Social networking software

Facebook's Troubling Trend Down Under

If I were an advertiser, I'd consider this to be a pretty negative trend. On the other hand, maybe Australia's just receding back to the norm and this will bottom out. In an Experian Hitwise survey of Facebook users in eight different countries from last August, Australia was third in most time spent on Facebook with 26 minutes 27 seconds, with four of the eight nations averaging less than 22 minutes per users visit to Facebook.

Now, if time spent on Facebook by U.S. users falls below the 20 minutes 46 seconds from last August, that'll be a problem for Facebook, which is planning a highly anticipated initial public offering that could raise up to $10 billion.

Experian Hitwise tracked the Internet habits of 3 million Australians from January 2011 to last month. Facebook had slightly more than half of all social traffic, with YouTube second at 23%.

From there there's a huge drop-off to YouTube's mobile-enabled site, which had slightly more than 2% of Australian social media traffic, while Tumblr accounted for 1.65%.

(However, Australian visitors to Tumblr spent more time there on average -- about 30 minutes -- than any other website.)

Unless I missed it, Facebook doesn't offer metrics for time spent on its site, though it certainly likes to point to the 845 monthly users and 483 million daily active users cited in the company's S-1 filing for its IPO.

But "engagement" is the key to success in the social arena, and Facebook acknowledges as much in its S-1 (italics mine):

Our financial performance has been and will continue to be significantly determined by our success in adding, retaining, and engaging active users. We anticipate that our active user growth rate will decline over time as the size of our active user base increases, and as we achieve higher market penetration rates. To the extent our active user growth rate slows, our business performance will become increasingly dependent on our ability to increase levels of user engagement in current and new markets. If people do not perceive our products to be useful, reliable, and trustworthy, we may not be able to attract or retain users or otherwise maintain or increase the frequency and duration of their engagement. A number of other social networking companies that achieved early popularity have since seen their active user bases or levels of engagement decline, in some cases precipitously. There is no guarantee that we will not experience a similar erosion of our active user base or engagement levels. A decrease in user retention, growth, or engagement could render Facebook less attractive to developers and advertisers, which may have a material and adverse impact on our revenue, business, financial condition, and results of operations.

There's a reason this is all spelled out as a risk factor: Facebook knows members can stop using the social service -- or use it a lot less -- as easily as they joined. There are no barriers to Facebook burnout or boredom.

If I were a serious investor looking at the Facebook IPO, I would ignore sucker stats like DAUs (daily active users) and especially MAUs (monthly active users) and find out whether time spent on Facebook is growing, holding steady or declining. That's a better indication of Facebook's future success.

(H/T ZDNet Australia)

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