It’s Official: Teens Are Bored With Facebook [Business Insider, March 3, 2013]
Teenagers are a good measure of what’s “cool.” Observing which apps they use and how they interact with technology can help the rest of us spot budding trends.
And lately it seems teens have grown tired of Facebook.
Adam Ludwin recently launched a social photo album app called Albumatic. Before its launch, he showed the app to a focus group of 20+ people under the age of 25. Most told Ludwin they didn’t like how reliant the app was on Facebook.
“They gave me the typical teenage response: ‘We’re bored with Facebook,'” Ludwin told Business Insider.
His test group doesn’t seem to be an outlier. Branch CEO Josh Miller recently asked his 15-year-old sister if she still used Facebook in a blog post titled “10th Grade Tech Trends.” According to his high school sibling, teens are obsessed with Instagram and Snapchat, but they’re less enthralled with Facebook.
“She mentioned that she tries to visit Facebook as infrequently as possible,” he wrote. She also told Miller she only visits Facebook after she’s thoroughly stalked people on Instagram.
Even Facebook Chat isn’t as appealing as it once was. “When you go on Facebook Chat the people you don’t want to talk to are always the ones who immediately chat with you,” his sister said.
Even Facebook has admitted it has a teen problem.
From its annual 10-K report:
We believe that some of our users, particularly our younger users, are aware of and actively engaging with other products and services similar to, or as a substitute for, Facebook. For example, we believe that some of our users have reduced their engagement with Facebook in favor of increased engagement with other products and services such as Instagram. In the event that our users increasingly engage with other products and services, we may experience a decline in user engagement and our business could be harmed.
Why isn’t Facebook “cool” anymore? The Verge’s Ellis Hamburger asked a few social media experts for their thoughts.
“I think it has less to do with kids consciously looking for ‘the next big thing’ than Facebook just no longer being a space that serves them,” one said. In other words, it used to be “cool” to brag about yourself and show pictures to friends on Facebook. Now people are looking for more intimate places to share items with a handful of people, like Snapchat. There’s a sense of privacy there, and it meets a need Facebook has grown too big to serve.
Of course, this doesn’t mean teens are deleting their Facebook profiles. They’re just looking to use the service less, and they’re open to communicating on other platforms.
Snapchat Application Is Latest Teenage Trend, But Do Photos Disappear? [ABCNews YouTube channel, Jan 3, 2013]
Snapchat and the Erasable Future of Social Media [Bloomberg Businessweek, Feb 7, 2013]
In the fall of 2012, Sally Ike, a senior at Columbia High School in Maplewood, N.J., heard from a friend about a hilarious new app you could download on your smartphone. Snapchat was free, her friend explained, and allowed you to share photos. And like a lot of photo apps, it was simple: just shoot and send. The hook was that when your friend opened the message, the photo self-destructed within 10 seconds.
In the U.S., Snapchat was the second-most popular free photo and video app for the iPhone in early February, just behind YouTube and ahead of Instagram. It was the 19th-most popular free app overall, according to App Annie, an analytics company. Snapchat’s website claims that more than 50 million snaps are sent every day.
It’s made rivals anxious enough to build similar products. In December social networking giant Facebook (FB) unveiled a Snapchat-like app called Poke that allows users to send self-destructing media. Instead of burying Snapchat, however, the competition from Facebook appears to have made the upstart stronger. In January tech industry blog TechCrunch named Snapchat the “Fastest Rising Startup” of 2012.
Adults have long warned kids that if they weren’t careful, questionable behavior would end up on their permanent record. Over the decades, that record has become larger, more searchable, and more available to the public. With cloud computing, the digital space for it has expanded exponentially. Just one institution, the Library of Congress, is busy archiving more than 170 billion tweets.
The business model of today’s free social media networks and search engines, of course, is collecting and storing behavior and interests of every kind, and selling that information to marketers. And companies are getting better at organizing and finding out about every last bit of a user’s social life, whether it’s a party picture or a preference for a certain kind of shoe. Last month, Facebook began rolling out Graph Search, a tool to retrieve details from the pasts of its billion users.
