By Terry Corbell
The Biz Coach
Is Facebook Approaching the End of Its Product Life Cycle? Yes
Updated – Jan. 9, 2013
If you’re a prospective Facebook stakeholder looking to profit from the social-networking site – as an investor or major advertiser – beware of all the Facebook hype. Facebook appears to be approaching the end of its product life cycle.
True, Facebook has 1 billion+ users worldwide and appears to be in the proverbial catbird seat. However, urgent caution is advised.
“You can’t be serious,” you’re probably thinking, “Facebook is huge.”
Firstly, consider: Facebook needs advertising revenue to sustain itself.
However, Facebook keeps self-destructing with highly questionable practices by incurring the wrath of the advertising industry and other stakeholders. (See: Facebook Draws Fire for 6 ‘Stubbornly Childish’ Behaviors.)
In addition, a 2012 reveals that social media, especially Facebook, only delivers 1 percent of an e-commerce site’s revenue (See: Social Media vs. Traditional Online Marketing – Where’s the Money?)
Furthermore, the seemingly constant Facebook buzz appears to be masking some serious red flags, especially, if you’re a major investor or marketer counting on it as an advertising medium Why? Published data indicates Facebook is showing signs that it might have advanced too far along its product life cycle (PLC) for you to reap a significant return on your investment.
A PLC, of course, ranges from the time when a product is introduced to market to when it’s no longer viable because of what the marketplace considers superior competitors.
The PLC stages:
In marketing, the PLC is important. In the introduction stage, sales are insignificant until the branding takes effect. Think in terms of a bell curve. The steeper the slope of the growth stage, the higher sales revenue you enjoy. Maturity is the stage when a product achieves saturation. Decline is just as the term implies.
Recent data demonstrates that a savvy investor or marketer would want to think twice about Facebook. That’s because Facebook appears it’s in the downward slope of its PLC curve in key markets. Yes, as amazing as it seems, Facebook appears to be already in its PLC stage 3 of reaching maturity – en route to stage 4 of a decline in popularity in many of the world’s most-important markets.
The first red flag about Facebook’s PLC appeared in this headline: Facebook Sees Big Traffic Drops in US and Canada … -Inside Facebook.
“Most prominently, the United States lost nearly 6 million users, falling from 155.2 million at the start of May to 149.4 million at the end of it,” wrote Eric Eldon. “This is the first time the country has lost users in the past year. Canada also fell significantly, by 1.52 million down to 16.6 million, although it has been fluctuating around that number for the past year. Meanwhile, the United Kingdom, Norway and Russia all posted losses of more than 100,000.”
Strangely, Inside Facebook reports the social networking site grew. But how?
“Most of the new users continue to come from countries that are relatively late in adopting Facebook, as has been the trend for the past year,” explained Mr. Eldon.
Facebook later denied it’s losing members in North America and Europe.
Facebook’s demise is illustrated by other indicators.
WebProNews originally published some eye-opening data from YouGov BrandIndex covering Jan. 3 to June, 13, 2011, which shows Facebook has had some serious erosion in word-of-mouth. (Note: In my experience, WebProNews articles should be taken seriously.)
To determine its Buzz score, which can range from 100 to -100, YouGov BrandIndex asked respondents: “If you’ve heard anything about the brand in the last two weeks, through advertising, news or word of mouth, was it positive or negative?”
In compiling the answers, the firm’s Buzz rating is then determined by subtracting the negative response from positive. Equal negative and positive responses lead to a zero score.
The eye-opening YouGov BrandIndex scores:
- Adults, 35-49, the Jan. score of 28.5 plummeted to 10.4 in June
- Adults, 18-34, the Jan. score of 36.2 dropped to 22.7 in June
Meanwhile, consider Twitter’s success as reported in this NewsFactor Network headline, Pew Study Finds Meteoric Growth in Twitter Usage.
“A meteoric rise in Twitter usage has been reported by the Pew Research Center, even though only 13 percent of online adults use Twitter,” stated NewsFactor Network in the article’s summary. “Pew also found that about half of Twitter users access the service on mobile phones, and African-Americans and Latinos have high Twitter adoption rates. Twitter expects more growth with photo sharing.”
In my experience, Facebook does not work in B2B advertising. Understand, however, if you’re marketing anything, you still need to maintain a presence on Facebook to keep your Internet ranking strong. Facebook’s marketing strength is B2C.
But if you’re counting on Facebook to generate a strong return on your advertising investment, my sense is recent indicators are not positive. That’s true, too, for disappointed investors in Facebook’s IPO in 2012.
From the Coach’s Corner, if you’re determined to advertise on Facebook, here’s how to maximize your odds: 11 Tips to Make Money onFacebook.
Things are not always as they seem.
Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.