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As Facebook’s value plummets, why advertisers may go elsewhere

By Don-Alvin Adegeest

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Business

It has been a painful week for Facebook, who’s stock price came crashing down, as shareholders responded to its slowdown in revenue growth, wiping 20 percent off the company’s value. A loss of 125 billion dollars in one day is an astronomical tragedy for any company.

But it is not just investors who are deserting the social media giant. Facebook lost 3 million European users in the wake of the many scandals from fake news to GDPR, though it failed to give a precise account of slowdown in user growth.

For the many brands and retailers advertising on Facebook, times are changing too. The company previously stated it is running out of places to show its ads in its News Feed. According to Recode, Facebook either needs to charge more fees for these ads, find new places to show them, or sign up more users in order to keep the growth momentum going.

According to an article in the Guardian last April, the teenage demographic is abandoning the platform in dramatic numbers. This is the conclusion from a study titled Teens, Social Media and Technology from the Pew Research Center. Interesting fact is that income is related to Facebook use, with 70 percent of lower income teens saying they used the platform as opposed to 36 percent of higher income teens.

As for the future, the New York Times in April stated advertisers are Facebook’s lifeblood. The power and vastness of its reach with billions of users means brands are still trusting their advertising dollars although frustration has grown with privacy laws and how ad performance is measured.

Facebook’s mission throughout it recent troubles remains unchanged, to connect the planet and create a digital universe. But Facebook can only continue connecting the world if it prevents a mass exodus of its advertisers and users.

Photo credit: Facebook company page

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