Facebook, Twitter, LinkedIn Capture Adult Audience: Pew Report

Social
networking sites such as Facebook and Twitter are capturing a larger share of
the adult population than ever before, according to a report from the Pew
Research Center’s Internet and American Life Project. Two-thirds of adult
Internet users (65 percent) now say they use a social networking site, up from
61 percent one year ago and more than double the percentage that reported
social networking site usage in 2008 (29 percent).

Pew
reported that, for the first time, its Internet surveys have found that half of
all adults use social networking sites. “The pace with which new users have
flocked to social networking sites has been staggering; when we first asked
about social networking sites in February of 2005, just 8 percent of Internet
users—or 5 percent of all adults—said they used them,” wrote report authors
Mary Madden, a Pew senior research specialist, and Kathryn Zickuhr, a research
specialist with the organization.

Looking
at usage on a typical day, 43 percent of online adults use social networking,
up from 38 percent a year ago and just 13 percent in 2008. Out of all the
“daily” online activities that Pew asked about, only email (which 61 percent of
Internet users access on a typical day) and search engines (which 59 percent
use on a typical day) are used more frequently than social networking tools.

The
report found that among Internet users, social networking sites are most
popular with women and young adults under age 30. Young adult women ages 18-29
are the power users of social networking; fully 89 percent of those who are
online use the sites overall and 69 percent do so on an average day, according
to the Pew Research report.

Looking
more closely at gender differences, women have been significantly more likely
to use social networking sites than men since 2009. As of May 2011, nearly
seven in 10 online women are users of social networking sites (69 percent),
compared with six in 10 online men (60 percent). Research showed women are also
more active in their use of these sites, with almost half of female Internet
users using social networking sites on a typical day (48 percent), compared
with 38 percent of male Internet users.

While
young adults have consistently been the most likely to use social networking
sites, Internet users in other age groups have seen faster rates of growth in
recent years. In the past two years, social networking site use among Internet
users aged 65 and older has grown 150 percent, from 13 percent in April 2009 to
33 percent in May 2011. Similarly, during this same time period, use by 50- to
64-year-old Internet users doubled—from 25 percent to 51 percent.

When
social networking users were asked for one word to describe their experiences
using social networking sites, “good” was the most common response. Overall,
positive responses far outweighed the negative and neutral words that were
associated with social networking sites (more than half of the respondents used
positive terms). Users repeatedly described their experiences as “fun,”
“great,” “interesting” and “convenient.” Less common were superlatives such as
“astounding,” “necessity” and “empowering.”

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Facebook Doesn’t Want to Deal

When Facebook first entered the daily deal space with a plan to offer its users deals in five cities, daily deal startups—at least those that were not among the lucky few working with Facebook Deals as partners—were apprehensive.

The social media giant, if it did things right, was expected to be a brand-name competitor at the very least, with some observers dubbing it a “Groupon killer.” But on Friday, Facebook announced that it is abandoning the online deals it debuted in Atlanta, Austin, Dallas, San Diego, and San Francisco.

One analyst suggested that Facebook may not have thought deals to be profitable enough because it is an overcrowded space. “The Groupon group-buying phenomenon is a commodity. There are no barriers to entry. It’s just not going to work because everybody offers it and therefore the margins go down,” Jeremiah Owyang of Altimeter Group told Reuters when the news was announced.

The official statement from Facebook obtained by the news agency explained: “After testing Deals for four months, we’ve decided to end our Deals product in the coming weeks. We think there is a lot of power in a social approach to driving people into local businesses. We’ve learned a lot from our test and we’ll continue to evaluate how to best serve local businesses.”

To that end, the social network will still offer Check-in Deals, a Facebook app that lets users find deals when they are on the go.

Read between the lines, and it seems that Facebook doesn’t think traditional daily deals that users sign up via email to learn about are the best (read: most lucrative way) for it to work with local businesses. The move is certainly good news for daily deal companies like deal leader Groupon, which has filed to go public, and LivingSocial, which is the No. 2 deal site, and also the subject of IPO talk. But it says a lot about the deal space too:

Mobile Is Where It’s At

While Facebook is abandoning the online-based deals it was offering, its plan to carry on with the Check-in Deals component, a subset of the now defunct Facebook Places, shows the strength of the fledgling mobile offers space.

Check-in deals allows users to check in from restaurants, supermarkets, bars, and coffee shops using an app that will offer them rewards with discounts, coupons, and free merchandise. It is part of a Facebook push to get its users to share information on where they are whenever they post to the site, although this location sharing is an opt-in feature.

Although they have mobile apps too, companies like Groupon rely heavily on email marketing to send out their deals, and those cost more than they would like. Facebook is betting on mobile as the medium of the future for such deals, and we’re going to assume that it is doing so, in part, because it’s a heck of a lot cheaper.

Local Sales Forces Aren’t Cheap

When Facebook had initially launched Facebook Deals it did so with a host of site partners that could help it offer social-oriented discounts, including KGB Deals, Zozi, Gilt City, and PopSugar City.

Facebook had a small sales team of its own, but it teamed up with the other sites because each had existing staff that made deals with local or specialty merchants in various cities, local “boots on the ground” that Facebook did not necessarily have in those locations.

It costs money to have a dedicated staff in various cities. By choosing to continue on with the Check-in Deals app only, Facebook will be able to offer deals more passively. Users let the network know where they are, and merchants who want to be part of it will likely have to make it known to Facebook that they have deals to offer. This may make it easier for national retail chains to get in on the deal action.

The Deal Space Is Crowded And Competitive

While there are low barriers of entry into the daily deal space, that doesn’t mean it’s an easy business in which to thrive. Even the deal leader, Groupon, which has seen astounding growth for a startup is losing money as it expands. Still, it’s a hot area, and Facebook did seem like a natural fit for social-outing type deals, espcially.

“It is surprising that Facebook ended their deals product after just four months,” Vinicius Vacanti, co-founder of Yipit.com, which aggregates daily deals and tracks the industry, told Reuters. “On the other hand, Facebook Deals had been an underwhelming product and experience.”

In an interview that appeared today in the Wall Street Journal, LivingSocial Chief Executive Tim O’Shaughnessy points out that even for successful companies in the space (his Washington, D.C.-based startup, just two years old is anticipating $1 billion in revenues this year), the daily deal business holds a lot of unknowns and hundreds of companies that got into it have already left.

“This business is much harder to scale than maybe we realized. So I think you’ve started to see maybe some of the new entrants started to slow down a bit, or there are some sort of retreats occurring,” he said.

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• Mason Counters Bad Headlines: An internal memo written by CEO Andrew Mason defending Groupon against recent bad press and touting a few victories has been leaked, and not at all to the company’s chagrin, we’re sure.

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Teresa Novellino writes for Portfolio.com

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