In what may be a Yin-and-Yang kind of moment Facebook’s dominance of the social networking scene and its hypervaluation in view of its upcoming IPO might be the very same things which conspire to undo it.

To quantify this, Facebook has grown in numbers to surpass the 10% mark of the world’s population on the deceptively simple notion that it is the place you go to “…connect and share with the people in your life.” That approach enabled Facebook to develop the concept of the social graph which gathered information in one place and made it easy for an individual to find friends, past and current, based upon the connections provided by their own shared information and that of others.

The online world of business however needs three distinct elements to provide success: A. Presence B. Critical Mass C. Engagement. Facebook certainly ticks the box when it comes to the first two, its brand is talked about frequently and its ‘Like’ button and ‘Facebook Connect’ are all over the web but when we get to the crucial third, things are not so rosy. Engagement of the sort which leads to purchasing decisions is an ingredient that’s noted in the Facebook environment only by its absence.

Facebook, of course has tried to change that and its brand-new Timeline is only the latest attempt in a long line of functionality changes designed to wean its membership away from social-orientated activities and move them towards interest-based ones. The ill-fated groups, marketplace initiatives, and Facebook Shops were all intended to provide an ever-increasing interest-led pattern of activity. The latest Bloomberg report shows that this, evidently, is not working.

To understand why we need perhaps to look a little at the psychology of the average social network member. Given the fact that there is a relatively set amount of time which can be allocated to online activities each day, most of us allocate that time in the same way we allocate time in our offline environment. Some is spent doing ‘work’ and some is spent hanging out. Facebook, having successfully branded itself as the place to hang out with friends, now is facing an uphill battle to get those who are busy chilling to do an additional activity like, for instance, buying something.

In order to understand the magnitude of the problem consider the fact that in an environment with over 800 million members and a fan page that had over three million fans, Gamestop had to close its Facebook Shop for lack of sales after only six months in operation, while Pinterest (a totally interest-graph orientated social network) with barely 11 million members, can account for as much as 25% of the traffic online retailers get to their websites.

Statistics like this alongside reports that Facebook is experiencing a slow-down in growth in developed markets (which tend to be profitable for marketers) and is now relying on developing countries like China, India and Brazil to maintain the momentum, are a clear indication of the challenge that lies ahead for the social network.

Author: David Amerland     David Amerland on the Web David Amerland on Facebook David Amerland on Twitter David Amerland on LinkedIn David Amerland on Google Plus David Amerland RSS Feed

David Amerland is the author of the best-selling ‘SEO Help: 20 steps to get your website to Google’s #1 page’. His latest book: ‘The Social Media Mind: How social media is changing business, politics and science and helps create a new world order‘ is the leading blueprint for understanding… View full profile