8 ms·

New Facebook Rules Will Sting Entrepreneurs

107 points by softdev12 12y ago

dubcanada 12y ago
If 50% of her business comes from FB posts, why shouldn't she just pay for them? I understand it was once free, but her posts sound like advertisements. And advertising costs money everywhere else.
- sillysaurus3 12y ago
  The advertising doesn't really help you, though. You're forced to pay for advertising which ends up targeted at people who don't engage with your brand. Check this out: https://www.youtube.com/watch?v=oVfHeWTKjag#t=3m10s https://www.youtube.com/watch?v=oVfHeWTKjag#t=3m10s Unless something has dramatically changed since that video was created 9 months ago, the situation is pretty grim.
  - thinkmassive 12y ago
    That video complains that page likes often come from click farms instead of actual people. If that's the case then posts going to 70k so-called fans are seen by far fewer sets of eyes, whether they're paid or not. You can't have it both ways, and in either case the metrics are far more reliable than TV/radio/print.
    - deleted 12y ago
      [deleted]
- k-mcgrady 12y ago
  I sort of agree but the fact that she had to build that base of people that see her posts makes me feel she should be able to post whatever she wants and as long as they engage she shouldn't be penalised. Facebook didn't hand her 70,000 likes - she had to spend a lot of time and money marketing to get that following. Are those Facebook's customers or yours?
  - osolo 12y ago
    Facebook's trying to double dip. They want you to pay to get your fans and pay again when you want to market to them. It's nothing short of a scam. I think that this stunt will increase Facebook's profits in the short term, mainly because of businesses that have already invested in building their pages. Longer term, however, we'll definitely see a shift to direct email marketing. Once you have someone's email, you own that relationship and there's no gatekeeper to charge you for every interaction. As business start realizing valuing of the direct relationship, Facebook will start taking a hit, and rightfully so.
    - girvo 12y ago
      > It's nothing short of a scam. How's that supposed to work? Frankly, Facebook is a business that doesn't have your small business' interests at heart. Never has, never will. We've shouted from the roof-tops to never build solely on a third-party platform, and now non-tech businesses are going to learn that lesson. But, this is Facebook; they're not a benevolent entity, and they don't owe you or your business squat. Saying they're "double-dipping" or are a "scam" is ludicrous.
      - josho 12y ago
        I absolutely agree with your points. Except I still agree with the parent as well. It is a scam because FB built a platform and marketed it to businesses as a way to build their fan base and communicate with them. FB then turned around and changed the rules of the game. That's called a bait and switch. Very few companies behave this way (offer something for free then turn around one day and charge for it--drug dealers come to mind as the only business that does this). Those companies that do treat their customers to bait and switch tactics usually don't stick around for long. FB rightly so has lost the trust of their business users, so I hope this turns out badly for FB as I don't want this behaviour to become the norm for business.
        girvo 12y ago
        I agree with your points, too. I think I wasn't clear, I feel that Facebook's behaviour is deplorable, I just don't find it surprising is all :) Also, somewhat off-topic but > drug dealers come to mind as the only business that does this Drug dealers don't even do that themselves (product is too expensive and it takes while to become an addict, and even then it's not guaranteed revenue)!
mhoad 12y ago
Consider this a friendly reminder that if 50% of your business comes from Facebook, SEO or pretty much any source which you don't control entirely you should be doing everything you possibly can to fix that problem ASAP and ensure that you aren't setting yourself up for a very nasty surprise one morning. "Fairness" aside, be thankful in this instance that you are getting advance notice. I wouldn't assume that you will always be as lucky in the future.
- graeme 12y ago
  By fix the problem, do you mean diversify sources, or switch to sources you control entirely? Apart from direct return traffic I'm having trouble thinking what source could quality as being entirely controlled by a business.
sehugg 12y ago
... And local musicians whose shows I keep missing because their posts get squelched, even though I've liked their page.
