The explosion of social networking continues, and the question of whether the market is becoming more consolidated or more fragmented is an interesting one. Trends on all fronts suggest that social networking collectively continues to be a large and growing market from a commercial standpoint, and it is surely impacting more of our lives at a personal level every day.
According to eMarketer, advertising spending on social networks has grown consistently in the 10% range for each of the last 3 years, and hit $3.5 billion in 2013. On the usage side, that growth also plays out. As of February 2014, on a worldwide basis, comScore data shows that the amount of time people spend using their desktops and laptops on social networks was up 20% – and that doesn’t even include mobile, where the lion’s share of growth is coming from globally.
As with most trends, a closer look at the underlying composition reveals a more interesting story. It turns out that the growth rates are dramatically different across demographic groups, and that the usage patterns within these groups across sites and devices varies as well. In fact, the answer to the question about consolidation vs fragmentation could actually be both.
The short story is that while the category is growing, older people are driving a disproportionate share of that growth. Let’s examine the US, where comScore Media Metrix Multi-Platform measurement includes PCs, smartphones and tablets. If we include mobile, the amount of time people spend on social networking has increased 32% in the last year. Approximately 1 out of every 5 minutes spent online is spent on social networking sites. However, this breaks down as follows: for 15 to 34 year olds, the growth rate is only 12%, but for 35 to 64 year olds it’s nearly six times as high (57%). For the 65+ crowd, it is seven times greater (72%). In other words, older people are the last to the social networking party, but they are making a dramatic entrance.
There is no question that mobile has changed the game for social networking. Facebook has long been the most popular app on mobile devices. Currently about two-thirds of time spent on Facebook comes from a mobile device. For many sites, including Twitter, Pinterest and Instagram, it’s even higher. Looking forward, social networking usage on anything other than mobile devices is likely to fade into the background.
The other important notable trend in the category is the types of social site people use. Once again, the picture depends very much on the demographic group. For older demographics, the name of the game is Facebook. For people (35+), roughly 90% of their time in social is spent on Facebook. That’s not the case for younger people, where roughly a quarter of their time in the category is spent on other sites.
This means we see both consolidation and fragmentation at play. On one hand, Facebook is absorbing older demographics across the world, finding people in new corners of the world and drawing them in. Older people who already use Facebook are spending more and more time there. For many of them, “social networking” and “Facebook” are synonymous.
At the same time, younger people seem to be saying that their needs in social go beyond what Facebook or any other single site currently gives them, so their social experience is becoming more fragmented. Many of the newer sites serve very specific purposes and have unique feature sets, and not surprisingly, younger people dive into these and experiment more than older people do, at least at the outset (the meteoric rise of Pinterest, Instagram and Snapchat are good examples). Perhaps in addition, this behaviour on the part of younger people suggests that now that their parents and grandparents have joined the Facebook party, it’s serving a more limited purpose. After all, sharing drunken selfies with your grandma might be one way to put a quick stop to those birthday checks.
Facebook is, of course, not standing still as this is taking place. Its recent purchases of Instagram, What’sApp and, most recently, Oculus suggests it is striving to expand the types of utility it delivers to young people. Even if most of the users of these services are currently part of the Facebook audience, Facebook seems to want to expand the types of things that can be done under the Facebook umbrella, whether it’s texting, sharing photos or virtual reality. So their growth going forward will likely come from both new, if older, users and new functionality that engages younger ones.
Facebook is a clear behemoth, and not likely to be displaced any time soon. However, its challenge is to find new and meaningful ways to engage younger users while keeping up momentum with the older crowd. On the other hand, the continuous innovation and new social sites demonstrates that if there is new value there, people will flock to it – maybe because it’s cool, maybe because they want to run from their parents, maybe a bit of both. Regardless, we’re likely to see both consolidation and fragmentation happening simultaneously for the foreseeable future.
Part of a series on the top ten trends in social media.
Author: Linda Abraham is Co-Founder of comScore and Chair of the World Economic Forum’s Global Agenda Council on Social Media.
Image: The sun rises behind the entrance sign to Facebook headquarters. REUTERS/Beck Diefenbach