Facebook's Next Decade: 3 Key Challenges

10 Famous Facebook Flops

In Facebook's first 10 years, we stepped outside our comfort zone. It was the first time many of us paired our online identities with our real names. We -- perhaps without even realizing it -- became more comfortable sharing more: our photos, our thoughts, our locations. That's exactly what Mark Zuckerberg wanted.

But as Facebook flourished, privacy grew complicated. The social network added settings. It removed settings. It launched features that collected user data. While Facebook set out to blaze a trail of openness, it left users pining for more privacy.

Finally, after 10 years of surrendering to Facebook privacy change after privacy change, the inevitable happened: We became less open, less social.

According to a survey by the Pew Research Center, only 10% of users update Facebook status on a daily basis. One quarter report they never do. Sharing and openness have been the lifeblood of Facebook, but that's changed. During the next 10 years, Facebook faces three big challenges -- but can address them.

[Facebook has suffered some strikeouts during its 10 years. Read 10 Famous Facebook Flops.]

Reclaim the teen demographic
Young users have been Facebook's bread and butter. The social network was built for them, by them. But Facebook's growth spurt came at a cost: Adults, teens say, have made the social network uncool, and teens are leaving for competitors.

According to a report by Piper Jaffray, just 23% of teens cite Facebook as the most important social network, down from 33% six months ago and 42% a year before. In January's quarterly call, Facebook acknowledged the trend: "We did see a decrease in [teenage] daily users, especially younger teens," Facebook chief financial officer David Ebersman said.

While Facebook's legacy users tend to prefer one social network over others, the same isn't true for teens. They use a variety of apps -- Instagram, Snapchat, WhatsApp, AskFm, and Twitter are among the most popular. These apps share similar characteristics: They're mobile, they're messaging platforms, they're quick, and they're easy.

To regain this vital demographic, Facebook needs to tap into teens' habits with standalone apps of its own. These apps need to hinge on communicating, community, and sharing. Integrate them with Facebook, but don't make it obvious. (Facebook is for old folk, after all.)

Out-innovate the competition
Facebook learned a valuable lesson in letting its teen population slip away: Underestimate the competition, and key users will disappear.

Facebook has been complacent thus far in its strategy to keep competitors at bay. To challenge Instagram, Facebook launched an identical app of its own called Camera. But when Facebook's replica wasn't enough to lure users, it resorted to Plan B -- acquire Instagram -- which it did to the tune of $1 billion. Smart acquisitions are important, but they're not always practical.

Snapchat's story was similar: Facebook launched rebuttal app Poke, which also flopped. Plan B -- likely to Facebook's surprise -- failed too, ending with two rejected purchase offers: $1 billion and upwards of $3 billion cash, according to reports.

As Facebook learned, it can't assume a replica app stamped with its name will be enough to succeed. Nor is it smart to assume that money can exterminate the competition. Instead, Facebook needs to ditch the pirate-or-purchase attitude and out-innovate them.

What can Facebook's mountains of data and algorithms bring to a trend captivating users? How can Facebook use its strengths to make it better? That's the cornerstone of Facebook's success, and that's what will propel it into the future. Status quo will no longer cut it.

Address older users' privacy concerns
Users who grew up with Facebook have vastly different opinions of privacy than those who logged on as adults, and the rift is apparent. "Teens are increasingly sharing personal information on social media sites, a trend that is likely driven by the evolution of the platforms teens use as well as changing norms around sharing," Pew said in a recent report.

Ninety-one percent of teens post photos of themselves, compared to 41% of adults. Eighty-two percent of teens share their birthday; 71% share their hometown; and 53% share their email address. Teen users don't think twice about revealing personal information, while the topic gives many adults heartburn.

Needling users to share more, as Facebook has done throughout its history, isn't working now -- and won't work in the future. As much as Facebook needs to reclaim its teen users, it needs to retain its adults. Gift the social network with intuitive controls and more of them; leave the openness, the sharing, and the data collection to its new breed of apps for teens.

Facebook's first 10 years were wildly successful, surpassing anyone's expectations. It amassed more than 1 billion users and continually reports record sales. The next 10 years will be more difficult: Its user base is fluid and its competitors are many. Facebook needs to pause, listen, and innovate. You're big, Facebook, but you're not immortal.

What advice about the next decade would you give Facebook?

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