Friday, 23 May 2008

Facebook unique traffic declines and Global Ad-Spend goes with it

The latest stats from Nielsen Online show a significant decline in month-over-month unique visitors to Facebook in the US. Year-over-year traffic growth decelerated from 98% to a much more modest 56%. MySpace also saw a slight decline (from 60.3M to 58.7M).

While this might be worrying to an observer, I'd suggest that this is because the majority of the audience that is likely to have joined Facebook or MySpace already have done so over the last two years... the most rapid growth was always likely to happen soon after social networking and these sites hit critical mass. There just aren't that many new users around except in the younger demographic coming of age. Personally I don't think these slow downs are worth worrying about. The audience size is the important factor from an engagement, advertising, marketing and monetisation perspective - and the size is phenomenal!

Last week, eMarketer also lowered their estimates for advertiser spending on social networks worldwide. eMarketer now sees social networking ad spend in 2011 at $3.4 billion, versus the previous estimate of $4.1 billion. Clearly this is supposed to cause business worry, but look at the size of the figures being discussed. So we can't increase the size of the market? Doesn't mean we can't reposition for market share. It's a massive market!

In any event, ad spending on social networks is still projected to outstrip online advertising on the whole by 65% to 23% in 2008; and with the speed of change in the digital space, I really wouldn't put much stock in the projections anyway.

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