Growth Frenzy Cools as Facebook Gets Dry Behind the Ears

Facebook is still on its way to 700 millions users, with 687 million actives at the start of June, according to a report by Inside Facebook, which provides analysis of the social networking giant. The trend in the last year shows a new-user influx from countries in the early stages of Facebook adoption, including India, Brazil and Egypt.

Overall, however, Facebook growth has been lower than normal for the second month straight, and in some countries, the network’s membership numbers are going down.

The United States lost nearly 6 million users, going from 155.2 million in the start of May to 149.4 million by the end. This is the first time this year that the United States has lost users.

Other countries that posted losses of more than 100,000 include Canada, the United Kingdom, Norway and Russia.

It’s possible that the figures are skewed by bugs in the Facebook advertising tool used to gather these stats, Inside Facebook noted. Also, seasonal changes such as college graduations and other factors can influence numbers from month to month.

Still, when Facebook’s user base equals about 50 percent of a country’s population (depending on Internet access rates), growth usually grinds to a halt.

Developing countries gaining Internet access have helped to counter the slow growth rates elsewhere, but the question remains: Can Facebook ever become 1 billion users strong?

Facebook Downplays Report

Reports based on Facebook’s advertising data are not reliable, according to Facebook.

“From time to time, we see stories about Facebook losing users in some regions,” spokesperson Johanna Peace told the E-Commerce Times. “Some of these reports use data extracted from our advertising tool, which provides broad estimates on the reach of Facebook ads and isn’t designed to be a source for tracking the overall growth of Facebook.”

More than50 percent of active users log on to Facebook on any given day, Peace noted.

A Sign It’s All Grown Up

Facebook’s huge numbers could make losses in North America appear to be more severe than they are. Because it already has such a large membership in the U.S., a constant growth rate would be hard to sustain.

“Facebook has been growing at such a rapid pace that it eventually would need to slow just because of the enormous numbers required to maintain the same level of growth,” Jim McGregor, chief technology strategist at In-Stat, told the E-Commerce Times. “Also, there is naturally going to be some saturation or maturity in certain markets.

Slower growth is no cause for concern, in McGregor’s view.

“I would be more concerned about less usage,” he said. “I do not have any figures that would indicate if the usage per user is increasing or decreasing, but if it does decrease, that would be a more ominous sign.”

Possible Market Saturation

Facebook may have reached the natural limit of its potential user base in the U.S., having successfully saturated its market.

“I can’t say I’m surprised by this report,” Carl Howe, director of anywhere consumer research at the Yankee Group, told the E-Commerce Times.

“Facebook’s growth has been high for so long — eventually it had to revert to something more average,” he said. “It’s easy to forget that this was a service targeted at college students, and while Facebook’s reach has grown, I think that’s still their prime user base, and there are only so many college students in the world.”

Facebook is continually evolving, though, adding tools and tweaking its business model. Having outgrown the stage of massive user growth may actually signal some positive changes ahead.

“Without the rapid growth story that has driven Facebook to date, Facebook will have to focus more on traditional business values to gain new investment and interest,” said Howe. “It will have to focus on service, subscriber retention and customer satisfaction to take their business to the next level. If they don’t, those shrinking subscriber figures in the United States may get larger in the future.”