The beginning of the end of social media
For the first time in its history, Facebook (Meta) made less money in Q2 than it did in the same period last year.
And it’s not just them - both Twitter and Snap posted disappointing financials this week.
William S. Burroughs once said, “When you stop growing you start dying.”
So are these numbers just a blip? Or are we at an inflection point for social media?
Well, given its financial size and impact on greater society, Facebook is the biggest company in Western social media. And there are multiple non-financial indicators that things are plateauing:
- Changing their name to Meta
- COO Cheryl Sandberg stepping down
- Switching their main feed to more of a TikTok-style experience
It’s the third move that speaks loudest.
Although Facebook have mimicked other platform’s features in recent years, this latest change feels most likely to alienate their most ardent user groups in the West.
In media, there is a classic mid-life crisis stage of the product life cycle that I call The Wobble.
It’s when leaders of a very successful businesses realise their golden goose is showing signs of laying fewer, smaller eggs.
After many years of fantastic growth, The Wobble is a difficult time, and often full of fear.
Decision making stops being exciting and adventurous, and begins to look - and feel - a bit desperate.
I’ve seen it before across both newspapers and television.
Back in the late 1990’s, I was a young photo editor at The Sunday People in London.
British newspapers were beginning a decline from a position of societal and financial dominance.
One day we were told that our friendly editor had been moved on, and we were introduced to the new boss.
“We need more young, male readers”, he said. “So we are going to tear up the paper and turn the features section into our version of FHM magazine!”
So, despite looking after our ~1.5m loyal newspaper customers (mostly over 60) in a similar fashion for many years, we transformed the paper into something entirely different within a week.
Our pivot lasted less than a month. A short wobble.
Before we’d even got used to the new approach, we were instructed to completely change back to how we’d been before.
We’d committed the cardinal sin - forgetting the customers that had supported us for years.
When companies plateau, the fear kicks in, hard.
Their leaders are desperate to trigger another wave of growth.
So as entrepreneurs, they twist rather than stick, keen to find a way to hit that sweet spot again.
And the easiest way to do that is to mimic the outliers who are seeing growth in similar markets.
TikTok is still growing briliantly.
So other social media companies are lurching to pivot towards short form, algorithmically-led video feeds.
But what they are all forgetting in the dash for cash is that being different is what brought them dominance.
Twitter, Snap, Facebook, YouTube and TikTok are brilliantly differentiated. None has significant competition in its own core competency.
Twitter= news
Snap= messaging
Facebook= community
YouTube= TV
TikTok= shorts
Eating each other’s lunch is when things get bad.
Customers end up walking away because their experience becomes weaker.
They can spot a Wobble a mile off.
In British newspapers, competition for market share in a declining market become so intense that phone hacking happened.
The solution?
Social companies should learn from legacy media and prioritise making their core products and services even better.
- Twitter should find a way to monetise traffic distribution
- Snap needs to monetise messaging
- Facebook’s pivot should be to focus on building community
- YouTube can continue to eat TV
- TikTok can build a unique creator economy
If founders get bored of their products, they should create new start ups without sacrificing existing loyal customer bases.
Meta can argue they are doing this by pivoting to VR. But this seems to be at the cost of prioritising their existing customers.
And The Wobble doesn’t usually last for more than a few years.
Before long, the numbers show the way back to serving a loyal customer base.
And the good news? With turnover above $100bn per year, Facebook can manage a gentle decline for centuries before Zuck is out of a job.
If this is indeed the beginning of the end, there is no need to panic.
Despite so many new forms of entertainment over the last century, theatre is still a great business!