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Social media growth is over in the U.S. — which is its most valuable market

There’s room for growth around the world, but advertising revenue overseas is significantly lower.

Facebook CEO Mark Zuckerberg drives a tractor on his tour of America.
Facebook CEO Mark Zuckerberg drives a tractor as he visits the Gant family farm in Wisconsin during his tour around America.

Social media companies aren’t growing as quickly as they used to. In some cases, they aren’t growing at all.

In the United States, things are even worse for them: They’re shrinking.

Facebook, Twitter and Snapchat are no longer adding new users in the United States. Facebook’s daily user base has been the same for the past three quarters. Twitter and Snapchat have both lost users in the U.S. or North America, respectively, in back-to-back quarters.

American users are incredibly valuable to these tech giants. Social media users in the U.S. generally have more disposable income than those in emerging markets, which makes them more attractive to more advertisers. As a result, these users generate more advertising revenue for social media companies, on average, than users in other parts of the world. By a wide margin.

Facebook users in the U.S. and Canada generated $27.61 in revenue apiece last quarter. European users generated just $8.82, and users in the Asia-Pacific region, where most of Facebook’s growth is coming from, generated a scant $2.67 apiece.

It’s a similar story with Twitter and Snap.

Twitter monthly active users in the U.S. generated $5.19 in ad revenue apiece last quarter. The rest of Twitter’s 259 million users outside the U.S. generated just $1.17 each. Snap’s North American users generated $2.62 apiece in revenue last quarter. Snapchat users in Europe were the second-most valuable; they generated 85 cents each.

In short, the fact that these user bases are no longer growing means these companies need to figure out other ways to grow their advertising businesses.

The most obvious opportunity is for social networks to build bigger businesses in other parts of the world. That’s tough because those regions don’t usually have large, well-established advertising industries.

The other option is for social media companies to generate more money from the U.S. users they already have. One way to do that is to charge more money for ads.

Another is to insert more ads into their products — known in the industry as increasing the ad load — or to insert more ads into new products, something Facebook is trying to do with Messenger, Instagram and WhatsApp. The challenge, of course, is increasing the number of ads without degrading the user experience.

It’s still unclear how successful these efforts will be.

It’s not totally clear why these networks have stopped growing, though here’s a guess for Facebook: So many people in the U.S. and Canada already use the service that there’s simply not much room to grow.

Facebook’s 185 million daily users in the U.S. and Canada represent roughly 51 percent of the entire population, including even children. Facebook’s monthly active users base — 242 million users — represents 67 percent of all Americans and Canadians.

The one exception appears to be Instagram. Instagram doesn’t share regular user growth updates, but its monthly user total keeps increasing. So does the number of users for its Instagram Stories feature.

However, we don’t know how much of that growth is in the U.S., and Facebook has been open about the fact that Stories don’t monetize as well as Facebook’s feed products.

Interestingly, the saturation of social media in the U.S. has paralleled the saturation of smartphones. In January of this year, 69 percent of American adults said they used social media, the same percentage that did so in 2017, according to Pew Research Center. Over that same time span, a constant 77 percent of U.S. adults said they owned a smartphone.

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