Finance4U

Facebook Turns 20: Who Is Left To Celebrate?


Facebook has come a long way since Mark Zuckerberg famously founded the social network from his Harvard dorm room in February 2004 (though that’s not how the Winklevoss twins tell it).

In 20 years, the platform has gone from a fun photo sharing app to a world-leading source of information (and, in no small dose, misinformation). This metamorphosis has coincided with a rise in the number of older users, sending Gen Z fleeing to trendier rivals.

As Facebook gears up to celebrate its twentieth anniversary this Sunday, the milestone is a chance to examine the brand’s changing image as it battles to remain relevant.

The scroll wars

When it was first published on the internet as thefacebook.com, Zuckerberg’s pet-project-turned-unicorn-startup was an instant hit with Millennial audiences.

In its first five years, Facebook’s user base skyrocketed to over 400 million to mark a mind-boggling 80-fold increase. Films like The Social Network, which depicted its founding story, earned millions at the box office.

But the excitement of its launch was 20 years ago. Facebook’s primary user base has since aged up, and their children see the social networking site as a home for parents and older relatives – unappealing in a tech-led world where ‘new’ equals ‘progress’.

Once the new kid on the block, competitors have moved onto Facebook’s patch, hungry for a slice of social real estate. Their currency is scrolling. Whoever can hold audience attention longest reigns supreme and in this area, Facebook lags.

While it still has the largest base of active users worldwide (an estimated three billion at the most recent count) engagement has dwindled for the past decade as rivals better capture young audience’s attention.

Research by SocialInsider’s suggests that, out of the Big Three (Facebook, Instagram, and TikTok) Facebook’s engagement rate is lowest, sitting at an average of just 0.15%.

It doesn’t hurt that Zuckerberg also has Instagram in his back pocket. But according to SocialInsider, the picture sharing app records a similarly poor average engagement rate of 0.60%, a statistic that’s continuously decreasing.

The top challenger is TikTok. The app surpassed Google to become Gen Z’s preferred search engine in 2022. Meanwhile, TikTok’s average engagement rate – calculated by followers – is judged to be 4.25%.

Can Facebook befriend Gen Z?

For many, Facebook’s status as a blueprint for social media sites has seen it slowly transition from godfather to grandfather.

Groundbreaking at the time, the platform’s text-heavy interface and algorithmic news feed now feel outdated compared to the more dynamic and personalised experiences of competitors.

Over the years, various attempts by Facebook to revamp its feed have included the addition of ‘Reels’, a product similar to TikTok’s short video format, and the choice to push new, exciting content onto users from accounts they do not follow. Neither has borne real fruit.

User-generated content can help platforms to feel and stay relevant. But, in a world where younger generations crave genuine connections and authentic online communities, dwindling user activity among peers creates a negative feedback loop.

Roberta Smith is a 27-year-old project manager. She first made her Facebook account at the age of 13. Today, she finds the app boring, and has instead moved to TikTok.

“Most of my friends have deactivated their accounts now, and I think the less they post videos or photos, the less I feel the need to log back in,” she says.

In comparison, Discord and Depop offer focused communities for shared interests, providing avenues for self-expression and building a following. Others specialise in features tailored to the youth, like Snapchat’s disappearing messages or Instagram’s dropshipping functionality.

In short, the Facebook brand has become bland. And if it fails to win the hearts of younger, trend-setting demographics like Gen Z, it risks staying that way.

Zuckerbergs’ Hail Mary

Perhaps sensing it was time for a gear change, in 2021 Zuckerberg hedged his bets on building the world’s largest virtual community: the metaverse. Or, as he described it, “the next chapter of the internet”.

“We’re a company that focuses on connecting people,” Zuckerberg said at the time. “While most other tech companies focus on how people interact with technology, we focus on building technology so people can interact with each other.”

The metaverse dominated headlines when it was unveiled, and the tech giant poured $36 billion into the idea. To show how seriously it was taking the endeavour, Facebook (the company, not the product) even rebranded to Meta.

Two years later, earnings reports show that Meta’s Reality Labs, which develops metaverse-related technologies, recorded a $3.74 billion operating loss.

Content controversy

Alongside a label of uncool, Facebook has also earned notoriety as a hotbed for internet unsafety amongst Gen Z (dubbed the ‘igeneration’ for their tech-savvy).

Various controversies – including past data breaches and targeted advertising practices – led to Zuckerberg being pulled in front of the US Congress to address concerns about Facebook’s data privacy as recent as this week. Since then, its reputation has dwindled.

“I don’t really trust the news I see on Facebook,” Smith tells Startups. “It’s basically just a lot of adverts and conspiracy videos now.”

To fix this problem, the company has gambled on AI for content moderation. Speaking in 2017, Zuckerberg announced the company was “building new AI to detect bad content and bad actors.”

Stakeholders are placated – for now. Facebook’s stock price rose after the CEO announced it would accelerate its AI plans last year, and the platform’s sizable fortune is such that it has a significant fame buffer to rely on if investor interest does dim.

Still, there are only so many times the company can bet its business plan on a mission statement that appears to change annually. Especially when it appears to be as much about image clean-up as innovation.

Make Facebook Cool Again

Done well, betting on AI to turn Facebook into a safer, more innovative platform could be the key to winning over Gen Z and tapping into a long-term audience.

Done poorly, it could risk Facebook feeling even more like a characterless product and push audiences towards more niche competitor platforms.

Your twenties are all about self-discovery. As the social media site enters its second decade, it must stop trying to imitate the successes of teenaged rivals and decide on a unique strategy it can stick to.

With this method, Facebook can hopefully fix its identity crisis as young people do; by finding its own interests, cleaning up its act, and establishing new, long-lasting friendships.

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