- jkaunisv1 12y ago
  Frankly the musicians should be creating events and inviting you to them. That's how my friends do it and I always see them.
jliptzin 12y ago
This should not surprise anyone. FB has a long history of pulling the rug out under its developers and advertisers in the name of maximizing their own profits. I cannot recommend strongly enough against building a business that is dependent on Facebook in any significant capacity.
- josho 12y ago
  I find it interesting to contrast FB with the early days of Microsoft--from a a developer perspective. FB is routinely hostile to its developers* killing off APIs and screwing around with the system. Microsoft, however, went through extreme measures to ensure backwards compatibility of applications between OS upgrades. I suppose the difference is that Microsoft needed developers to create its network effect and grow their DOs/Windows monopoly. FB however needs users, not developers, to create its network effect and grow their monopoly. This begs the question, why can FB be so hostile to their own users? I suppose the answer must be because their users don't leave FB the ecosystem. *Obviously I'm using the term developer loosely here. The article isn't so much about developers as it is about business' building on FB, not unlike business' that built on MS.
  - crxgames 12y ago
    Which brings up the question: What would it take to get users to leave FB for an alternative service?
    - megablast 12y ago
      Easy, once most of their friends have left, they will leave.
      - marktangotango 12y ago
        That's like a proof by induction but skipping the induction step; how to get the k'th user to leave? The alternative should be free, easy to use, 100% control to start, imo.
    - 12y ago
danenania 12y ago
I'm not a big Facebook fan or anything, but this seems like a predictable development. A user's attention and newsfeed real estate are limited resources, while the number of pages they've liked increases with time. If ALL business pages reached a large percentage of their followers for free, the typical newsfeed would be inundated with promotions. It's a natural monetization point--Facebook makes more money (which is the main purpose of Facebook), and their users are insulated from seeing too much marketing content. If you want to reach people reliably, build a funnel that you control. Facebook/google/service X can all be valuable components of this funnel, but none of them should be the foundation.
- Igglyboo 12y ago
  A lot of people don't realize that if your business relies completely on someone else's then you aren't going to get very large.
  - bbcbasic 12y ago
    Yes it is worse than that, the small biz owner can have the plug pulled on him at any time. Even if he is paying for the advertising - e.g. adwords ban! What she should do now is get as many email addresses as possible from her existing customers and likers of her page, and have an e-zine or followup. This could be in conjunction with a blog. All stuff that is in her control and cannot so easily be pulled away.
    - ams6110 12y ago
      Does ANYBODY even open emails like that though? I know I never do.
      - jkaunisv1 12y ago
        Yeah, some people do. I ignore a lot of them but I always read through the newsletter from my tea store. It's like tea porn and even though I order infrequently I like seeing the pictures.
      - 12y ago
mdesq 12y ago
This was predictable, but the only reason I like business FB pages to begin with is so that I can receive content from them in a way that doesn't clutter up my email inbox. If I'll now only be hearing from the businesses that can afford (and then foolishly pay for) FB ads, the value of FB goes down dramatically for me.
- peterkelly 12y ago
  The value of facebook for you is the ability to see lots of ads?
  - veb 12y ago
    Advertisements in the sense you're probably thinking of is not what works on Facebook. It's not just "$5 off all Amethyst Geodes today!"... There's a very simple formula, and that is to humanise your business. Put a face/person to it so to speak. Then, the people who 'like' the business page, will get decent, curated content that they like (otherwise, they wouldn't 'like' the page). Rinse, repeat several times a week and you do get a very good following and interaction. Sadly, the article (in my experience) is right, organic is no longer a thing -- you really have to 'boost' a post for it to be seen by a good number of people (or just get really lucky). This was not the case about a year ago -- you'd get a decent amount of 'reach' and interactions with said post. It just simply doesn't happen now for the majority of pages as Facebook is trying to goad people into paying for each post.
  - gonzo 12y ago
    From companies he "likes".
- wodenokoto 12y ago
  Why is it foolish for them to pay for an ad you already admitted to wanting to see?
