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How Will These New Developments Impact Facebook’s Dominance?

Shrinking word-of-mouth and glimpses of new strategy

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Last week, we ran an article about the future of Facebook, discussing what we might be using Facebook for in five years, including things like search, e-commerce, travel, identity, payments, movies, music, etc. This week, we followed that up with a piece asking if Facebook has peaked. This was based on a handful of studies that showed slowed growth for the massive social network, while Twitter adoption is on the rise. Since then, some more things have come out that can give us more clues about where Facebook is headed.

Can Facebook dominate forever? Share your thoughts.

Shrinking Word of Mouth?

First off, YouGov BrandIndex tells WebProNews, our previous article on Facebook “peaking” inspired some research, which found that Facebook’s word of mouth has been declining since the beginning of the year among adults 18 and up. This “may create some potential investor concern as the company considers its IPO,” the firm says, adding:

While Facebook is still very well positioned in its space, there is other evidence that points to potential challenges ahead. According to Inside Facebook Gold data service, while Facebook is approaching its 700 million user goal, most of the gains have been from countries who adopted it later than North America. Growth numbers have recently slowed down and the United States lost 6 million users in May alone.
 
Facebook’s word of mouth was measured by YouGov BrandIndex using its Buzz score, which asks 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?” YouGov BrandIndex’s measurement scores range from 100 to -100 and are compiled by subtracting negative feedback from positive. A zero score means equal positive and negative feedback.

Those scores:

ADULTS 35 – 49
 
January 3 score: 28.5
June 13 score: 10.4
 
ADULTS 18 – 34 (which historically have the highest perception of the company)
 
January 3 score: 36.2
June 13 score: 22.8
 
“Facebook’s perception gap between men and women began widening in mid-January, with men’s numbers tumbling throughout February,” the firm says. “Only a small amount of that loss was regained through the spring until early June, when the numbers declined again.”

January 3 score: 22.1
June 13 score: 7.8.

YouGov BrandIndex Facebook Data

YouGov BrandIndex Facebook Data

YouGov BrandIndex Facebook Data

Facebook Credits

Facebook Credits, which are essentially the company’s own currency, which one could envision becoming a viable way to pay for goods online and off, with the advent of mobile payments, have gotten a major boost from the company with the announcement that Facebook is introducing international payment methods and improved payout workflows for developers who use Facebook Credits. With these improvements, Facebook can support developers in “virtually all countries.”

Facebook’s Loren Cheng wrote on the company’s developer blog:

Starting around July 1, we’re adding alternative payment options for Facebook Credits in 13 countries in Asia and Latin America. Those payment options are supported by Live Gamer. A list of current Facebook Credits payment options is available here.

We’re also excited to announce that we now support payouts to developers in all countries globally (excluding a few government-embargoed countries). To do this, we’ve developed a new pay out process for developers in countries where we haven’t previously supported payouts through banks or PayPal. For developers in these countries, we may request some additional documentation to enable them to be paid through their local bank account.

Keep in mind that international growth has been booming for Facebook, even as it has slowed in markets like the US, Canada, and UK.

Facebook to Dig Into Mobile Even More

MG Siegler at TechCrunch was able to obtain some very interesting findings about Facebook’s alleged plans that involve taking on an unlikely rival on its own magical turf. I’m talking of course about Apple. Siegler writes:

As we understand it, Project Spartan is the codename for a new platform Facebook is on verge of launching. It’s entirely HTML5-based and the aim is to reach some 100 million users in a key place: mobile. More specifically, the initial target is both surprising and awesome: mobile Safari.

Yes, Facebook is about to launch a mobile platform aimed squarely at working on the iPhone (and iPad). But it won’t be distributed through the App Store as a native application, it will be entirely HTML5-based and work in Safari. Why? Because it’s the one area of the device that Facebook will be able to control (or mostly control).

Facebook clearly already has its tentacles firmly entrenched in the better part of the web, so going through the browser, as opposed to Apple’s notoriously stingy App Store, certainly seems like a wise decision.

It seems even wiser when you take into consideration the following points:

Separately, Siegler also obtained “roughly 50 MB of images and documents” outlining an apparently forthcoming photo sharing app from Facebook for the iPhone. He calls it “Path meets Instagram meets Color meets (Path’s new side project) With — with a few cool twists.  And obviously, it’s built entirely on top of Facebook’s massive social graph.”

Twitter, of course just recently announced its own photo uploading feature.

Twitter

Speaking of Twitter, as its competition with Facebook continues to heat up, it hasn’t been standing still either. A new “Follow Recommendations” feature has been unveiled, which appears to let users make lists of people they think others should follow – kind of like a blogroll, or a greatly expanded “Follow Friday”.

