- A recent comScore survey has found that Facebook remains the most popular social networking platform for millennials.
- This finding pours cold water on the long-held assumption that millennials no longer find Facebook ''cool''.
- The ability to appeal to a wide demographic bodes well for Facebook's ad rates and Facebook stock.
For quite a long time now there has been a general perception that teens and millennials were abandoning Facebook Inc. (NASDAQ:FB) in favor of more ''exotic'' social media sites including Snapchat and Facebook-owned Instagram. The general perception has been that teens and millennials no longer find Facebook cool and prefer connecting on sites that their parents are less likely to visit. If these reports were true, then this would present a real headache for Facebook in its quest to attract marketers who want to build brand affinities with younger generations.
A recent comScore survey, however, pours cold water on this long-held assumption. The survey not only found that the vast majority of teens not only use Facebook as their primary social media network but are also a lot more engaged on the platform compared to sites such as Snapchat and Instagram. According to the survey, the much-coveted 18-34 year old demographic spends more than 1,000 minutes/month on the social network with a reach of close to 100% compared to 63% for Instagram and 38% for Snapchat. Additionally, millennials spend much less time on other social sites including both Instagram and Snapchat compared to the time spent on Facebook.
From the chart above, it's clear that Facebook is in a class of its own when it comes to social networks. Investors will probably be disappointed because Whatsapp, a company that Facebook bought for $19B two years ago, was not ranked in the survey. But Whatsapp does not qualify as a social media platform because a user's contacts on the platform are private and other users cannot connect with them. Whatsapp is more of a cross-platform messaging app.
There are a couple of good reasons why millennials still use FB heavily to connect with friends. Facebook is by far the most complete social network out there. Unlike sites such as Twitter (NYSE:TWTR) whose users gripe about the site not being user-friendly, Facebook is geared towards providing a superior user experience with features such as news feeds, Timeline, Trending Topics, photos, status updates, notifications and other key features. The user interface is attractively laid out and highly intuitive. Millennials do not use Facebook the same way older demographics do since they tend to post less frequently. Instead, they mainly use the platform as a news-curation feed to broadcast to their friends stuff about their lives. Facebook's easy-to-use platform makes this easy to do.
But perhaps one of the best reasons why Facebook remains hot for millennials is that the site has been continuously improving its user engagement by incorporating video and unique features such as Instant Articles. One big reason why Facebook bought Instagram was because its mobile apps were not as good as Instagram's. Millennials primarily connect on FB via their smartphones. But the incorporation of videos into the platform has increased the popularity of Facebook with millennials. Facebook recently launched Suggested Videos to compete with Alphabet Inc's (NASDAQ:GOOG) YouTube. The presence of cool videos on Facebook could be the reason why Facebook's engagement is so high compared to other social platforms.
Facebook Inc. recently launched Facebook Lite, a stripped-down version of the main app that consumes much less bandwidth than the main app and one that people in developing economies can use. This allows millennials in these demographics to connect seamlessly with their friends in other parts of the world.
Incidentally, videos are the reason why Facebook has become hot property with marketers. It's common knowledge that videos enjoy the highest engagement rates of all marketing channels. Click-through rates on video ads are much higher compared to other channels. It's hardly surprising then that Facebook's ad rates have been growing at a time when those of other social sites and Google have been declining. During the last quarter, Facebook CPM rates increased more than 40% Y/Y at a time when Google's ad rates declined in the mid-teens.
Source: Business Intelligence
The ability of Facebook to appeal to a wide demographic is part of the reason why the company's ad rates and ad revenues have been surging. The stickiness of Facebook's platform ensures that it will remain the most popular social media site for years to come. This bodes well for Facebook stock and its investors.