  - mdesq 12y ago
    Paying for FB ads probably makes sense for Nike, Coke, etc. but I live in an area with a little smaller population. Local businesses I like subsist off a core of maybe a couple hundred customers max. My local family-owned wood-fired pizza shop and a new wine bar in the area are struggling little places where one or two sales makes the difference between profit and loss for the day. A FB message posting a promotion or tasting opportunity because the day is slow may make them a few bucks more, but it often does not. When they ask me about advertising, FB is probably not the right solution for them, ROI speaking.
fenomas 12y ago
It's interesting to consider Facebook marketing as a game, where the players are brand owners and the goal is to generate revenue by pushing the various buttons Facebook provides. Until now, Facebook has operated this game on a standard F2P/freemium model, where skilled players can win with enough time commitment, and others can pay for shortcuts. But it turns out it's very hard to make F2P profitable, so now they want to move to a subscription/recurring revenue model. Sounds pretty familiar. Perhaps I'm being overly meta but once you start looking for this pattern it crops up everywhere.
- coralreef 12y ago
  F2P isn't hard to be monetize at all, its actually a fantastic model for profitability. Any F2P game (that makes money) would make a fraction of what it actually does if they charged a flat retail price instead. Look at any F2P PC game like League of Legends, or mobile game like Clash of Clans, Candy Crush, etc. They are the top earners, but they earn even more than hit game franchises like Call of Duty. Its the reason why F2P is becoming more prevalent.
  - fenomas 12y ago
    I didn't say F2P is a bad model, I said it's hard to make it profitable. (Every app store is littered with F2P games that never recouped their costs.) A thing can be difficult even when it's the best thing available.
    - coralreef 12y ago
      (Every app store is littered with F2P games that never recouped their costs.) But this is true of any industry ever, regardless of business model.
djtidau 12y ago
Whilst I understand Facebook's position on this and can see that they are trying to clean up news feeds (whilst maximising revenue), it has always rubbed me the wrong way that they DECIDE what I see. If I like a page, I want to see the information from that page, if I didn't I would remove them from my feed. It's this kind of mismanagement of information I am subscribing to that will surely have people looking elsewhere. Will Facebook soon filter out friend requests from people they don't see as being suitable?
- deleted 12y ago
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- lexap 12y ago
  I appreciate this perspective. If you're opting in to receive posts from a brand, why should Facebook throttle that brand's posts. But as a counter argument consider how many friends users have, how many pages they like, etc... there are so many posts coming from all these friends and likes, that it would take constant attention to see them all, information overload. Facebook has to optimize the stream for usability.
  - djtidau 12y ago
    This is true, information overload is a serious problem that much greater minds than mine work to tackle. Though personally I want to have a little more control over my stream. Google+ had an attempt at this with giving a kind of ranking to certain circles depending on how noisy you want them to be. For me that is a much better approach as I am more involved in making such a choice. Though then comes the issue of giving the user too much work. There are two sides to each coin I guess though in this case I do feel it is weighted more toward boosting FB's share price rather than truly looking out for their users.
    - graeme 12y ago
      Facebook does effectively allow you some control. If you click on a post/hover over it/like it/comment you'll see a lot more posts from that source.
forrestthewoods 12y ago
The moral of this story is don't let your business become overly reliant on one source of users. Particularly when that source (Facebook) has goals (generate revenue/profit) that do not align with yours (free marketing). I've also come to accept and even appreciate that access to users is something worth paying for. Getting users is hard. Damn hard. Sometimes that access is a rev share and sometimes it's an advertising fee. That's fine. A mere 15 years ago you couldn't pay that fee to access a user pool that large if you wanted to.
- 7Figures2Commas 12y ago
  > The moral of this story is don't let your business become overly reliant on one source of users. Having a higher-than-ideal concentration of referral channels is not in and of itself a bad thing if you truly understand those channels. For example, a business that derives the majority of its customer referrals from paid search doesn't necessarily have a valid reason to diversify if it has the ROI equation down and understands and manages the associated risks. The real problem with social media channels like Facebook is that many folks have been treating them (and investing in them) as if they were "owned media" when they never have been and never will be. These people are just figuring out that these channels fall under the categories of "earned media" and "paid media" now that Facebook et. al. are turning the screws. The true tragedy of this is that many of these unsophisticated marketers will have little to nothing to show for their social investments when all is said and done. They've been spending gobs of time and money building up their social profiles and will now have to pay even more in perpetuity to use them going forward.
