 800 million users are active on the site monthly. The company's popular Finance portal has many links and ads on the main page. However, when you get to the individual stock pages, advertising falls to the background and information is presented front and center.

Sites like Yahoo!'s Tumblr, with its 150 million blogs, and Pinterest are almost exclusively about user-generated content, and advertising takes a back seat. The point is, Facebook's popularity and publicly traded status seems to be turning the company away from its roots of connecting people. When the company becomes more interested in monetizing users at the expense of the site's usefulness, investors might be witnessing the height of Facebook's popularity.

Speaking of monetizing
The second reason Facebook users may be getting tired of the company's changing personality is the frequency and interference of targeted advertising. In the last several months, Facebook's revenue and earnings growth has improved, in part due to an increased focus on targeted advertising.

Twitter, so far, only uses promoted posts and paid trends. Yahoo!'s Flickr site has virtually no advertising, yet hosts over 10 billion photos. By comparison, Facebook is becoming increasingly about in-line advertising. On the desktop, in-line advertising is lessened thanks to more available space for dedicated display ads. However, mobile in-line advertising is reaching an almost annoying level.

Targeted advertising on mobile shows up between every seven to 10 posts. This means to view 50 posts by family or friends, users must scroll past five to seven advertising links. In addition, each of these advertisements includes a scrollable list of multiple advertisements. In total, the user might see as many as 25 or more advertisements for every 50 posts they want to see.

A problem with Facebook's future
The third problem facing Facebook is, with users' frustration with increased advertising and a crowded desktop experience, teens don't want to use the site any more. According to GlobalWebIndex, U.S. teenagers active on Facebook fell to 56% near the end of 2013, compared to 76% at the beginning of last year.

It's not hard to understand why teenagers would avoid Facebook. For years, teenagers have valued their independence. It's hard for teenagers to freely voice their opinions when all of their friends and family are on the site as well.

The proliferation of prying eyes on Facebook is forcing teens to move to other sites like Vine (owned by Twitter), and Flickr. Since there is far less parental oversight on these fledgling sites, teenagers have the freedom to express themselves.

Final thoughts
Facebook's investors might be excited about the company's better financial results, but they need to make sure to keep up with how the user experience is changing. The idea that Facebook will dominate social media in the future just because it dominates today is short-sighted.

With a crowded desktop experience, increased ads in mobile, and teenagers opting for other platforms, Facebook has some real challenges. The company needs to get back to basics if it wants to continue its growth.

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Chad Henage has no position in any stocks mentioned. The Motley Fool recommends Facebook, Twitter, and Yahoo!. The Motley Fool owns shares of Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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