Today social media is crucial for the success of any business since ROI (return on investment) of social media campaigns is much higher than the ROI of virtually any other marketing channel. SEO is less reliable now due to frequent search algorithm changes, so social media marketing becomes the main channel of predictable organic traffic. Of course social media campaigns are not limited to organic traffic, yet paid traffic in social media rarely stands on its own, and usually serves as an accelerator for organic growth.
Whether you’re a small business owner or the head of a marketing department for a large company, you have to figure out how social media marketing fits in your overall marketing strategy. And since Facebook is the major player in social marketing field it’s important to understand what part of your marketing budget should be allocated to Facebook marketing.
What stock trading has in common with business analysis
When stock traders decide what action to take against a particular stock (buy, sell or hold) they carefully analyze the past performance of that stock. Sure, they also examine other parameters pertaining to fundamental and technical analysis, yet the historical performance plays a very significant role in a final decision.
We can use the same method for our business analysis. To understand whether an average business should increase or decrease its involvement with Facebook marketing, let’s review the history of Facebook policies related to business users. Such overview should help us to determine whether this social network is reliable and suitable for long term business strategy. The answer, in turn, will allow us to fathom the amount of resources that should be designated to the development of future Facebook marketing campaigns.
After all, it doesn’t make sense to invest considerable resources in business presence on Facebook (such as the development and ongoing maintenance of Facebook fan pages with all the bells and whistles) and its promotion if the company can’t be sure that this investment will bring sufficient long term benefits, right?
Facebook Plays a Selfish Game
Facebook is notorious for a long history of privacy violations and self-indulgent business decisions which vividly demonstrate that this social network only cares about its own agenda. However, due to the lack of education among average users about potential security consequences of such actions, it still remains one of the most popular choices for social interactions.
Until recently this social network was also a very popular marketing venue for many businesses. The sheer size of this network (in October 2012 Facebook reached 1 Billion users) made it a coveted source of targeted leads. Even after the subtraction of 8.7% of bogus accounts (the fact admitted by Facebook), it still provides a potential reach of over 900 Million users.
Of course it would be unreasonable to think that such reach is really possible on Facebook for any product or service. The real size for any market could be estimated only after demographic and Geo filters are applied. Still it could’ve been a very impressive potential reach. However, huge quantity of potential eyeballs only matters to business if they could be converted into leads.
Due to Facebook’s latest changes the conversion for organic social media campaigns is seriously decreased. At the end of August/ beginning of September 2012 Facebook modified its EdgeRank algorithm reducing the real percentage of fans that could be reached through communications via fan page. As a result, fan pages found their reach dropped by up to 40%. Stats indicate that posts never reached 100% of a fan base during last year, but this was still a humongous drop.
Facebook denies that median reach is decreased stating that “analytics providers are only looking at a relatively smaller number of pages, typically less than 1000″. The reality is, nobody cares too much if the median reach remains the same or not. What companies care about is whether their own reach decreased. And it sure did. Soon after slicing the organic reach Facebook readily offered a solution on how page owners can reach the 100% of a fan base. They simply have to pay up.
How Facebook Creates New Revenue Streams
After the stock price went down more than 50% in September 2012, Facebook urgently launched new revenue-generating programs in September and October) – Offers, FBX (Facebook AdExchange), Gifts, Promoted Posts, and Mobile App ads. The program that so thoughtfully addressed an issue of decreased reach was Promoted Posts. From now on, companies could reach the 100% of a fan base – for a fee. Incidentally this paid program was launched right after organic reach was slashed in half…
Of course, Facebook vehemently denies that the decrease in reach and a consequent launch of Promoted Posts is a blatant attempt to force companies to pay for the full reach. They say that it’s a necessary adjustment to de-clutter users’ newsfeed caused by the fast growth of number of pages liked by users. If so, why not let users decide the updates from which pages they want to see? Users can always click a “hide” button and hide the feeds from the pages that they don’t want to hear from often. Of course, there is no money in this process for Facebook…
How Facebook Tries to Fix the Shortcomings of the EdgeRank
After receiving a harsh critique from social media about these “innovations”, Facebook implemented a few changes that supposedly would help brands to get higher visibility. First, it created a dedicated feed for brands/ fan pages, and provided new tab “Pages Feed” in the left sidebar of user’ home page profile for this feed. However, the majority of users only use newsfeed, they would barely notice a link to pages feed which is buried among dozens other links…
Then Facebook introduced an opt-in feature that allows users to receive notifications whenever the Pages they follow post something new on their Timelines. It’s cumbersome and doesn’t really address the issue of decreased reach. Users actually have to go to your page, right click on a “like” button and from the drop down list choose “get notifications”. Theoretically, if a user liked a page this setting should be “On” by default. It’s not.
