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Facebook Deals Another Blow To Small Business

Facebook deals another blow to small business as it announced yet another change to how it will decide what users see in their News Feeds.

This change, according to Facebook spokespeople, will filter out posts deemed “too promotional.” Promotional, according to Facebook, consist of “less creative” posts that sell a product, ask people to install an app or enter a sweepstakes.

Or the sort of stuff that many small businesses, in particular, have built fan bases over the years to enable them to do in the News Feeds of their fans.

Facebook views the News Feed as desirable real estate for a number of reasons. First and foremost, it’s why people visit Facebook – their News Feed is chock full of updates from friends and family. If people stop decide that their News Feed isn’t that interesting anymore or too “promotional”, they’ll stop coming to Facebook. And, if people stop coming to Facebook, Facebook as an advertising platform loses its massive revenue stream.

And, of course, that’s reason number two for Facebook’s recent actions.

Facebook has seen its stock price soar 40 percent this year because of a massive surge in its advertising revenue. Revenue in Q3 2014, reported about a month ago, was up 72 percent from last year for that same period. Their price per ad also increased by a whopping 118 percent. Why? That’s an easy one. Facebook has been displaying more ads in the News Feed which, of course, is delivering more and better returns to advertisers.

And Facebook.

On its last earnings conference call, management touted the performance of its News Feed ads; telling analysts that they outperform right hand column ads on all dimensions – engagement, click thrus, and, therefore, price per ad.

So, quite naturally, Facebook doesn’t want unpaid posts to kill off its lucrative and increasingly paid ad-laden News Feed. That makes the News Feed virtually off limits to small businesses who are the least equipped to pay for ads on Facebook.

That’s not the way that Facebook sees things, however.

Facebook had this to say on its blog page after announcing the change. “While Pages that post a lot of the content we mention above will see a significant decrease in distribution, the majority of Pages will not be impacted by this change.”

That’s not exactly what’s been happening. Forrester reported ealrier this year that less than 2 percent of any of brand’s fan see updates from the brand, aka unpaid posts. A similar study done by Social@Ogilvy found the average reach of 106 brands’ organic posts fell to 6 percent from 12 percent. Ad Age also reported that Facebook was urging brands to buy ads, telling them that their organic reach was shrinking.

Facebook said it was prompted to take this action after a user survey. Details about that survey were not released, including how many people were surveyed. The change will take effect in January 2015.

 

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