11 Feb

Facebook’s slow user growth isn’t a concern

WRITTEN BY Patricia Garner

Slow monthly active user growth rate

As of December 31, 2014, MAUs (monthly active users) for Facebook (FB) had improved 13.4% year-over-year and 2.9% sequentially from 1.35 billion in the third quarter to 1.39 billion in 4Q14. Mobile MAUs had increased 25.8% year-over-year to 1.19 billion. DAUs (daily active users) had risen 17.6% to 890 million on a year-over-year basis. Mobile DAUs had grown 34% year-over-year to 745 million.

Even though MAU growth was slow, Facebook’s user growth across its other businesses was pretty high. Facebook witnessed solid growth with Instagram, Messenger, and WhatsApp, which crossed 300 million, 500 million, and 700 million MAUs, respectively, in December. Despite the slow user growth, Facebook continues to be the leading social network in terms of MAUs.

Focus on user engagement

Facebook’s efforts to target the right ads to the right people are helping advertisers gain a better return on investment than peers like Google and Twitter are. Improved ad targeting leads to better user engagement. The high pricing of Facebook’s ads reflects this.

Facebook’s slow user growth isn’t a concern

According to a report from comScore Mobile Metrix, social networking is a popular activity among smartphone users. The chart above shows that several social sites have exceptionally high engagement.

Market Realist’s article Why Facebook beats Twitter on user engagement metric discusses how Facebook leads the pack among social networking sites. The average Facebook mobile user engaged the site for more than seven hours via browsers or apps. Twitter (TWTR) mobile users had an average engagement of nearly two hours during the month.

By comparison, Pinterest, which has seen an explosion of users in recent months, had visitors engaging with the brand for nearly an hour. Tumblr, whose parent company is Yahoo! Inc. (YHOO), had user engagement of 68 minutes during the month.

To learn more about this subject, read Market Realist’s article Why is Facebook focusing on fewer ads to drive user engagement?

Investing in Facebook

If you want to gain portfolio exposure to Facebook, consider ETFs. Facebook makes up 4.1% of the Technology Select Sector SPDR ETF (XLK) and 3.57% of the PowerShares QQQ Trust, Series 1 ETF (QQQ).

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