When Facebook launched in 2004, and for many of the years following, the social network’s sole focus was to attract new users to its platform. Eight years and one IPO later, the social media site boasting one billion users is now faced with a balancing act between users, advertisers, and investors. It’s new controversial solution? Promoted Posts. This feature is available to brands and users alike, and it’s supposed to be a way to keep everyone happy. Look, Pepsi can promote that status update – but you, an average user, can now do the same, putting everyone using Facebook on equal footing … at least that’s the idea. Is this idea really working, and will it be enough to keep investors satisfied?
Three’s a crowd: The careful balancing act Facebook must play
Facebook knows that to be successful it has to meet the needs of three parties (users, advertisers, and investors), but satisfying one group oftentimes comes at the expense of another. Recently, users and advertisers have been feeling overlooked as the social network rolls out new ways to generate revenue and impress its investors (a relatively jaded group).
For users, Facebook has to ensure that News Feeds aren’t cluttered with ads and instead are filled with relevant and interesting content that will keep us coming back—whether it’s content from friends or highly targeted and personalized ads. For brands and advertisers, the social media site needs to provide exposure to a broad audience that will be receptive to the advertised content. And investors want to see a strong ROI—which will only come if both users and advertisers are satisfied. This is becoming increasingly difficult as some reports show Facebook peaking on the potential revenue it can generate through banner ads. The company earned upwards of $3 billion through traditional banner ads last year, and is now reportedly generating $1 million a day in revenue through Sponsored Stories—personalized ads that appear to the right of the News Feeds.
Facebook has been shipping product after product to appease the moneymaking side of its business, but there’s clearly still pressure to keep users happy — it was one of the big dilemmas Facebook listed in its S-1 paperwork. And Promoted Posts have become a key part of this, and EdgeRank has also been a mechanism Facebook is trying to use to keep the content flowing into its network fair and balanced: Give brand’s enough — but not too much — voice, so that users see the posts they want. But essentially, while trying to make everyone happy, Facebook is holding back content, and it can be argued this isn’t fair to brand or the users who are following them.
Social competition: Facebook’s Promoted Posts vs. Twitter’s Sponsored Tweets
Facebook’s solution to keeping all players happy was to roll out Promoted Posts, which it announced in October. The social network’s EdgeRank algorithm determines how many and which posts will be seen by whom, and according to Facebook itself, the numbers aren’t anything to write home about. Traditional posts on Facebook are now only seen by 15 percent of earned fans; content can be pushed to the remaining 85 percent, Facebook says, for a fee.
Gokul Rajaram, Facebook’s product director for advertising, said that if brands wanted to reach the remaining 80 to 85 percent of their audience, it’ll come at a cost. “For brands, one of the most interesting product offerings we have is Reach Generator, which ensures that every single one of your page posts reaches all of your fans. Organically, you get anywhere from 15 percent to 20 percent of your fans, that you reach organically. In order to reach the remaining 80 to 85 percent, sponsoring posts is important,” Rajaram said.
But Facebook wasn’t the first of the social media big wigs to incorporate native advertising into its platform. Twitter rolled out its Promoted Tweets in September 2011, expanding the audience brands and advertisers can target and reach regardless of whether or not their targets are followers. This means that Twitter is essentially charging an advertising fee to extend a company’s earned reach, unlike Facebook, which charges advertisers to reach their own fan base. What’s more, Twitter doesn’t charge advertisers for simply having their ads show up on a page; Twitter’s native advertising is performance based—advertisers only pay if a user engages with the promoted content.
A blog post on Twitter detailing the program explains: “Promoted Tweets are priced on a Cost-per-Engagement (CPE) basis, so you only pay when someone retweets, replies to, clicks or favorites your Promoted Tweet. In addition, impressions on retweets are free and can extend the reach and cost-effectiveness of your campaign many times over.”
But regardless of the microblogging platform’s native advertising program, Twitter users and brands can rest assured that their Tweets—even if they’re not paid for—are still being seen by willingly followers. The discrepancy between this and Facebook’s methods is what’s caused brands and marketers to complain Facebook is holding their fans and followers hostage.
