Facebook's (FB 2.29%) popularity among teens continues to wane, according to a recent report from Frank N. Magid Associates. The study found that 88% of surveyed U.S. teens still used Facebook -- a decline from 94% in 2013 and 95% in 2012. Meanwhile, another study from Pew Research found that usage among U.S. users older than 65 rose from 45% in 2013 to 56% in 2014.
Those figures complement a study from iStrategyLabs last January, which found that Facebook usage was steadily declining among users between the ages of 13 to 24, yet rising among all age groups over the age of 25.
Source: Pixabay.
Facebook's critics often cite those numbers as proof that the social network isn't "cool" anymore, and that nosy parents are scaring off younger users. While that might be true, let's explore why Facebook's investors needn't worry about that loss of teen users at all.
Facebook is still gaining users
Although U.S. teen usage declined between 2012 and 2014, Facebook's monthly active users (MAUs) rose from 845 million to 1.35 billion between the end of 2011 and the third quarter of 2014, indicating how the influx of older users easily offsets minor declines in teen usage.
Moreover, most studies regarding teen usage of Facebook solely focus on the U.S. market, while most of its growth now comes from overseas. For example, research firm eMarketer expects Facebook's American user base to only inch up 2.6% year-over-year in 2015, while its Indian user base is expected to grow by 28.4%.
Facebook is already popular among young Indians, with 70% of "tweens" (10 to 12 year-olds) already having an account (despite 13 being the minimum age), according to TechSiren. Ultimately, rising usage among teens in emerging markets can offset tepid growth in the U.S.
Teens left Facebook ... for Facebook
Last October, Piper Jaffray reported that teen usage of Instagram was increasing, rising from 69% in the spring of 2014 to 76% in the fall, while also citing that teen use of Facebook was declining. The most commonly cited reason for Instagram's rising popularity was the belief that fewer parents were active on the network.
The irony, of course, is that Facebook owns Instagram, so it was merely "losing" teen users to itself. That swap helped Instagram's MAUs soar from 90 million in Jan. 2013 to 300 million in Dec. 2014 -- making it slightly larger than Twitter (TWTR +0.00%).
The downside, however, is that Facebook hasn't fully monetized Instagram yet. It launched video ads last October, but it's unclear if they can generate as much ad revenue per user as Facebook ones.
Older people have thicker wallets
Facebook's influx of older users makes the network more lucrative to advertisers, primarily due to the spending power Baby Boomers carry.
Nielsen and BoomAgers previously forecasted that between 2012 and 2017, Baby Boomers in the U.S. would control 70% of the nation's disposable income while purchasing around half of all consumer-packaged goods. (By comparison, the average annual income of an employed 15-17 year old last year was only around $4,900.)
And according to Jupiter Research, one-third of all U.S. Internet users were over the age of 50, while Pew reports that two-thirds of those 50+ users bought goods from e-tailers.
Source: Pixabay.
The Boomers' high spending power and online presence means that they might be more willing to click on ads than younger ones. That could improve Facebook's average click through rate (CTR) per regular display (not News Feed) ad, which Wolfgang Digital pegs at only around half the average CTR of display ads across the Web.
The long-term outlook
Looking years into the future, Facebook's younger users will age, leave home, and have families of their own. In this context, it's possible that Facebook's "runaway" teens will return to reconnect with their parents and friends, and possibly start checking up on their own kids.
The key takeaway here is that this shift between teens and older users could be cyclical rather than permanent. Ultimately, investors should focus instead on the network's growth among younger users in emerging markets like India, instead of mature ones like the U.S., to get a clearer perspective on its global teen use.
