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November 01, 2006

Is it Over for FaceBook? Losing 10% of Users

posted by MR WAVETHEORY at 11/01/2006 04:10:00 PM
The talk about FaceBook being not very sticky might turn out to be true. Comscore says FaceBook has lost 10% of its user base between August and September. This is very odd since you would expect new users and college students to sign up. However, maybe as students graduate and enter the workforce, they stop using it or delete their profiles - who would want all those raunchy late night frat party photos showing up on your employers email system?

Yahoo! Inc. (Nasdaq YHOO) might end up getting a better price now after holding off on the buy.

The signs indicate that Facebook may no longer be as "cool" as it once was among college students, its core user-base. Traffic is declining. According to rating service comScore Networks, Facebook's number of uniques dropped 10% to 13.3 million at the end of September from an August high of 14.8 million. Recent moves to ramp up traffic and ad dollars have only served to upset users. As a result, potential buyers are now content to sit on the sidelines and wait for the site's price to drop.

Uniques are dropping but page views are up. That means users are churning faster than FaceBook is adding them. Interesting paradox huh? There are many ways to achieve increasing page views while unique users decline - add news feeds, add photos (great for upping page views), you get the idea...

Facebook is currently locked in a dispute with rating services such as comScore Networks, which measure Web traffic and usage. The latest publicly available comScore data, issued for September, show a decline in the number of Facebook's unique visitors. comScore says the number of "uniques" dropped 10% to 13.3 million at the end of September from 14.8 million at the end of August. It says the number of page views rose 11% to 7.1 billion, from 6.5 billion in August. That's a huge gain, making Facebook the seventh most heavily viewed site on the Web, behind a handful of behemoths such as No. 1 Yahoo and No. 2 MySpace, which had 35 billion views. Yahoo had about 40 billion page views.

FaceBook uses different methodology to track uniques.

Facebook says it's doing much better than the comScore statistics suggest. Its review of page views shows 30% growth over the same period, to 16.5 billion hits. The huge difference between the comScore and Facebook numbers may stem from differences in the way college networks are measured and in the weight they receive. comScore is sticking by its data and methodology.

Facebook also says its total registered users, which include anyone who has signed up for the service, grew 9% to 11 million in September. Deitch says "more than half" of registered users use Facebook every day. But it doesn't track "active users" the way comScore does. That number, which is less encouraging, counts the number of people who enter Facebook from outside the network in any given month.

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