In this environment, unease about one’s permanent social record is logical. Danah Boyd, a senior researcher at Microsoft Research (MSFT), says it’s not surprising that teenagers would be the first to appreciate the advantages of impermanent social media. “This cohort has grown up with the expectation of surveillance by people who hold direct power over them,” says Boyd. “It’s not about surveillance from companies or the state. It’s surveillance from their teachers, their college admissions officers, their parents.”
Facebook Backer Hansen Bets on Pinterest and NBA’s Kings [Bloomberg Businessweek, Feb 27, 2013]
California investor Chris Hansen, an early Facebook Inc. backer, is making high-stakes bets across the state, from investing in Pinterest Inc. to a bid to buy control of the capital’s marquee sports team and move it north.
Hansen’s hedge fund, Valiant Capital Management, led a $200 million financing round in Pinterest last week at a $2.5 billion valuation.
Hansen, 45, is also leading an investor group including Microsoft Corp. (MSFT)’s Steve Ballmer that last month agreed to buy a controlling stake in the Sacramento Kings — valuing the franchise at a National Basketball Association record of $525 million — and proposed a relocation to Seattle.
Both deals are high-profile and controversial. Hansen’s foray into sports has met vocal opposition in Sacramento, where the Kings have spent 28 years, including 19 sold-out seasons and 10 playoff runs.
Valiant’s funding of Pinterest ranks the online bulletin board among the most valuable closely held Web startups, even though it generates no revenue.
“Pinterest doesn’t have its business defined yet so you’re betting all on potential,” said Anand Sanwal, chief executive officer of CB Insights, a New York-based research firm that tracks venture capital and private equity. “You have to take it on a case-by-case basis, but we generally worry that there is bad money chasing these rock-star companies.”
Hansen left Blue Ridge to start Valiant in 2008, and now manages about $3 billion in assets. The firm invests in a variety of securities, including stocks, options, swaps, bonds and illiquid securities. Its private investments include technology, energy and health-care companies.
Pinterest is just the latest high-priced Internet bet for Valiant. The biggest was Facebook. Valiant, along with co- investors, started backing the social networking site in late 2010 at $12 a share, and bought stock totaling about $500 million, said a person familiar with the matter, who asked not to be named because the terms weren’t disclosed. At the time of the IPO, the Valiant Capital Opportunities Fund owned 36.3 million shares worth $1.38 billion.
In late 2011, Valiant participated in a $250 million investment in online file-sharing service Dropbox Inc. at a $4 billion valuation. In November, the firm contributed to an $85 million financing round in Evernote Corp., about six months after the Internet note-taking service was valued at about $1 billion.
Pinterest, where members share photos of clothing, food and art, may represent Valiant’s biggest risk in private technology investing, because the company hasn’t proven it can make money. And while user growth is up 300 percent from a year earlier, the disappointing public market performance of Facebook, Zynga Inc. (ZNGA) and Groupon Inc. (GRPN) shows how challenging it can be for Web companies to live up to their startup hype.
“It’s a strategy that works pretty well when things are going up, and it’s only matter of time before things go the other way,” said Eric Risley, a managing partner at investment advisory firm Architect Partners LLC in Palo Alto, California. “Then you’ve got a challenge on your hands.”
Still, the bet could pay off, Risley said. “Pinterest is a cool company that can do a lot of interesting things,” he said.
Why retailers are pinning hopes on Pinterest [Reuters, Feb 27, 2013]
After a tough day at work as a publicist in Minneapolis, Becca Bijoch would often indulge in a little retail therapy. She usually headed out to the stores as she did not care much for online shopping.
That changed last year when the 26-year-old joined Pinterest, a photo-sharing website that allows users to “pin” images to online bulletin boards based on their interests and to follow others. Bijoch says she has found all sorts of things that she bought after seeing them on Pinterest, from great kitchen tools on CrateandBarrel.com to clothes at Asos.com.
“I’m probably spending more now. I’m on the couch at night, after having two glasses of wine,” Bijoch says, but she has no regrets. “I tell everyone that Pinterest has changed my life.”
Pinterest, which was the fastest standalone website to hit 10 million unique visitors a month, now has 25 million members, of whom many – like Bijoch – are young, female, well-educated and have disposable income.
