Tomahawk, WI 01/08/2014 (BasicsMedia) – The internet has been buzzing with the news that teenagers are dumping Facebook and joining other social media platforms. Though exact numbers are still a long way to go, the trends across several studies have pointed out that users in the age group 16-18 years are no longer active users of Facebook and prefer to use other social media platforms like Twitter, Snapchart and Whatsapp. People have also started calling Facebook ‘Buried and Dead’. In fact, aside from such rhetoric, is it really such a bad thing to happen?

The Changing Demographic Profile:

Let us face it, Facebook is a business organization and it needs money to survive. Social media platforms rely heavily on advertisement revenues to generate cash. They cannot generate cash through subscriptions as this will drive away the users. Teenagers are a very fickle user group but serve a very useful purpose. They make a site popular and social media platforms like them very much, in the initial stages. They can make a website go ‘viral’. They are also put off by their parents’ presence and therein lies a dichotomy.

They do not have good purchasing power. They do not have sufficient decision making powers and are not good influencers outside their peer group. They can set trends in very few segments. In short, advertisers do not find them very attractive. Advertisers would like the users to have money power, capacity to make decisions and be key influencers in the decision making process. So small ticket or big ticket advertisers seek a more mature user groups. Just like the users who are driving the teens away from Facebook.

Facebook’s Business Plan:

New startups like Snapchart, Whatsapp, Pinterest and other social media platforms are yet to monetize their offerings.  They do not offer any competition to Facebook. The competition comes from Twitter, Google and other more mature sites. And Facebook has managed to keep its chin up here. It is working on making ads work better on its platforms. So, it is working on making its targeted software better than its competitors. Ultimately the advertisers will continue to pay only if they find that advertising is getting converted into sales.

The recent drive in recruitment as well as acquisitions point out the importance Facebook attaches to advertisement revenues. The average revenue per user (ARPU) is on an upward path. It has risen from $1.29 in Q3, 2012 to $1.72 in Q3, 2013. The contribution of advertisement in the same period has risen from $1.11 to $1.53.

So, our advice to the investors is very simple. The proof of the pudding lies in the eating. The real challenge will come when such newbies mature and monetize the offerings.

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