Facebook (FB) Faces Increasingly Fragmented Audience

May 21, 2013

Facebook (FB) faces pressures from online audience fragmentation and the loss of eyeballs to other more mobile platforms such as Twitter, Snapchat and WhatsApp, says Brian Pitz, Managing Director and Senior Research Analyst at Jefferies & Company, Inc.

“We were concerned in terms of some of the engagement metrics; the data we have suggests that the Millennial demographic might be churning off a bit faster than other demographics, which are shifting to more mobile-centric apps and/or platforms. We think Facebook tried to address this early on through its acquisition of Instagram, but what is happening since then is further fragmentation of the audience onto other platforms or apps such as Twitter, Snapchat or WhatsApp,” Pitz said.

FOR MORE INFORMATION ABOUT THIS INTERVIEW CLICK HERE.

Pitz says that, although FB can still take more advertising market share from media such as radio and display advertising compared to competitors such as Yahoo! (YHOO) in the shorter term, the longer-term outcome remains uncertain.

“We are remaining on the sidelines until we believe there is a catalyst for an upgrade. We still believe that they are well-positioned longer-term to gain share. Furthermore, we believe that companies such as Yahoo! have a lot more work to do to turn around their core business, so Facebook is probably much better positioned to steal display or radio advertising share versus Yahoo! in the near term. But longer term, I still think there is a substantial fight for the number two and number three spots behind Google,” Pitz said.