Facebook's (NASDAQ:FB) own customers rank it as the worst among all social media sites, a category that sits near the bottom in the latest American Customer Satisfaction Index survey, or ASCI.
That reported lack of customer satisfaction did not stop the social media giant from posting record revenue and huge gains in users in the recent quarter. People may not like Facebook, but more of them are using it -- and more advertisers are spending money on the platform.
It's possible, however, that poor perception will catch up to the company and hurt its business. Facebook has become something like a busy public highway -- everyone has to use it, but if an alternative emerged, many might be quick to change.
What the ACSI survey said
Overall customer satisfaction with social media, search engines, and online news and opinion websites climbed by 2.9%, to 73.4 on ACSI's 100-point scale. Split out social media, however, and the number drops to 71. That's up 4.4% but still leaves social media as the fourth-lowest-scoring category tracked by ACSI. Only airlines (69), subscription TV (65), and Internet service providers (63) fared worse.
Facebook did climb 8%, but its score of a 67 was well below the category average for social sites. The company may also be in for a big fall, as its improved numbers are from before news that the social networking giant manipulated the news feeds of a half-million users as part of a psychological experiment. ACSI believes that efforts to monetize -- which Facebook has done extremely well -- may also lead to customer dissatisfaction.
"Advertising continues to be a drag on the social media customer experience, but it is hard to tell if consumers are getting used to the advertising or if these companies have been able to offset disruption with tweaks to the rest of the experience," says ACSI Director David VanAmburg. "I'm surprised at the movement at the bottom of the industry, but it remains to be seen if these scores can hold as social media continues to monetize its users."
That idea is backed up by the fact that the top-rated social media company, Pinterest, which has an ACSI of 76, has just started to monetize. The presence of ads is still very subtle on the site.
How well is Facebook doing?
People may not love Facebook, but that hasn't stopped them from using it. During the second quarter, the site reported a 19% increase in daily active users, to an average of 829 million, from the same period last year. The company also saw a 39% rise in mobile daily active users, as well as a 14% increase in monthly active users, and a 31% spike in mobile monthly active users.
"We had a good second quarter," CEO Mark Zuckerberg said. "Our community has continued to grow, and we see a lot of opportunity ahead as we connect the rest of the world."
In addition to growing its audience, Facebook also grew its revenue to $2.91 billion for the quarter, an increase of 61% over the $1.81 billion recorded in the second quarter of 2013. Revenue from advertising was $2.68 billion, a 67% increase from the same quarter last year. Mobile advertising revenue accounted for approximately 62% of advertising revenue for the period, up from approximately 41% in the second quarter of 2013.
It's hard to see how Facebook has been hurt in the short term by customers being less than satisfied with its product.
Does Facebook need to be liked?
When a company becomes as ubiquitous as Facebook, a backlash is inevitable. The social media site, which was once just for the cool kids, has now become the place your parents and grandparents hang out. That has not yet caused younger, hipper users to flee the site, partly because there is no real alternative.
You may not want to be on Facebook, but it has become ingrained in our society that if you stop using it, you will miss out on things like high school reunions, birth announcements, and even deaths.
The challenge for Facebook is not whether it stays popular while it's the only game in town, but what it would do if a real alternative arises.
The reality is that while users love to grumble about every change made by Zuckerberg and his team, the social media giant is not actually disliked. People have negative feelings about cable companies and ISPs because they offer poor service, high prices, and a bad attitude. Facebook is almost never down, remains free, and provides a useful service.
Cable companies and ISPs are the crazy girlfriends/boyfriends we break up with as soon as we can figure out how to do so without them boiling our proverbial bunny. Facebook is the long-term spouse we've grown familiar and comfortable with but don't always have something to say to.
Should Google find a way to offer nationwide Internet service, it would likely devastate the traditional ISPs. Facebook is as vulnerable to competition as any company, but people aren't looking to leave, and any competitor that hits a certain scale would likely face similar satisfaction issues.
Facebook is like McDonald's -- the place everyone pretends they don't go, even though they're secretly sneaking Big Macs ... probably while typing in Facebook status updates.
Daniel Kline has no position in any stocks mentioned. Jake Mann has no position in any stocks mentioned. The Motley Fool recommends Facebook and Google (C shares). The Motley Fool owns shares of Facebook and Google (C shares). 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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