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
Qualcomm takes aim at the server silicon market with Centriq 2400 https://t.co/GziZl8sPP6 https://t.co/6yUxnilCsr
Follow CCS Insight
Shaun Collins
Good day today. At the @TheO2 watching @rogerfederer and @JackGrealish1 on the bench for @AVFCOfficial at @QPRFC.
Follow Shaun
Ben Wood
Think we’ll be seeing a lot more capabilities added to HomePod beyond high end audio when it finally shows up. Very… https://t.co/qjDDoK8rS9
Follow Ben
Martin Garner
@Google TensorFlow Lite launched in beta: https://t.co/MtHWGweD32. Late, but strong competitor to Azure IoT Edge an… https://t.co/FQi4JKOvOK
Follow Martin
Geoff Blaber
RT @mikeddano: . @sprint COO of Technology @guengott68 is leaving the company just a week after @Son_Softbank promised to triple Sprint's c…
Follow Geoff
Marina Koytcheva
@EisenTV @CCSInsight Ah! I thought I said "brief success" :)
Follow Marina
Nicholas McQuire
RT @lbcbreaking: AC/DC co-founder and guitarist Malcolm Young has died aged 64, the band has announced.
Follow Nicholas
Paolo Pescatore
@SpringhamJustin Shame they don’t play like that every week!
Follow Paolo
Kester Mann
RT @CCSInsight: A leading Western operator adopts a radical new business model by 2021 #ccspredicts https://t.co/4TfM8XpeSN
Follow Kester
Laura Simeonova
RT @CCSInsight: Optimization for artificial intelligence defines competitiveness in mobile chipsets in 2019 and beyond #ccspredicts https:/…
Follow Laura
Katie Taylor
RT @guardianscience: Scientists make first ever attempt at gene editing inside the body https://t.co/e8u0BT9a09
Follow Katie
Tony Worthington
Thoroughly enjoyed speaking at #ccspredicts event today. They get better every year. Keep it going Team CCS! https://t.co/6A5hQF9ESR
Follow Tony

Recent Blog Posts

Blog Post
Mobile Scale, from Device to Data Centre Taking Advantage of a Colossal Market The technology indu... Read more
Blog Post
Multi-Gigabit Wi-Fi Comes of Age Faster Wi-Fi in an Age of Gigabit LTE Multi-gigabit Wi-Fi... Read more
Blog Post
Uber Partners with NASA Ride-Hailing Company Envisions Flying Cars Uber moved a ste... Read more
More blog

Latest Company News

Blog Post
CCS Insight Predicts 1 Billion Users of 5G by 2023, with More Than Half in China 5G to take off faster than any previous mobile technology ... Read more
More news