Facebook's Growing Problem

One of the highlights of February for me was meeting up with my oldest mate and going on a good, old-fashioned Thursday night bender.

Conscious that advancing age, waistlines and the number of dependents in our respective households had made these nights out very rare, we opted to break from tradition and visit a cool bar in the East End of London.

It was everything we had hoped for. Funky music, beautiful people and a gorgeous bar. Over my third spectacularly cool cocktail, I leaned over to my mate and said: 'What a place, eh! How cool is this?'

He looked at me with a sad, doleful smile and replied: 'Yeah, there is only one thing wrong with it.' I looked around the bar and all I could see was perfection. 'What could possibly be wrong?' I asked him. He nodded at me and then himself and said: 'Us. The only thing wrong with this place are the two old fat bastards ruining it for everyone else. If we have found this place, it is only a matter of weeks before the place slides downhill.'

Cool brands are like a vacuum, nature abhors them. The cooler they get, the more attractive they become to the uncool and the harder they have to fight to retain their hip customer base.

This is the big problem for Facebook.

Last week, Nielsen Online reported that its user numbers fell by 5% during January. Facebook has rejected Nielsen's data and is reporting that the number of active users - people who have used the site in the past 30 days - has continued to climb. That excuse might buy it a bit of time, but the bottom line is that Facebook is about to suffer the classic hangover that follows huge market growth.

The Facebook brand is only four years old, yet within that period there is a story of almost bacterial-scale growth. Within a month of the site's launch at Harvard, more than half of the student body had joined. A few weeks later, students from all the major Boston universities were signing up. Within two months, students from across the US' top universities were members and within a year, students from every major US college were joining in their millions. After 18 months, high-school kids could join the site. Finally, in September 2006, the doors were officially opened to anyone, anywhere in the world.

That is the point at which Facebook signed away its soul. It might be cool new media, but the oldest rules of marketing still apply. Some customers don't like other customers. For all their bright new-century appeal, the founders of Facebook have a case of old-fashioned sales orientation. It should have hired a proper marketer to ensure that the wrong members didn't ruin its brand. Unfortunately, it is now too late: the fat bastards are drinking at the bar.

Facebook members now include the CIA, McDonald's, Tesco, John McCain, Newsnight, and Febreze. In the US, a growing army of students are receiving horrifying Facebook invitations from their mothers asking them to become 'friends'. What was once the secret connection site for the switched on, is rapidly becoming a demographic zoo with big brand sponsorship.

Suddenly the super-cool Gen Y target market, low barriers to entry and huge market size aren't such a positive for Facebook. Competitors could spring from every corner and the cool kids are probably already joining up.

It is too late for the site to do anything now other than sit back and pray that next month's user data turns upward. Fortunately for Facebook every major religion has also joined its site so it can aim its online prayers at everyone from the Mormons to the Jehovah's Witnesses. God knows it will need the help.

30 SECONDS ON ... SOCIAL NETWORKS USER NUMBERS

- Facebook shed about 400,000 UK unique users between December and January, according to Nielsen Online's latest research.

- This is a 5% drop from 8.9m users in December to 8.5m last month, after 17 consecutive monthly increases.

- However, Facebook remains the most popular social networking website in the UK and its audience is 712% higher than a year ago and 9% higher than three months ago.

- Facebook's nearest rival, MySpace, also posted a 5% drop in UK traffic 5.3m to 5.1m between December and January - a fall of 9% since January last year.

- Bebo, which saw users drop by 2% month on month, was ranked third, with 4.1m users. Its unique users have risen 53% year on year compared with January 2007, but have dropped 8% since the end of October.

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Comments

[Jack Payne]

Great analogy: two fat guys in a bar and Facebook, facing fundamental realities.

Never looked at it that way, but it makes a lot of sense.

[Matt Bradley]

As a grad student, this is an issue that hits particularly close to home. While I blocked my Facebook account, I've since created a LinkedIn profile and student-perspective branding blog. Do you think the internet can be appropriately leveraged as a means for personal branding? Or is the risk not worth taking as of yet?

Also, I'd welcome any critique of my informal blogging style - I obviously want my writing to work FOR me, and not the other way around.

Regards,

Matt

[Ted Grigg]

This blog clearly demonstrates that great brands not only define who belongs to the target market, but also who does NOT belong.

Apple, Mercedes Benz, and Mont Blanc are not for the masses. Even general market brands like Microsoft loose steam over the long term. Therein lies the allure of powerful brands --- exclusivity.

In my view, that is why Broad market brands like Sears and even Walmart may not survive. They lack that special appeal that comes with limited membership.

[Tony]

One of the trends that I am noticing (which was also picked up in your article) was the move off-line towards more face to face, personal interactions.

The internet & social networking sites are just tools and mediums.

It's all about real people dealing with real people.

[Erica DeWolf]

Wow. Great post, an interesting and extremely relevant analogy. I love it!