Meta wants you to know that reports of Facebook’s demise are premature.
A number of analysts and media outlets have in recent months reported that Meta’s core social network has seen its growth plateauing, especially among younger users. But Facebook president Tom Alison points out in a blog post today that Facebook passed the two billion daily-active-user mark in December 2022, after picking up 16 million new DAUs over the final quarter of the year.
“There’s been a lot of narratives over the past year about Facebook being in decline,” Alison says in an interview with Fast Company. “What we’re really coming out to say is that, no, Facebook is alive and well and we’re continuing to grow, and that the app and the business underneath it are quite healthy.”
It’s fair to point out, however, that Meta’s numbers don’t show us what age groups those DAU gains are coming from. The company says this in its most recent 10-K: “while user-provided data indicates a decline in usage among younger users, this age data may be unreliable because a disproportionate number of our younger users register with an inaccurate age. Accordingly, our understanding of usage by age group may not be complete.”
And, as Alison points out, younger users represent the way forward for Facebook’s business, which is approaching its 20th year.
“What we are building for right now is for the next generation–—young adults, Generation Z, what they want, what they need, what we’re seeing with them,” Alison says. “[I]ncreasingly they discover their identity and discover the world a lot through creatives, and these digital relationships that are coming online. We saw this a lot during the pandemic where these expressive sharing formats like short form video combined with this personality-driven but frankly more authentic sharing from creatives is highly relatable to people.”
Continuing to attract and retain users is important, but profiting off them is more important, and on that front, Facebook has been struggling. Meta, which makes the vast majority of its money from Facebook and Instagram ads, saw its revenue drop in the second quarter of last year for the first time in its history. And full year 2022 revenue fell 4% from the previous year. The business has suffered as ad spends have been negatively effected by the pandemic, inflation, recession fears, and serious competition from TikTok, the Chinese-owned company that pretty much nailed the short video format. Ad spends have also been depressed by Apple’s decision to require iOS users’ permission before release data used for ad targeting.
Underneath Meta’s statements today is a desire for Wall Street to continue to see the company as a “growth story,” despite the troubled ad market and considerable losses incurred by its Reality Labs (metaverse) business. No serious observer is predicting Facebook’s doom today, but without sustained increases in users and ad profits the “growth” story gets harder to maintain.