Facebook Faces Network, Demographic Issues

Reports began rolling in early this morning from the United Kingdom that Facebook Inc. (NASDAQ: FB) is suffering from an outage that is leaving some users unable to reach the site either through desktop or mobile applications. The problem is also causing a flurry of activity on Twitter from U.S. Facebook users.

While we can be pretty confident that Facebook will sort out its network issues, the company faces a bigger challenge from its legion of users: teenagers are abandoning the social media site in large numbers. According to a new study by retail analysts at eMarketer, Facebook usage by teenagers between the ages of 12 and 17 will decline by 3.7% this year, the first time the analysts have reported a decline in usage by any age group.

That’s the bad news. The less-bad news is that Facebook-owned Instagram is picking up some of the defectors. That’s only less-bad because Instagram is running behind Snap Inc.’s (NYSE: SNAP) Snapchat in corralling the defectors.

eMarketer senior forecasting analyst Oscar Orozco said:

We see teens and tweens migrating to Snapchat and Instagram. Both platforms have found success with this demographic since they are more aligned with how they communicate—that is, using visual content. Outside of those who have already left, teens and tweens remaining on Facebook seem to be less engaged—logging in less frequently and spending less time on the platform. At the same time, we now have ‘Facebook-nevers’—children aging into the tween demographic who appear to be overlooking Facebook altogether, yet still engaging with Facebook-owned Instagram.

eMarketer is now forecasting that Snapchat’s U.S. user base will rise by 25.8% this year to 79.2 million with the biggest addition coming from the 18- to 24-year-old age group. The analysts now see Instagram growing by 23.8% in 2017 to 85.5 million users, expanding its base by 19% among users younger than 12 and by 8.8% among users ages 12 through 17.

Even though Instagram will end the year with more users than Snapchat, the newer social network beats Facebook for users in the two younger demographic groups. By the end of the year, thanks to 12 to 17 year olds and 18 to 24 year olds, Snapchat’s share of U.S. social network users will rise to 40.8%.

Facebook’s network outage will get sorted out relatively quickly. The company’s demographic issues are likely to take longer.

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