Kids aren't talking about Facebook (NASDAQ:FB) anymore. It's all about Snapchat, Yik Yak, Vine, Tumblr, and Instagram. But while teens are using Facebook less, it is still the most popular social network in the age group by a wide margin.
According to a recent Pew survey of people aged 13 to 17, 71% of teens use Facebook. What's more, Facebook-owned Instagram is the second most popular, with 52% of teens using the photo-sharing app. And when asked which platform they use most often, 41% of teens named Facebook while another 20% said Instagram. Again, they were the two most popular social networks.
Worried about teens
During its third-quarter earnings call in 2013, then-Facebook CFO David Ebersman told investors the company had seen a decrease in daily use among teenagers. In response, analysts talked down, and investors sold off, the stock despite an excellent earnings report.
Indeed, the trend shows that teenagers are using Facebook less even if the vast majority of them still use it. Nearly every survey over the past two or three years shows a decline in the percentage of teens using Facebook. Even the Pew Internet group previously found that 77% of teens used Facebook in 2012, compared with the 71% it found in its most recent survey. (Pew says it used two different methodologies for the surveys, so the numbers aren't completely comparable.)
At the same time, we've seen an increase in the popularity of Instagram, which Facebook presciently purchased in 2012. In addition, Snapchat usage among teens has climbed to 41% to be third most popular according to the Pew survey. Facebook reportedly tried to purchase that photo and video messaging app in 2013.
So even as Facebook becomes less popular among teens, it's excellent at identifying the next big thing. And that's extremely important. The platform teens use eventually becomes the platform young adults use, and that eventually becomes the platform older adults use. We saw it with Facebook, we saw it with Tumblr, we saw it with Pinterest, and we're seeing it with Snapchat.
Moreover, Facebook seems to understand that mobile has enabled people to diversify their social networks. The ability to tap phonebook contacts makes it easy for any app to find your friends and create an instant network. Indeed, 71% of teens use multiple social networks.
Giving people more ways to use Facebook
In light of the competition Facebook faces for teenagers' attention, it's done an excellent job of keeping them engaged with its platform. One way it's done so is by creating a constellation of apps that all surround its main network. Instagram feeds its photos into Facebook's News Feed, while Messenger and Groups require a Facebook ID to use. Meanwhile, Facebook's Creative Labs has pushed out a bunch of new apps to see what works. It's most recent effort, Riff, is designed to increase the amount of video uploaded to Facebook while still being able to stand on its own as a video-sharing platform.
The strategy of producing multiple apps is not unique to Facebook, but it's certainly pulling it off the best. Google has tons of apps for Android and iOS, which all feed data back to the mothership. However, very few of Google's apps encourage its users to download another app or sign up for another service from Google.
Twitter told investors at its analyst day that it plans to release more stand-alone apps. Earlier this year, Twitter purchased live streaming app company Periscope, and it also owns Vine. Those are its only two apps beyond its flagship app.
The value of teens
As mentioned, teens are particularly telling when it comes to what the next big social network will be. That's one reason it's important for investors to monitor the popularity of Facebook among teens.
The second reason is that teens are one of the most valuable demographics in advertising. That's why we've seen apps such as Snapchat monetize its platform without providing much data for advertisers. Keeping teens engaged with Facebook means Facebook's average revenue per user will climb faster than without them.
Facebook has shown it's very good at identifying social apps that are poised to grow significantly. While its efforts to replicate those apps haven't been as successful, it's showing that it understands teens better than its major competitors.
Adam Levy has no position in any stocks mentioned. The Motley Fool recommends Facebook, Google (A shares), Google (C shares), and Twitter. The Motley Fool owns shares of Facebook, Google (A shares), Google (C shares), and Twitter. 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.