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Digging Into Slowing Social Networking Numbers

Posted by: Rob Hof on January 31, 2008

Social networking sites, at least in the U.S., are seeing a slowdown in both new members and time spent on the sites, according to numbers my colleague Spencer Ante got from comScore. Leaving aside whether comScore’s numbers represent reality, and the fact that they’re U.S.-only when most of these sites have lots or even majority overseas members, I’m wondering what the slowdown actually means. …

Is it Facebook and MySpace fatigue, as a lot of folks are saying? Maybe. I certainly find myself a little overwhelmed in trying to keep up with friends and other contacts on MyLinkedFaceTwitPownceNing.

On the other hand, I still use several of them on a daily basis. I'm just not fooling around on them as much. Honestly, I don't really want to be drawn even more into them, because I'm busy enough. But I guess that may make them less attractive to advertisers, so maybe it's a real concern, especially when you have a $15 billion valuation to live up to.

But Andrew Lipsman at Comscore also pointed out to my colleague Heather Green than fewer minutes of engagement is natural as social networks grow because newer members generally are lighter users. Maybe it takes new users awhile to learn the ropes and get engaged, or the newer users are people (older, employed, have a life) who have less time to spend on these sites. Either way, if that's the key factor, social networking fatigue, which would affect established users, wouldn't be the main cause for the numbers to fall.

Another colleague, Catherine Holahan, points out that ads themselves, or at least the widgets that ultimately are intended to carry advertising on sites like Facebook, could be turning people off. We certainly see that anecdotally in comments on our blog posts and stories on Facebook and other social networks. Again, not a good sign for advertisers.

In fact, I'm wondering if these visitor and engagement numbers may prove to be the least of the concerns of advertisers when it comes to considering social networking sites for marketing. So far, there's little evidence that they're very good places for ads of any kind (except widget companies advertising for other widgets). It seems like social sites will be challenged to match the buying intention indicated so clearly by people’s searches. In other words, Facebook isn't Google yet. For now, at least, that could be the bigger challenge for social networking sites than what their numbers are doing month to month.

Update: Indeed, on Google's conference call today, CFO George Reyes just said, "Social networking inventory is not monetizing as well as expected." In other words, Google couldn't find a good way to sell enough ads on MySpace. Jonathan Rosenberg, Google's senior VP of product management, says it hasn't yet been able to slice up all that inventory into useful demographic chunks. Whatever the reason, this is not good news for any social networking site.

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Reader Comments

Dawn Douglass

February 1, 2008 02:30 AM

As I wrote on my blog a couple of weeks ago, older users are not going to be as engaged as younger users are. Facebook has maxed out the low hanging fruit, the college aged crowds. Human psychology is against Facebook being compelling for older demographics, so both adoption rate and engagement rates will continue to drop as Facebook adds new users, which will have to come from older age groups.

Pinny Cohen

February 1, 2008 04:50 AM


First off, thank you for linking to my blog, it's a real honor.

Second, I think the reason why monetizing the social networks has been difficult is that we have to look at users' intentions on these sites. The time they spend there is to interact with friends, not to be marketed to.

This is a perfect example of "Right medium, wrong time".

cameron casey

February 2, 2008 02:38 AM

In regards to monetizing social networks, I just submitted a widget into the comment box earlier. It is an HTML commerce widget that Shopit developed for posting to blogs and social networking pages- The widget enables users to buy sell and trade on their network pages for free- This may give users more to do and a reason to stay on their pages longer. Take a look. Thx


February 2, 2008 02:55 PM

I think more and more people will start spending time on smaller, focused, niche social networking sites that are actually related to a users particular interest, vocation or hobbies etc.

Advertisers will also get better targeted demographics to sped their money on.

Thanks to sites such as ning, anyone can start their own social network for any subject. Then there's search engines such as that help users find nich social networking sites.

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BusinessWeek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, Douglas MacMillan, and Spencer Ante dig behind the headlines to analyze what’s really happening throughout the world of technology. One of the first mainstream media tech blogs, Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.



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