The problems with Promoted Posts
Since Facebook launched Promoted Posts, marketers and advertisers have noticed that their pages are driving only a fraction of the previous level of traffic back to their official websites. Some have even reported that despite large increases in their number of Likes, Facebook click-throughs are actually down by as much 50 percent. Page managers blame the new Promoted Posts feature, claiming that the social media site is purposefully reducing the earned reach of traditional, non-paid posts, and in turn reducing CTRs and traffic back to company websites, unless those companies paid for placement. Critics say Facebook is essentially holding their content ransom—from already-earned followers—in exchange for ad dollars.
A now widely read post on the Dangerous Minds blog details how during the period in which it grew from 29,000 to 53,000 Likes on Facebook—an increase of 83 percent—it lost anywhere from half to two-thirds of the traffic from Facebook back to its site. “To reach 100 percent of our 50,000 Facebook fans they’d charge us $200 per post,” the blog post said.
Ryan Holiday, the author of “Trust Me, I’m Lying: Confessions of A Media Manipulator,” is also not a fan of the program. “At the root of Facebook’s model is a conflict of interest: The worse their service ‘works’ for brands, the more brands will need to pay Facebook. Why? Because originally Facebook’s model was different, the better it worked the more brands invested in and became dependent on the platform.”
And it’s not the fact that Facebook is charging for promoted content that has some brands up in arms, Twitter already does so, but it does so much better.
“Twitter’s platform adds value to its customers and charges for those services. That’s basic 21st century business strategy. What Facebook is doing is straight out of the Gilded Age,” Holiday says.
But Facebook argues Promoted Posts were implemented in the interest of a very important factor – us, the users. According to the social network, Promoted Posts were rolled out to benefit users by weeding out spam posts and cleaning up News Feeds. But if that’s really all Facebook is doing—trying to help the users weed out extraneous posts—why wouldn’t they take the Google+ approach to this problem and allowing users themselves to filter the level of content streaming in from different pages and profiles? Or why doesn’t Facebook provide its users with an option to opt-out of the filters if they wanted to? Another choice would be to allow page content to be distributed to all earned followers, but to offer payment options for advertisers who want to extend their audience beyond followers.
And it’s not only brands that have the right to complain about their contents’ reach, users may have reason to be upset about this as well. Studies show that a majority of Facebook users want to use the network to connect with brands, and they might not actually be seeing these posts because of EdgeRank. The move is supposed to keep more of this data out of the News Feed, to keep users happy, but if people are willingly following a business page, it’s possibly they aren’t getting the content they wanted in the first place.
George Takei, an avid Facebook poster who uses the site to connect with fans has been complaining about his status’ reach lately. “‘I as to why interactivity rates on my page appear to fluctuate so much when I have done nothing different,” he recently wrote, noting there will be a chapter in is upcoming book about EdgeRank. It’s a prime example of why this issue affects both brands and users: Facebook is deciding what we do and don’t see, and while it’s possible this is being done with good intentions, it’s apparently hurting both sides.
Faithful Facebook supporters say that at the end of the day, this is a profit-seeking business, and that if users want free access to the service it’s providing, it has to find some way generate revenue in return. Supporters also argue that the social media site has the right to monitor and regulate the way content on its site is being used and shared.
The social network also raises the point that brands and advertisers are paying not for traditional banner ads, but to have their content dropped into the center of the News Feeds of potential customers—arguably one of the most effective ways of advertising. Native content like this also has a higher potential for engagement, as users can Like or share the content—meaning advertisements can essentially be spread around for free.
But just because a company has the right to do something, doesn’t mean it’s necessarily the right thing to do. “Sure Facebook has the ‘the right’ to operate this way—to throttle access and charge unequally for passage—but it is undeniably unethical and evil,” Holiday said. “It’s a short-term strategy that might make sense in a revenue spreadsheet but is so clearly stupid and short sighted to anyone who thinks about it for two seconds.”