As Facebook rolls out a steady stream of features designed to improve monetization, at least one financial analyst is arguing that the social network has begun to drive its users away.
In a series of blog posts, Richard Greenfield, of BTIG, a firm that services institutional investors, has argued that the network is cluttering its News Feed.
Facebook has introduced Sponsored Posts in its mobile apps and, on its desktop website, display ads that do not include Facebook’s added value of social context. It has also allowed data brokers into its walled garden, although it says it won’t share its user data with them. Most recently, it agreed to acquire Microsoft’s ad server, Atlas, in a move that experts said signaled the company’s intention to advertise across the Web.
According to a report today, Facebook will soon introduce the same hashtag functionality that Twitter offers, which some saw as a move into the search advertising space. The company also debuted a search function earlier this year.
Greenfield argues that with the ad products and the open-graph activities of users’ social contacts, the “signal to noise ratio [has] skyrocketed.”
He argues that user behavior has already shifted.
“Activities critical to the health of Facebook’s social graph are suffering as legacy users are no longer actively adding friends and status updates tend to be content simply dumped into Facebook from other applications such as Instagram and Twitter,” Greenfield wrote.
Like many other watchers, Greenfield sees Facebook’s changes to the News Feed format as an effort to make commercial products less distracting. But it’s too soon to know how that will play out.
Facebook user numbers continue to grow. But a growing share of the users are in countries where Facebook generates “a fraction” of what it does in the United States and Europe, according to Greenfield.
BTIG began recommending in February that its clients sell Facebook stock.