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Facebook Commands 70% Market Share Of All Social Network Users

From Bank of America/Merrill Lynch analyst Justin post:

"Social Networking: Facebook adds 12mn more visitors m/m.  Over 166mn US internet users visited a social networking site in December (more than 81% of the US internet population) and the average user spent over 4 hours total at sites such as Facebook, MySpace, and Twitter.  Facebook grew its users by over 12mn m/m to 112mn visitors, representing over 50% of total US users.  MySpace had 68mn users, while Twitter and Linkedin had 20mn."

Here is a chart from the report:

Social Network growth

Our Take: With 70% market share of US social network activity, Facebook is now entrenched in people's daily lives.  As a result, advertisers are realizing they need to figure out how best to market on the platform or risk losing consumers where they spend most of their time.  This has enabled the company to grow a billion dollar business while other social networks have struggled to generate meaningful revenue and profits.

This also has implications for most online publishers since they compete directly with Facebook for advertising dollars.  In addition to losing share, web publishers could experience significant ad inventory pricing pressure since Facebook's rates are typically lower than the average web publisher (we've heard of some premium rate inventory but also a lot of inventory that is being sold for less than a $1 CPM).  As a point of comparison, just look what Google did to traditional media by selling its ad inventory for pennies in some cases while traditional media was selling them for dollars.

On the other hand, Facebook's growth will be limited if the company can't figure out how to charge higher prices for its inventory.  Anecdotal reports from advertisers who use Facebook's self-serve ads suggest that prices are abysmally low.  This has always been the problem with social-network advertising.

See Also:
Facebook's Self-Serve Ad Pricing Is Extremely Low: This May Not Be A Big Business After All

Facebook Wins Again, As Investors In Other Social Media Companies Give Up

Facebook Nearing A $1 Billion Revenue Run-Rate

WOW: Some Advertisers Moving Money From Google To Facebook Self-Serve Display Ads