Half a Billion People Were Defriended Last Year—Does That Undermine Facebook's Business?
As Facebook users change the way they behave, the social network company will need to stay nimble to protect revenue.
Amanda Borland, a sophomore at the University of Southern California, sits at her computer scrolling through a list of names. Suddenly she stops and clicks on a picture. “That is a random person I have never talked to,” she says. In an instant, Borland “unfriends” another Facebook contact. Borland originally added these people while running for student government in high school; now she sees no reason to keep them as friends.
“For me, it is weird to reach out to someone who is technically linked to me personally, when I literally have no idea who they are,” Borland says.
The idea of “cleaning out” Facebook friends is getting more popular: The percentage of people unfriending other Facebook members rose from 56 percent in 2009 to 63 percent in 2011. In gross terms, 158 million people were unfriended in 2009, and more than a half a billion in 2011. Experts predict the trend will only increase in coming years, and they see it as a potential problem for Facebook’s business model, which relies on leveraging information gained from a user's profile and personal networks.
Morley Winograd, former director of the Institute of Communication Technology Management at the University of Southern California, says the unfriending trend is only natural as the Facebook demographic shifts from largely college users to a majority older than 35. Older users are more concerned with privacy and want to limit access to their profiles to people they trust.
Millennials, on the other hand, are starting to use Facebook as a way to promote, manage and store their lives, deleting friends once a contact ceases to serve a function. As users delete friends, their networks shrink, and Facebook loses an edge in interconnectedness. This presents a problem for advertising: Facebook charges based on how well an advertisement is targeted to a user, and the more information Facebook can gather, the better they can target advertisements.
“If they have targeted all your friends, then they can serve up advertisements to you and your network,” says Karen North, director of the Annenberg Program on Online Communities at USC. “As you decrease your reach, you decrease the ability of Facebook to advertise.”
Experts say that the fewer friends a person has, the harder it is for Facebook to interpret the world the subscriber comes from. In turn, the less information Facebook has, the less they can charge for advertisements on the subscriber’s page. Facebook declined to comment on how changes in user behavior could affect their business.
North suggests this trend points to a more significant issue. The unfriending phenomenon suggests many users view Facebook as a utility, a place to network or post a photo gallery, instead of a hangout spot. She says many social media experts have noticed the level of engagement is declining. People are not only unfriending, they are spending less time on Facebook overall.
"The phenomenon where people were living a big chunk of their lives hanging and interacting on Facebook is decreasing," said North. “All of that does have an impact on the value of Facebook, whether it is the amount of engagement, going on fewer times, or using it more efficiently.”
Unfriending may also affect certain kinds of advertisements, like sponsored posts or page posts. These particular advertisements “rely on the size of the friend base of someone that ‘likes’ one of those types of ads,” says Kate Sylanski, an advertising specialist at Modcloth, the online retailer that advertises with Facebook. Modcloth has previously invested in sponsored posts, but the ads have not generated increases in revenue.
It’s also possible that the trend could enhance the accuracy of Facebook’s efforts to target users, because the company can assume that those defriended had little to no influence on the user’s life. “The ‘unfriending’ trend could make these types of ads more appealing to companies because ‘friends’ may hold more water and truly be people you feel connected to in your Facebook community, therefore making them a more like-minded audience,” Sylanski says.
But if ‘unfriending’ is a problem for advertisers, that means trouble for investors. Facebook’s “pending IPO depends on increasing the amount of revenue per subscriber that the site generates,” says Winograd, who researches the Millennial generation along with political scientist Mike Hais. The two theorize that fewer friends per person mean fewer referrals or less sharing. That means less revenue from each Facebook visit. The narrower a person’s network of friends, the less likely something on her page will go viral. In any case, “a reduction in people, in connection, or in time and energy spent on the site would make advertisers and potential investors nervous,” North says.
There is little hard data on the question so far, but North is seeking funding to conduct research on the trend and gather more concrete facts on the true effects of Facebook ‘unfriending.’
“[Unfriending] is a fact that a smart company such as Facebook will adjust to,” says Ira Kalb, president of consulting Kalb & Associates and an expert in marketing and business. "As long as Facebook has a large, engaged audience, it and [everything] off it will do well.”