Facebook Hangs Tough, For Now

At least in the short term, reports of Facebook’s demise have been greatly exaggerated.

That’s according to Forrester, which insists that Facebook Inc. is still on firm footing.

“Short-term, Facebook’s no-good-very-bad-2018 may have meant an overworked PR team, but the social-media behemoth is doing just fine,” according to Jessica Liu, senior analyst at Forrester, and lead author of the new report.

Indeed, the tech titan posted a 9% year-over-year increase in users in the fourth quarter of 2018, along with a 30% increase in revenue.

In addition. the three biggest threats to Facebook -- dissatisfied brands, disillusioned users, and regulations -- don’t pose an immediate threat to the company, according to Liu.

While users have the most say over Facebook’s fate, their behaviors change more gradually than many industry watchers appreciate.

“Growing distrust in an ‘addictive’ service manifests over years,” according to Liu.



At present, a staggering 71% of U.S. online adults still check out Facebook’s flagship app at least once a week, while 40% scroll their Instagram feeds at least once a week.  

Lui believes unhappy brands could have the most immediate impact on Facebook’s bottom line, but she doesn’t believe they will stop investing in the company anytime soon.

“Brands care only about executing their marketing plans,” she suggests. “The approximately 2.7 billion people using at least one of Facebook’s apps (as of December 2018) are just too enticing.”

Regulators will simply move too slowly and inelegantly to rock Facebook’s boat, Liu noes.

Long-term, however, Liu believes Facebook will be its own worst enemy. Specifically, she suggests Mark Zuckerberg’s insistence on restructuring the company as a private-messaging platform will backfire.

As Liu explained in an earlier report, Zuckerberg “is trying to strike an impossible balance between growing users and time spent in-app to fuel more advertising dollars, while also trying to build a singular ‘privacy-first experience’ to appease privacy regulators … all under a cloud of potential anti-competition breakups that could reduce the company’s services.”

Adding to Facebook’s long-term woes, social-media user growth will eventually stall, while regulators will make it increasingly more difficult for the company to keep buying competitors.

Hyper-targeting will increasingly conflict with Facebook’s new privacy vision, which will eventually turn advertisers off.

Over the long haul, Liu predicts, “Facebook doesn’t have much to trade on.”
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