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This graph tells you everything you need to know about Facebook's problem with falling use

Mark Zuckerberg sad serious
Facebook CEO Mark Zuckerberg has tried to control the narrative of declining use.
Stephen Lam/Reuters

  • Facebook's use by US consumers aged 18 or older fell 4% year-on-year in November, according to Nielsen stats cited by the Pivotal analyst Brian Wieser.
  • That applies to Facebook's core app — its other businesses, including Messenger, Instagram, and WhatsApp, are faring better but not enough to compete with Google.
  • The decline in use means Google is snapping up a larger share of people's time spent online, with YouTube the main engine for that growth.
  • Wieser's analysis ties in with Facebook's recent revelation that users had spent 5% less time on the site.
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There's a serious malaise at the core of Facebook's business right now — and you can see it in a simple chart.

The graph below illustrates what proportion of time US consumers spend on different sites when they're online. In other words, it shows how much time users mess about on YouTube, Snapchat, Facebook, and others.

Facebook Nielsen Google time spent
Pivotal Research analysis of Nielsen data

Look at the orange and blue lines, which represent Google and Facebook.

In August 2016, it looked as if people spent almost as much time on Facebook and its properties (like WhatsApp and Instagram) as they did on sites owned by Google, such as YouTube and Google Plus. The two internet giants were nearly neck and neck. Through 2017, however, the gap between those two lines widened.

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That graph appeared in a negative note about Facebook from Brian Wieser, an analyst at Pivotal Research who analyzed Nielsen figures on consumer time spent online. Wieser maintained his "Sell" rating on Facebook, with a target price of $152.

Per his note:

  • Google accounted for 28.6% of all time people spent on digital media in November — up 5 percentage points year-on-year.
  • Facebook is "going in the opposite direction," declining 4% year-on-year in time spent on its core app.

The malaise looks as if it's affecting only Facebook's core app. Instagram saw increases in time spent and users. WhatsApp and Messenger also grew.

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"However, with one-tenth the volume of activity that the flagship app has, Instagram's growth does relatively little to change the overall Facebook story," Wieser wrote.

"Including Facebook, Messenger, Instagram and WhatsApp, Facebook's growth is modest — +4% year-over-year — and consequently its share of digital consumption continues to fall, now at 16.7% share vs. 18.2% in the yearago period."

Instagram and WhatsApp aren't stemming the losses

In short: Facebook made some good bets by buying up rivals like Instagram and WhatsApp, but their popularity isn't enough to make up for the decline in its main business.

For Google, YouTube is the main powerhouse; time spent on YouTube grew almost 30% every month. Importantly, and unlike Facebook, it doesn't look as if Google saw use decline anywhere else in its business.

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Facebook is still leagues ahead of the rest of the competition, but the decline in time spent tallies with the company's own warning that its users were spending less time on its platform.

During its fourth-quarter earnings last month, Facebook revealed a 5% drop in the number of hours people spent on its site. Facebook has tried to take control of this narrative, tweaking its News Feed to prioritize updates from friends and family members and warning this would lead to a dip in use.

But as analysts have pointed out, this was happening before the News Feed change.

Wieser warned not to directly correlate time spent with Facebook's ad performance, which is affected by other factors like how effective its ad products are. But, he added, if advertisers perceive that Facebook is becoming less popular, that probably isn't good news for long-term growth.

On February 28, Axel Springer, Business Insider's parent company, joined 31 other media groups and filed a $2.3 billion suit against Google in Dutch court, alleging losses suffered due to the company's advertising practices.

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