Retailers are hankering after these users, but it is sometimes difficult to nab them because Pinterest is an ad-free website and “pins” flourish virally. While many retailers have learned how to interact with consumers on Facebook and Twitter, they are still struggling to figure out Pinterest and the ways to make money out of reaching shoppers through it.
In that effort, many retailers have installed Pinterest buttons on their main websites, created their own Pinterest pages, and allocated marketing dollars to acquire followers. While Pinterest says it does not track metrics internally, many ancillary businesses have popped up to help companies harness the revenue-driving possibilities of the site.
“It’s a huge window-shopping platform,” says Kyla Brennan, chief executive of HelloInsights, a Santa Monica, California company that provides analyses of Pinterest use. “It helps people find what they really like. Does it encourage people to be a little impulsive? Of course.”
E-commerce experts say Pinterest generates more dollars per users than some other social media sites, even though Facebook, the world’s largest social network with more than a billion users, is a leading driver of shopping by volume.
Pinterest shoppers, on average, spend nearly $170 per session, according to a study by RichRelevance, an e-commerce consultant, which tracked 700 million shopping sessions. In comparison, Facebook shoppers spend $95 per session, while Twitter shoppers spend $70.
Major retail brands with a presence on Pinterest include L.L. Bean, with more than 5 million followers; Nordstrom Inc, with more than 4 million followers; and Lululemon Athletica Inc with close to 2 million. Other major players like Gap Inc and Urban Outfitters Inc have fewer followers on the site, but are growing.
The three-year-old Pinterest recently closed a $200 million round of financing, which raises its value to $2.5 billion.
Most companies’ Pinterest activity is handled by their social media teams, but the efforts differ from promotions on Facebook and Twitter because Pinterest boards are interest-based and not timeline-based. Nordstrom’s Facebook page, for example, features a couple of products daily that are on sale or seasonally interesting, but its Pinterest page is an evergreen collage of fashion lifestyle images.
As there is no direct advertising and Pinterest is still growing, the marketing cost to businesses of acquiring new users is lower than other sites, says Daniel Maloney, CEO of PinLeague, a consultancy that tracks social media usage.
“The current cost of acquiring a Pinterest follower is a penny to 50 cents, depending on type of business. That compares to 50 cents to $2.50 on Facebook,” he said.
One of the top ways to reach followers seems to be to do anything but try to sell products. L.L. Bean’s most popular board, for instance, is devoted to pictures of woodland creatures – its most popular pin is a picture of a cat dressed up to look like a bat.
“While we do measure traffic coming to llbean.com and llbeansignature.com from Pinterest, we are not currently promoting the platform as a selling channel,” says Laurie Brooks, senior public relations representative for the company based in Freeport, Maine. Internal metrics show Pinterest users spend more than others, and that traffic is on the increase even if, overall, it is less than what comes from Facebook, she adds.
L.L. Bean, like many other retailers, has not offered discounts through Pinterest, but it has sponsored contests. So has Nordstrom, which did a bridal-focused sweepstakes in January.
“Our followers share and save compelling imagery and merchandise – period. Our boards aren’t focused on bargains or coupons,” says Bryan Galipeau, who is group manager of social media at Nordstrom’s Seattle headquarters. “We think it’s important to take a broader view of Pinterest because that’s also how our customers see it.”
Fashion retailer Gilt.com’s “Pin to Win” contest offered a $2,500 shopping spree to women who shared certain images from their wedding dress collection. Gilt also rewarded those who received 50 re-pins of a children’s dress the chance to buy the item for 77 percent off.
Similarly, fashion-seller Karmaloop.com offered a trip to Paris for the best outfit pinned to one of its boards.
Other goodies from retailers include AMC Theatres’ giveaway pinboard where users can win movies posters and other memorabilia. Wal-Mart Stores Inc ran a contest about inspiring people to be environmentally conscious.
Even if you could win something by shopping through Pinterest, consumers need to exert some impulse control.
Since most of what is “pinned” on the site is aspirational, people can end up spending way more than when they click through from other social media sites.