Facebook's Teen Crisis ... Not So Much

It seems that predictions of the social media giant's impending demise may have been flat-out wrong.

Jul 2, 2014 at 7:19AM

After former Facebook (NASDAQ:FB) CFO David Ebersman said last fall that fewer teenagers were visiting the site, everyone from the business media to a Princeton University study predicted the social media site's downfall. Even President Barack Obama was overheard by a reporter for The Atlantic saying this about reaching teens: "It seems like they don't use Facebook anymore."

Younger users were migrating to other social media sites, the theory went. Whether it was Twitter (NYSE:TWTR), Snapchat, or a highly unlikely triumphant return of Friendster, Facebook was going to die because teens no longer found it hip.

New research from Nate Elliott at Forrester shows that it's not true.

How the death of Facebook predictions worked
A variety of credible researchers took a downturn in the social media giant's popularity with younger users and forecast a doomsday scenario. If Facebook's popularity dropped by a few percent -- to smaller, but still enormous -- and some upstart climbed by a seemingly impressive amount -- to bigger, but still small -- the conclusion was that Facebook would start to plummet while a new competitor would assume the throne.

In January, comScore data obtained by Digiday was used to color this story. According to the study, Facebook's penetration among U.S. adults age 18-24 decreased by about 3%, to 88.6%, between February 2013 and November 2013. During the same time period, Twitter, Tumblr, Snapchat, Vine, and Facebook's Instagram all gained users. Facebook was still the most popular social media service on college campuses, but the slight downturn could be extrapolated into a big problem. If that 3% doubles, then doubles again, the math gets scary pretty quickly. Add in that other services can post huge percentage gains because they were starting from relatively nothing, and you can see how seemingly legitimate numbers could be used to come to an illegitimate conclusion. 

In the time period studied, Facebook fell by 3% with young users while Snapchat's reach among adults 18-24 increased eight-fold, to 25.9%, in November 2013 from 3.2% in February 2013. Vine -- launched in late January 2013 -- went from not even registering with comScore in February 2013 to 25% penetration in November 2013.

In reality, Facebook took a little dip but is still dominant. A variety of other platforms grew, but whether they have any staying power remains to be seen.

What the real story is
Elliott did a deep dive into the comScore data, and the first thing he discovered probably should have been reported more widely when everyone was predicting Facebook's collapse. While comScore was correct in reporting a 3% drop in college-aged Facebook usage, the research firm also reported that 89% of this audience still used Facebook -- far more than used any other social site. Having 89% penetration within an age group for anything is stunning. It might not be as good as 92%, but to put it in perspective, let's examine the percentage of households who watched the last Super Bowl in Seattle and Denver -- the markets of the two teams playing.

Fewer than 57% of households in Seattle watched the Seahawks win their first-ever championship, according Nielsen, while 58.1% watched their team lose in Denver.

The percentage of college users on Facebook even trumps the 80% of Americans who eat fast food once a month, according to a 2013 Gallup poll. 

If 89% is failing, then any other company would gladly take that kind of failure.

Forrester took things a step further and conducted its own research to check whether the next generation of teens would be the ones to flee Facebook for other sites. The research company asked 4,517 American kids age 12 to 17 not just whether they use certain social sites, but also if they use those sites "about once a day," "at least a few times each day," or even if they were on any of the sites "all the time." The results were clear:

Facebook remains young users' favorite social network. More than three-quarters of online youth use Facebook -- twice as many as use Pinterest or Tumblr or Snapchat, and more than use Instagram and WhatsApp combined. And 28% of young users who are on Facebook say they use it "all the time," a higher percentage than said this about any other social network.

Elliott put it succinctly at the end of his blog post: "The sky is not falling. Facebook does not have a problem attracting or retaining teen users."

Why do people want Facebook to fail?
The media wants Facebook to falter because a stumbling company is more interesting to cover than one that's firing on all cylinders. Competitors want the social media giant to fail because Facebook so heavily dominates the social media scene that the loss of even a fraction of its users might be enough to lift another company to success.

Facebook also sucks up a lot of money. The company had $2.5 billion in revenue for the first quarter of  2014, an increase of 72%, compared with $1.46 billion in the first quarter of 2013. Twitter -- the only other public company on the list of potential challengers -- had Q1 2014 revenue of $250 million -- 10% of Facebook's. The others were all well below that, so you can imagine how the idea that young people might be tiring of Facebook could warm a few hearts at the company's rivals.

Social media may no longer be like the old Highlander movies, where only one sword-wielding immortal can survive. Facebook dominates, but that does not mean it has to fall apart for Snapchat or Twitter to succeed.

The history of social media has been a progression of companies climbing to the top then being knocked off by the next big thing. That does not appear to be how things will go for Facebook. If others will rise, it will likely be in tandem with the established leader. 

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Daniel Kline has no position in any stocks mentioned. He uses Facebook and Twitter. The Motley Fool recommends Facebook and Twitter. 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.

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