Follow Recommendations
View more presentations from Twitter

Twitter has also partnered with Yahoo in Japan, which is one of Twitter’s biggest international markets. The partnership will see Twitter appearing in search results over there. Add this to all of the other things Twitter has been up to, and whatever else it may have up its sleeve to become a more legitimate rival to Facebook. The company has been much more aggressive in its strategy since the return of co-founder Jack Dorsey earlier this year, who by the way, also has a firm foothold in the mobile payments industry, which could just end up being incredibly significant for all of those iPhone users using Twitter as their ID.

A recent report from Pew Internet found that 13% of adult Internet users have used Twitter (up from 8% in November), and Twitter use is spreading to a wider range of ages. Those between the ages 25 and 44 have experienced notable adoption growth since late 2010, and when you go younger, the adoption rate is higher still.

Conclusion

Here’s my thinking about what the future holds for Facebook. The company is going to continue to dominate social media for the foreseeable future, but it’s going to become more challenging to fend off competition. I can see parallels between Facebook vs. Twitter and Google vs. Bing (in search). One is the clear dominator, and while the other may be a distant rival in terms of market share, the “underdog” is continuing to make gains little by little, while the giant faces more and more backlash in brand perception.

Of course there are plenty of other players and factors that enter the equation, including the overlap of companies and industries (web, mobile, location, deals, email, social, search, etc.).

How long do you think Facebook can maintain its lead as the dominant social media player? Let us know in the comments.

How Will These New Developments Impact Facebook’s Dominance?
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  • http://www.absolutewebworks.com/ Jesse

    I do not think so. Facebook will constantly be in the cross hairs of emerging companies. I could be wrong, just look at Google. Nobody has been able come close to Google in regards to search. Hopefully something better will come along.

    • http://www.webpronews.com/ Chris Crum

      I don’t know if it’s better, but Bing is managing to grow it’s market share little by little, and with recent developments, could grow it even more significantly. That’s not to say it’s going to catch Google anytime soon.

  • http://www.consciousminds.com Walter Parrish

    The Article was on the money The Facebook won’t last long, competition will grow and it will be history, I’d give it three years if that. It’s all smoke and mirrors 50 million users / 10 user accounts each = 5million/ 2 million users who create new accounts when they get locked out of The FaceBook = 2.5 million users. And we won’t even talk about the free service where anyone can join and buy nothing from advertisers. Once advertisers wake up and realize their targeted audiences aren’t being reached it’s history. As far as meeting the needs of the public people are becoming more and more aware that if they create a Facebook account they are giving away their privacy, which explains the growth on Twitter. It’s going to be an interesting watch this all kind of reminds me of the old word-processing programs where you had to type in all these different commands to get the job done vs. the newer programs put out by word perfect and Microsoft. Any Social Networking site owner should keep their eyes open and expect more traffic to start flowing their way before the year is out.

    Walter Parrish (Owner ConsciousMinds.Com)
    I didn’t come here to tell you how this is going to end.
    I came here to tell you how it’s going to begin.

    • http://www.macoway.com Macoway

      Fully agreeing to Your comment.

  • http://cozumelmexico.net Bob Rodriguez

    The short answer……………NO!

    • Jack

      the question was “How long do you think Facebook can maintain its lead as the dominant social media player?” and yous short answer is a “no”.. what the hell man? lay off the good stuff! it’s making you go nuts!

      • http://www.webpronews.com/ Chris Crum

        There was more than one question. I think he was referring to the one: Can Facebook dominate forever?

  • http://growingtomatoecenter.com/ Jack

    I just started twitter a few weeks age. I am begining to like it more and more. I have had a hard time getting visiters to my site growing tomatoe. Then I learned what twitter was all about.

    • http://www.webpronews.com/ Chris Crum

      People have plenty of different reasons for using Twitter, and as long as they’re using it, I doubt Twitter minds much.

      • http://www.webpronews.com/ Chris Crum

        I guess, I should add: as long as it meets their terms of service.

  • http://ChainsawAccessories.biz GJ Johnson

    Facebook will continue to evolve. It is possible they could dominant cyberspace. The one stop destination that would require only one password to do everything you do online. Once logged in you can do your banking, webmail, search, make calls, fax, & anything else that would require a separate password. Google & MS may have some serious competition in the future.

    • Bob,Boulder, Colorado

      yeah that is what I thought initially too, but services like instagram, twitter, foursquare are all growing superfast.

      • http://www.webpronews.com/ Chris Crum

        Banking through Foursquare. There’s an interesting thought.

  • http://www.hikingtrek.com Nepal Alsace Trek and Expedition

    Namaste and wecome to make a Adventure with Nepal alsace trek and Expedition

  • http://www.fixpcfreeze.com Mathews

    I think some day the number of facebook accounts will exceed the number of human being on the planet.

