Start-up Entrepreneurs' Blog

Facebook Faces Competition from Google+ and Other Start-Ups

July 23, 2011

Facebook faces flattening user activity as “Facebook Fatigue” is afflicting its user base. Google has launched Google+, a new competitive threat. Numerous start-ups such as Everloop are looking to pull away large segments of Facebook population that are under addressed.

PrivCo, financial data provider of private companies, recently released new in-depth financial report on Facebook that reveals the following: 

• Repeat U.S. visits have flattened and are in decline
• Facebook, Inc. already feeling negative impact from new competition from Google+
• Facebook revenues have grown to $1.92 billion for the first half of 2011, up more than 100% versus the first half of 2010.  However, financials for 2012 and beyond are at risk due to declining repeat visits, Google competition, and “Facebook fatigue”
• Facebook making unpublicized attempts to increase revenue and traffic in the face of declining user activity: adding third ad-spot/page, up from two, blasting users new “weekly friends’ birthday reminders”

FACEBOOK FATIGUE

Although Facebook has more than 750 million registered users, repeat visits in its core U.S. market has peaked and is falling.  PrivCo finds Facebook’s U.S. monthly unique visitors have been effectively flat since December of 2010, remaining at approximately 145 million, the result of declining repeat visits.  After setting up profiles and uploading photos, revisits from Facebook’s earliest users have declined; evidencing what is now dubbed “Facebook fatigue”.

GOOGLE+ VIABLE COMPETITION

After three weeks, Google+ is already attracting valuable market share.  Google’s Facebook rival has crossed the 20 million users mark, growing virally.  PrivCo believes that Google launched its social media product just in time for 2012 ad-budget planning season, forcing businesses to set aside portions of 2012 social-media budgets for Google+ at Facebook’s expense.  And Google, (uncovered as a Zynga shareholder in this week’s Zynga IPO filing amendment), has plans on Google+ for social gaming—one of Facebook’s largest profit sources.

FACEBOOK PRIVATE STOCK SALES LIKELY FROZEN UNTIL VISIBILITY IMPROVES

The report concludes that plans for a Facebook IPO may be delayed until 2013, providing that visibility improves.

“Facebook is now facing meaningful competition from a well-funded and viable alternative, Google+.  Facebook’s last private stock valuation of $80 billion+ may no longer be justified on a risk-adjusted basis,” says Joseph Ranzenbach, VP at PrivCo.  ”Given that private companies rarely approve private-stock transactions at a decline in value, a virtual freeze on Facebook’s private stock sales for the next two quarters of 2011 is possible.”

Filed under: Technology News

Tags: Everloop, Facebook Financial Report, Facebook IPO, Google+