Facebook Approaching U.S. Saturation: Can it Continue Growth?
Facebook (NASDAQ:FB) achieved a year-over-year revenue growth of 38 percent but the company appears to be reaching market saturation in the United States and Canada. North America provided approximately half of Facebook’s revenue when the company went public. That number dropped to 46.5 percent last quarter — according to CBS News — which is a good thing.
Unfortunately, monthly average users in the U.S. and Canada have only increased 6.6 percent year-over-year. Add in the fact that Facebook counts a monthly user as anyone who clicks a Facebook like button on a website and there is reason to worry that market saturation is approaching in a region that provides nearly half of the company’s revenue.
Facebook’s most profitable users are predominantly based in the U.S. and Canada. The average U.S. or Canadian user generates $3.50 in revenue per quarter. Europe generates $1.60, Asia generates $0.64 and the remainder of the world averages $0.50. Increasing advertisement revenue and maintaining user growth is a difficult balancing act for Facebook. The company has continued its crackdown on appearing “spammy” — a complaint often leveled at the social media giant…
Tech Crunch reports that the Path smartphone app has been banned from connecting to Facebook’s Social Graph API, preventing the app from looking up a user’s Facebook friends and messaging them to join. A number of other apps have lost their Facebook access recently as well. The main reason why Path was blocked may be that the app started sending text message invites at six in the morning last week. Between third party apps using Facebook users’ personal data and spamming their News Feeds with advertisements for companies, keeping people engaged with the social media website without pushing them away is key.
While Facebook has seen strong growth in mobile ad revenue — a lack of which was a driver behind the drop in the company’s stock price after its IPO — another website is always lingering in the back of investors’ minds. That website is Myspace. Dan Caldwell — an entrepreneur who founded a social music network which was purchased by Myspace — said to the Guardian: “There’s a lot of instructive lessons from the fall of Myspace, which was over-monetised, did a lot of user-hostile things and was very vulnerable to disruption. It went from the number one site in the world to zero, and it’s interesting that it happened so quickly. People are fickle and will move if there’s something better – and if that wasn’t true, we’d all still be using MySpace.” Can Facebook continue its march to increasing profitability without collapsing in on itself? That is the question.
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