    I don’t feel that 700 million is the actual figure. I was watching a talk show on the Indian TV. Some people stood up and said that they have over 6 to 8 accounts each on Facebook. And shockingly many of them said they do not use their actual names. Now after hearing this from people who use facebook and are not very computer educated or savvy. They use facebook through out the day and feel that they need to have a different account to keep different set of people and friends.

    I think facebook needs to filterout the pseudo accounts and then say that they have so many users 700 million or what ever the figure is.

    • http://www.webpronews.com/ Chris Crum

      Have you seen Catfish?

  • Dr Jayanth G Paraki

    The world famous W.Edwards Deming (www.deming.org) is particularly recognized for his pioneering efforts to raise Japan’s economy after the disaster of World War II. It subsequently lead to his publication Out of Crisis.

    What if Facebook were to face a crisis of great magnitude especially now that they are going after an IPO in OCt/NOv with a valuation of 100 Billion USD. What if the reported 10 million or so users in UK closing their Facebook accounts is true? The need to acquire wealth should be matched proportionately to the actual benefits rendered to the end-user.

  • BRB

    Facebook will die soon if they don’t get more exciting. They need to get into search to survive. FB is stuck on stupid just like Myspace did. Another more interesting social network site will come along and that will be the end for FB.

  • BRB

    Facebook probably has 50 million unique accounts and that’s probably too much. That big number they report is a joke. I know a marketer who has thousands of accounts. Black hart marketers have millions of them combined; especially the ones in India, Pakistan, Philippines and US.

  • http://www.behappyinlife.com/ Gal

    I like how the last few pieces went from “I see Facebook in your future” to “Oh, wait a second” and then “Actually, maybe it’s already going down”.

    Yesterday, I saw a presentation on responsive design that pointed to the total focus on content on smartphones and the preference of mobile users of using Facebook from their phone, rather than from a desktop, because of the content focus.

    This trend is likely to push any advertising-laden site to be much less profitable and Facebook is no exception. With smartphones, the hunger for free stuff has grown to the point where it’s hard to promote anything with ads.

    Moreover, the Internet hates bullies :)

  • http://arkanbiz.ru arkadjar

    Yes.Yes.yes!!!Facebook!

  • Bob,Boulder, Colorado

    there is no inherent need for a social network, you forget that in your analysis. I can discuss with friends over a lot more channels than facebook alone. Email, Skype, IM, tumblr, twitter, linkedin ,SMS phone calls etc. Facebook needs to be very careful. I also see imessages as a possible threat. My guess is facebook will remain big, but its importance will diminish and it will never be the next ‘google’. Not many use a search engine apart from google, because google gives the best relevant results, but facebook does not have such a wide moat, I can discuss stuff with others over lots of other channels. It is a bubble I say.

  • http://www.hedgehogdigital.co.uk/ SEO Bedford

    I think it is only natural that Facebook has hit a plateau but I don’t agree the the word of mouth has shrunk. You can’t go a day by without hearing something about Facebook or a new friend request from an old friend who just joined the network. The way it keeps introducing new features and expanding it horizons I assure you that Facebook dominance will last for many years, just like Google despite the growth of other search engines such as Bing it continues to dominate the global search market.

  • http://talkingwebhosting.info Patty Gear

    Based on the huge followers/users of Facebook, I’d say they’ll be able to maintained their spot as leading for two more years. I just wish that Facebook will have more security features for their followers.

  • http://www.route72.com EmailListsDude

    One again Chris, great article. You have really done the research on this topic. Facebook is on top now but like any company feeling great success they will have to either create the market place or follow the viral leaders model. Facebook is a true database driven application and the technology is changing everyday. I would count on FB to be a leader in the B2B space. Recently they added some B2B feature onto their fan page presentation and their client reach far exceeds other players in the business. I have also read about businesses having the ability to collect opt in email lists right from their B2B Fan Pages. I’m a FB user so I may be tainted and there maybe more B2B going on linkedin and other sites. Technology is born, it grows and then there is a shakeout. I don’t think FB has seen the shakeout yet, time will tell.

    Jim Alamia

  • http://www.metanym.com/milton-keynes MarkFL

    Nothing is forever and everything evolves. I wonder what Darwin would make of Facebook?!

  • donS

    I’m surprised it lasted this long. Who has time for it?

  • http://www.fipe.co.uk bespoke web design

    Funny enough i was having a conversation with a friend about the number of facebook users. He pointed to the oft quoted 700 million users they have and how the numbers keep growing.
    The number of users is not entirely true and is not what will decide if facebook succeeds or fails. Lots of companies are very profitable without having 700 million users on their books. If facebook has 100 million actual users but is able to monetize their platform successfully then they’ll be fine.

    I do think they have probably peaked but that in itself is not the biggest problem.