Facebook's Astonishing Milestone

Social Network Hits 2 Billion Users


In its last quarterly results, Facebook reported 1.94 billion monthly active users and tenfold growth over the past eight years. At the current growth rate, the company will reach 2 billion monthly active users this weekend, 10 and 11 June. This means that about 30 percent of the world's population uses the site at least once a month.

Facebook's recent growth is nothing short of astonishing. During the past six years, its quarterly revenue growth has never been less than 30 percent and has often exceeded 50 percent.


MG_Figure1

Figure 1. Facebook monthly active users and revenue growth rate


During 2008 to 2012, Facebook started seeing serious network effects, growing very rapidly, hitting critical mass and making life difficult for other aspiring social media sites. Remember Apple Ping, Badoo, Bebo, Diaspora, Google Buzz, Google Me, Hyves, MySpace, Orkut, StudiVZ, Tuenti and others?

As this happened, Facebook and Google — with its dominance of search in Western countries — became something of a duopoly for advertising dollars as online advertising grew. In recent quarters, the two companies have come to account for over 60 percent of total online advertising spending in the US and 20 percent worldwide. They took 99 percent of recent online advertising growth in the US. The remaining 40 percent of online ad spending in the US is shared between all the other rival platforms, so each one can only attract a fairly small share, and that remaining slice is barely growing.

Facebook's revenue performance accelerated in the last six quarters since late 2015, thanks to gradual improvements to its advertising formats and its ability to finely target users. In its latest results, Facebook's revenue growth rate dipped only just below 50 percent per year for the first time in 18 months.

But the growth of online advertising overall is slowing and it seems that the end of this phase of hypergrowth is in sight. There are two possible trajectories for Facebook's development in the next five years.

Firstly, there's still growth in the core advertising business, as companies continue to switch budgets from traditional forms of advertising to online ads. Facebook is working hard to take a large share of that, expanding advertising on Instagram and moving toward higher-priced video ads. We also expect artificial intelligence to play a growing role in improving the effectiveness of advertising.

At the same time, Facebook is attracting much more attention from governments, partly for its role in allowing terrorist messages to spread on the site, and partly for its role in shaping public opinion, especially during elections. In fairness, political parties are becoming adept advertisers on Facebook, exploiting the reach of the platform and targeting capabilities to shape opinion in their favour.

So, a crucial question Facebook needs to address is whether its core service is a pure platform, in which it has minimal editorial control, or whether the company is becoming a publisher, meaning it will increasingly need to take an editorial position and vet content appropriately.

Secondly, as growth of advertising slows, Facebook will need one or more of its potential growth areas to start on a hypergrowth course and to contribute meaningful revenue. There are several candidates within the company. They include WhatsApp, bots on Messenger leading to paid-for interactions with companies, Marketplace, its new Events app, groups, search, enterprise usage with its recently rebranded Workplace and Work Chat services, video content and virtual reality with Oculus.

However, one of the main problems these platforms face is that they are services operating in competitive markets and may not experience the network effects that social networking produced in the company's core business. It's therefore unlikely that they'll be able to replicate the same level of rapid growth that Facebook witnessed to date.

As if to underline that point, Google used its I/O developer conference in May to announce that it had become the first tech company worldwide to hit 2 billion monthly active users with its Android operating system. This doesn't detract from Facebook's achievement, but it serves as a reminder that the next phase is going to be harder fought.

This entry was posted on June 9th, 2017 and is filed under Services. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Posted By Martin Garner On June 9th, 2017


Comments
Kevin Breen/ CyberActive Limited
- 2017-06-15 at 01:16
Quite staggering growth & numbers which have to date confounded the supposed law of big numbers! Tougher times ahead perhaps given the connectivity "digital divide" still in some parts of the world in this much hyped digital age. The other key question is the value (or interest) proposition for new users... Will saturation or disinterest begin to raise its head more frequently. I know lots of people who don't want to likelog, never take pictures of their food rather than just enjoy & savour it!
Leave a Comment

Hot News

Team Tweets

CCS Insight
RT @mobilityxchange: Great analysis - @nickmcquire of @CCSInsight says @Microsoft is ready to lead the #enterprise #AI boom: https://t.co/I…
Follow CCS Insight
Shaun Collins
RT @CCSInsight: What does 2018 hold for the connected world? We reveal our predictions on 15 November. Get in touch for more info https://t…
Follow Shaun
Ben Wood
Test driving @TAGHeuer Connected Modular 45 smartwatch powered by @AndroidWear and @Intel #TechBling https://t.co/NGjajFEskO
Follow Ben
Martin Garner
@helium launches new Atom connector, Element access point + cloud router. Key are simplicity, zero config, security. https://t.co/nzjZHU0Obk
Follow Martin
Geoff Blaber
Apple legal wrangle aside, i'd wager the MSM shipment guidance points to Qualcomm maintaining position in new iPhones. Apple still reliant
Follow Geoff
Marina Koytcheva
@nationalrailenq You think you are excused for the inconvenience? Is the signaling system ever going to get fixed??? https://t.co/wRlCbQZPuN
Follow Marina
Nicholas McQuire
#IBM defends analyst questions over the competitive viability of #Watson & its cognitive computing #AI strategy https://t.co/zopmWeqiNY
Follow Nicholas
Paolo Pescatore
TalkTalk results: Good start to new fiscal year compared to last year. Stable multiplay base & continued demand for… https://t.co/hyeYjaBl6b
Follow Paolo
Kester Mann
Colao on Wi-Fi: “75% of mobile data is still Wi-Fi, but cellular continues to substitute it due to greater quality and on-going deployment".
Follow Kester
George Jijiashvili
RT @benwood: Video for Volterman smart wallet almost beyond parody. A *must watch* for all the wrong reasons. Watch to the end! https://t.c…
Follow George
Katie Taylor
RT @GdnPolitics: Whether you are calling it #BattleForNumber10 or #mayvcorbyn, don't forget to play along at home https://t.co/Aj4SG7lkaS h…
Follow Katie
Tony Worthington
RT @CCSInsight: Etisalat's struggles in Nigeria raise the prospect of the mobile market shrinking back to three operators: https://t.co/uHO…
Follow Tony

Recent Blog Posts

Blog Post
Microsoft Showcases Its AI Leadership Strategy Addresses Ethics and Human Aspects of Artificial In... Read more
Blog Post
A Big Blue Mesh Bluetooth SIG Announces Mesh Networking Mesh networking is ... Read more
Blog Post
Reinventing the Bus Citymapper Trials Its Smart Bus in London Citymapper, the p... Read more
More blog

Latest Company News

Blog Post
Halcyon Days Ahead for Indian Telecom Market CCS Insight Predicts Consolidation in India to Just Four Mob... Read more
More news