Facebook seeks fountain of youth
Facebook CEO Mark Zuckerberg on Monday said that the company is pivoting its strategy to focus on young adults, following reports that teens have fled its apps.
Why it matters: A series of stories based on leaked whistleblower documents suggest the company sees the aging of its user base as an existential threat to its business.
- Not only are younger users — especially those in the U.S. — a coveted demographic for advertisers, they're also key to Facebook's long-term growth trajectory.
What they're saying: On an earnings call with investors, CEO Mark Zuckerberg said Facebook will be "retooling" its team to make "serving the young adults their north star, rather than optimizing for the larger number of older people."
- "[O]ver the last decade as the audience that uses our apps has expanded so much and we focused on serving everyone, our services have gotten dialed to be the best for the most people who use them rather than specifically for young adults."
- Zuckerberg called TikTok "one of the most effective competitors that we have ever faced."
By the numbers: Data from the leaked whistleblower documents suggests that teens on Facebook's main app "were projected to drop 45 percent over the next two years." per The Verge.
- "Young adults between the ages of 20 and 30 were expected to decline by 4 percent during the same timeframe. "
- The number of new teen signups has also declined, according to Bloomberg's reporting based off of the leaked documents. Young people are also "taking much longer to join Facebook than they had in the past."
Be smart: Some of these struggles were revealed in the whistleblower Frances Haugen's complaint to the Securities and Exchange Commission a few weeks ago, in which she alleged that Facebook was misleading investors about young user declines and failed to disclose how many accounts were duplicates.
- Instagram, which it owns, has long served as Facebook's most youth-oriented service. But data from Piper Sandler's most recent survey on teens shows that Instagram continues to lose ground to Snapchat and TikTok.
Between the lines: Third-party data has long suggested that Facebook was losing ground with teens, particularly on its main app, but Facebook's announcement suggests that the company is starting to feel the competitive pressure from rivals.
- To boost youth engagement, Facebook has adopted new features that mimic rival apps. Last summer, Facebook launched its TikTok rival, called "Reels," on Instagram.
- Today, Zuckerberg says Reels are the "primary driver of engagement growth on Instagram." Chief operating officer Sheryl Sandberg said that more than 60% of video revenue now comes from "mobile-first" video, or videos less than 15 seconds or shot vertically.
Yes, but: Facebook has been trying to tackle this problem for years. And it's unclear how much weight to put on Zuckerberg's words, since the company is also eager to change the subject from all the reports based on leaked documents.
- For example, Facebook reportedly created a 100-person "teens team" in 2017 to make its apps more appealing to young users.
What to watch: The shift to lure back young adults, Zuckerberg says, "will take years, not months."