Outlook: Facebook critics confounded, but Twitter is a worry

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The Independent Online

So much for the demise of Facebook. Reports that the social networking site has begun to see a decline in user numbers in its most established markets, including the UK, were rather undermined by yesterday's data from the authoritative market research group Nielsen, which suggested Facebook's popularity was continuing to grow strongly in this country. The same is true for Twitter, Nielsen added, not least thanks to the Ryan Giggs furore, which saw a big rise in traffic.

The data will be reassuring for both companies, though monthly updates, whether positive or negative, will continue to be volatile. What's really interesting about Nielsen's numbers, however, is the underlying demographics. At both Facebook and Twitter, the growth is coming especially strongly from older users, particularly the over-50s.

That's good news for the social networks. The problem with the early adopters of technology trends, particularly the under-25s, is they have little spending power. Facebook and Twitter may have enjoyed the kudos of being the latest big thing with the kids, but that audience was not particularly commercially attractive.

Advertisers would much rather spend money with a service providing access to older customers. The over-50s demographic is ideal, for it includes the sector of society with the largest disposable incomes.

In that sense, Facebook and Twitter will have been cheered by this data. For both companies, a proposition for advertisers, in one form or another, represents the best chance of monetising their popularity. Facebook is already much further down that path than Twitter, but the broadening of appeal this data suggests ought to translate into additional revenues for both.

Still, it isn't all good news. While social networking sites need this wider user base, they don't want to lose their early adopters, because they may find edgier, more exclusive alternatives – and eventually lure everyone else away too.

Happily for Facebook, its user numbers are still growing across all age ranges. But this is less true for Twitter, where there is some evidence growth has come to a stop among younger users.

There's a similar divergence, by the way, on another factor which is important to advertisers: how long people actually spend on these sites. Again, Facebook wins, with the average user spending almost seven hours a month on it. The comparable figure for Twitter is just 24 minutes.

What does this mean for the finances of Facebook and Twitter? Well, the former will find Nielsen's data useful as it continues its progress towards a flotation early next year. For Twitter, however, the doubts about its long-term commercial viability continue to persist.