The Future Of Facebook, Inc.: Short-Term Gain, Long-Term Pain
Based on the many press inquiries we’ve received at Forrester, the industry is keen on predicting Facebook, Inc.’s immediate demise. (Note: Facebook, Inc. is inclusive of the Facebook app, Messenger, Instagram, WhatsApp, and its other apps, services, and hardware. We simplify and call it “Facebook” for the purposes of our research.)
But not so fast.
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. It continues to report steady user and revenue growth: a 9% year-over-year increase in users in Q4 2018 and a 30% increase in revenue in the same time frame. The three parties that could impact Facebook the most, or the most immediately, will move too slowly for it to feel any instant impact:
- Users would have the most profound impact on the social networks and messaging apps, but their behaviors change gradually — growing distrust in an “addictive” service manifests over years. Currently, 71% of US online adults (18-plus) visit Facebook app weekly, second only to Google at 86% (Instagram is fifth at 40%).
- Brands could affect it the fastest but won’t stop investing in social ads unless users disappear, because brands care only about executing their marketing plans. The approximately 2.7 billion people using at least one of Facebook’s apps last Dec 2018 are just too enticing.
- Regulators carry the most heft but will enact policy so unhurriedly that Facebook will shore up its assets in the interim — like its continued collection of first-party data on those 2.7 billion users or its omnipresence as the de facto internet in developing countries (via its internet.org initiative, also called Facebook Free Basics).
Long-term, Facebook’s push into private messaging will be its undoing. We blogged about this in an earlier post, We Should Chat About WeChat And Why Facebook Wants In. To crystallize this: Social media user growth will eventually stall (we are already seeing this with the Facebook app), pushing Facebook to add services to encourage greater use. However, regulators will clamp down on any Facebook acquisition attempts, stifling Facebook’s growth options. Further, advertising and hypertargeting on any hypothetical new services will conflict with its new privacy vision and ultimately hurt advertisers — and Facebook’s revenue. Where does this leave the social media company in the long term? With fewer users and advertisers, no hardware successes, and most content generated from its users, Facebook doesn’t have much to trade on.
Read our full report here: “Facebook, Inc.’s Scandals Will Not Doom The Company: Regulation Will Only Strengthen It In The Short Term.” And listen to our latest Forrester What It Means podcast episode for more on what the future holds for Facebook.