A Changing SNS Market
The psychologists working for Facebook were pretty smart. They knew that advertising during the growth stage of FB would deter us from joining. But they also knew that when many of us became addicted, we would put up with a lot of advertising—even on our walls. And they also knew that despite our profit-hating caviling, we would not change to another SNS because we know instinctually that eventually our new SNS will have just as much advertising as Facebook. So what is the point of leaving—especially when our friends are still on Facebook and it is still a very useful product to us? The marketing psychologists knew us better than we knew ourselves. It really was a no-risk decision for Facebook to enhance its advertising space at a critical moment.
While Facebook has little fear of losing users because of its advertising, it has a separate legitimate fear. The market for SNS is fragmenting—and there is nothing Facebook can do about losing its mass appeal. Younger people are preferring other SNSs, which probably cater better to the new youth. It is more likely these youth will stay with the new more youthful SNS than to later turn to Facebook. As Facebook users die off, there will be a slow market decline. Facebook is losing more users because of this mortality trend than because of its increased advertising.
Click here to learn more about Market Fragmenting.It would have been nice to have been a fly on the wall in the Facebook boardrooms while the executives pondered this trend. But let's speculate they discussed these two options:
- Continue with minimalist advertising space and data mining practices, thus earning minimalistic profits—and not offending their loyal users.
- Enhance the advertising space and data mining to maximize profit.
In either case, Facebook is on a slow decline. There is much more profit with the second choice, even if the decline happens a little faster. There should be no doubt that Facebook has made an understandable decision with how it proffers its assets.
