Facebook at 10: Adapting to an aging user base

By Agence France-Presse | Updated: 3 February 2014 08:40 IST

As Facebook celebrates its 10th anniversary, the world's biggest social network is finding its path as a maturing company, adapting to an aging user base.

The company created in a Harvard dorm room in 2004 has established itself as a phenomenon, securing its place in the world of the technology giants.

"Facebook has made the world much smaller, much more interactive," said Global Equities Research analyst Trip Chowdhry.

"Facebook started the social revolution but it may not be able to control it."

In its short history, Facebook has become a part of daily life for more than a billion people around the globe.

Co-founder Mark Zuckerberg described the mission as "making the world more open and connected," and some say he has accomplished just that.

"More than 20 percent of all time spent on the Internet is spent on Facebook," says Lou Kerner, founder of the Social Internet Fund.

Yet in some ways, Facebook could be the victim of its own success.

Its initial core base of teens and university students has expanded, and Facebook is now widely used by people in all age groups.

Facebook says it has a global total of 1.23 billion monthly active users, including 945 million who use the social network on a mobile device. But some analysts note that Facebook has to shift strategy for an aging user base.

(Also see: Facebook crosses one billion active users mark)

An iStrategyLabs study of US Facebook users found a 25 percent drop in the number of users in the 13-17 age group, along with an 80 percent jump in the number of users over 55.

"People joke that for the teen, Facebook isn't cool when your mom is on it," Kerner said. "I think it's not even your mom any more, now it's also your grandmother."

The research firm Social Bakers says its data shows teens are a big and still-growing part of Facebook.

"The 18-24 year-old age group is still the largest," said the group's Ben Harper.

"Our data shows the growth of audience and interactions on Facebook, and while teens are undoubtedly using multiple platforms (as we all are), they are also sticking with Facebook."

In the United States, Facebook is used by 71 percent of all adults who are on the Internet, or 57 percent of the adult population, according to the Pew Research Center.

(Also see: Facebook the source of news for one-third of US adults: Study)

Pew found that while Facebook is used by 89 percent of online adults in the 18-29 age group, it is also used by 60 percent in the 50-64 age category and 45 percent of those over 65.

Facebook is maturing as a company as well. It had a calamitous initial public offering in May 2012 plagued by technical glitches, and saw its share price slump by half, but has been on a roll for the past year, with its stock hitting record highs.

Facebook has reassured its investors it can generate advertising revenue, particularly in the mobile segment used by an increasing number of members.

Facebook reported its profit for the full year 2013 jumped to $1.5 billion from just $53 million in 2012, and revenues increased to $7.87 billion from $5.1 billion.

(Also see: Facebook posts strong Q4 earnings, cites growth in mobile ad revenue)

According to the research firm eMarketer, Facebook has become the second-largest recipient of digital advertising spending behind Google, and is particularly strong in mobile ads.

"Facebook appears the best way to play the social Internet," Morgan Stanley analysts said in a note to clients, preferring Facebook to the up-and-coming network Twitter.

Some analysts point out that Facebook's appeal to grownups is a big part of maturation, and represents the key to generating revenue and profit.

"Advertisers place promotional content on Facebook for one reason only to generate sales," said analysts at the research firm Trefis.

"The vast majority of purchases made online come from users of ages 25 and above. One study suggests it is as high as 85 percent. With these figures in mind, the decline in users ages 13-24 becomes almost irrelevant."

Kerner note that being "cool" is not necessarily Facebook's long-term goal.

"You can't be the cool place forever," he told AFP.

"One of two things happen to companies when they're done being cool. They either go away, or they transition to becoming more of a utility. And Facebook is very successfully doing the latter."

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