How “Peak Social Media” May Impact Franchise Development
By: Michael Alston for Franchise Insights
January 10, 2024 – Signs are that we may have reached “peak” social media as measured by posting activating and consumer surveys. The Wall Street Journal posits in a recent article that users are doing a lot more lurking than posting these days and foresees more of the same in an election year along, with mounting concerns about privacy.
Audience measurement company SimilarWeb reported declining Meta traffic in the third quarter of 2023, with U.S. Instagram app monthly active users dropping for Instagram by -8.2%, while the Facebook app was down -3.8%. In a few weeks we will know about the fourth quarter as Meta earnings are reported.
Research firm Gartner forecasts that some 50% of consumers will significantly limit their interactions with social media by 2025.
It won’t help either that the FTC is going after Meta on antitrust grounds, potentially forcing the divestiture of What’sapp and the powerhouse of Instagram. This legal proceeding may potentially be resolved in 2024.
Meanwhile, in FranchiseInsights.com surveys conducted in December 2023, 41.4% of U.S. franchisors expect to spend more on Meta properties Facebook and Instagram in 2024, and another 20% expect no change. Only 11.4% expect to reduce their Meta spending “somewhat” or “significantly”, and another 27.1% don’t plan to use it at all.
In 2024, 41.4%% of U.S. franchisors expect to spend more on Facebook and Instagram for lead generation than in 2023.
Decreasing supply at a time of higher demand brings to mind the old joke about the food in a restaurant. While consumers dial back, will advertisers be competing with each other to increase their shares of a shrinking pie? As seen in the chart above, the percentages of franchisors who “don’t use” have fallen precipitously in the last two years, while fewer are decreasing their Meta budgets “significantly” or “somewhat.”
The only certainty – is that advertising costs will rise in an environment of increasing demand and shrinking supply.
“Boy, the food at this place is really terrible… and in such small portions.” – Woody Allen from Annie Hall
As a footnote, the survey represented a cross-section of franchise development teams, from emerging systems to well-established franchises with thousands of units.
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Published on Wednesday, January 10th, 2024.