Facebook also now has “Interests” feature. If a user creates interests lists and add pages to them, s/he will be able to see the updates from those pages after clicking on an “Interests” link from the profile page. But again it’s hardly an equivalent to newsfeed exposure.
Why Popularity of Facebook Pages Is Bound to Decrease
If a business has hundreds of thousands of fans, chances are that the majority of them are now lost for organic reach. Sure, the insignificant number of fans will use “Notifications”, “Interests” and “Pages Feed” features and continue to receive page updates, but the majority of fans won’t jump through so many hoops. Business can educate new fans on how to make sure they see all page posts, but all the effort and resources spent on acquiring earlier fans were in vain.
One of the main reasons of Facebook popularity among business users was the ability to combine free and paid traffic methods to achieve better ROI. The key element of successful marketing campaign on Facebook was the development of effective fan pages. Brands then could grow their fan base both organically (by engaging with their fans, providing interesting content, creating contests, coupons, etc) and by creating ads campaigns.
Many companies were running Facebook ads to promote their own fan pages. It was also not uncommon to see a TV commercial where businesses provided Facebook URL for their fan page instead of the URL to their own sites. Businesses were willing to spend considerable resources on acquiring fans. The thought process was that they acquire fans once and then would be able to talk with them for a long time. Fan page in this strategy should’ve served as a tool for frequent communications and increased engagement with prospective customers. This logic worked for a while. It’s obvious that with the latest Facebook changes it won’t work anymore.
Now businesses have to shell out a pretty penny in order to reach the 100% of the fan base. Mind you, that they already invested considerable resources in acquiring this fan base, so this looks a lot like a double taxation.
It’s an unpleasant turn of events, for sure, but hardly surprising. Companies should’ve known better. After all, it’s not the first time that Facebook deceives its business users. Let’s take a little excursus in the history of Facebook malevolent decisions.
When Facebook introduced the concept of fan pages, it did an extremely lousy job explaining the rules on how to name pages. It was clear that Facebook was fighting name squatting and the brand names were reserved for major brands, but it was unclear that businesses are not allowed to choose general names for their pages. As a result, many businesses chose keyword-related general names for their fan pages (something like “Horse Riding”). Instead of giving a business-specific name (for example, “Horse Riding Advice from Emily Watkins”)
Facebook’s reaction? It didn’t notify the page owners that something was wrong. Facebook simply waited until pages fan base grows to 10,000, and then took these pages away from the business owners by turning them into community pages. Yet again page owners invested time and money in building pages, and on a whim all was lost. Do you begin to see a pattern here?
Here is another example. Facebook made developers use its own markup language to build fan pages (FBML). After Facebook decided to switch to apps, and all the pages built with FBML became obsolete. Code standardization is a good move, but it doesn’t change the fact that all the effort that page owners put in their pages turned out to be useless.
Bottom line: Facebook marketing is still important for market research and is useful in its paid portion (especially mobile advertising), but companies should seriously reconsider the reliability and importance of fan pages.
Facebook is Driving away Brands
Facebook: 8.7 percent are fake users
The End of the Facebook Like Bubble
How Facebook Can Steal Your Pages