  - forrestthewoods 12y ago
    Well even the ROI calculated example is unstable ground. One change to one of several invisible algorithms can turn your boom to bust. And user acquisition costs tend to go up. You can find yourself priced out real quick. Particularly during the holiday season.
    - lexap 12y ago
ulyssesv 12y ago
Television, reinvented.
lakeeffect 12y ago
I imagine that most of these small businesses will end up with a better sense of a posts value and the net result could potentially be for a 100k a year business to become a half million dollar business. Its hard for small businesses to rationalize going from free to paid, especially if rhey neglect the cost of the time sink in dispersing the information for free.
anaolykarpov 12y ago
Given how shitty the fb search is, I'd say that businesses that earn sales from their fb posts are just the ones based primarily on impulse buyings - like the cheap jewelry store in the article, but unlike the water pumps business. The businesses that sell products that need careful research before buying (cars, phones, houses, wedding dresses, etc) benefit from Facebook strictly because of its high search engine rankings. It is much easier to make a fb page that ranks well in search engines than it is to make a website that is on the first page. As an effect is the fact that business owners believe that their customers come from fb (because that's what they see in their analytics), when they actually come from Google, via Facebook.
Silhouette 12y ago
Remember, boys and girls: A "like" has no intrinsic value whatsoever. It is worth exactly as much as the paid conversions it eventually drives. If Facebook reduce the exposure your posts get to interested potential customers who have voluntarily liked your page, then those likes are worth less accordingly. You should be proportionately less willing to spend money promoting on Facebook as a result. The only reason this sort of strategy works for Facebook is because too many people don't understand the basic economic model at work here and just throw more money at the auction hoping for the best, which is a race to the bottom that drives prices up for everyone and benefits no-one but Facebook. Of course, Facebook do just about everything they can to obscure how much money you're actually paying and what you're really getting for it. Even with paid ads, the numbers they themselves report frequently appear contradictory unless you know exactly what they mean (and sometimes even then). Never trust these numbers. The only things that matter are how much money in total you spent on Facebook in a given period, and how much money people visiting from Facebook spent with you in turn.
- deleted 12y ago
  [deleted]
- sparkzilla 12y ago
  Good point. The problem is that many people spent time and effort to create likes (see my post above) so they feel the likes have value. The whole thing seems backwards to me. Facebook should make money from encouraging more interaction between its participants, not throttling the connection and charging for access.
peterkelly 12y ago
Title should be changed to "Facebook reduces amount of free advertising it gives companies"
hagbardgroup 12y ago
FB's demoting the value of that 'like' button for non-publisher brands, while preserving its value for publishers. Remember, small to mid sized advertisers make up roughly 55% of US ad spending [1], so if Facebook wants to fulfill its mission, it can't just churn and burn these little guys and hope that they come back wallets open. There are such a dazzling array of options that aren't Facebook that it isn't as if they're the only guys in town. FB should understand that advertisers could, for the most part, care less if a giant fireball hit Facebook's offices and the company disappeared tomorrow. There are tons of perfectly serviceable replacements for, users, the people who pay for the social network, and investors looking for better opportunities. [1]http://kantarmedia.us/press/kantar-media-reports-us-advertising-expenditures-increased-09-percent-2013 http://kantarmedia.us/press/kantar-media-reports-us-advertis...
Ensorceled 12y ago
There are lots of businesses you might follow and want to get updates from: your kids karate school, your favourite band, the local revue theatre, your yoga studio, the bar on the corner, your mayor ... This ongoing "crack down" on company pages doesn't just "sting entrepreneurs" it is day by day making Facebook less useful to me. Now our karate dojo needs to take out an ad to let us know it is kata week? I think this is one of the weaknesses that may allow a competitor to eventually pry me away from Facebook; let me control what I want to see.
- MichaelApproved 12y ago
  In the end, email is the best way to communicate with your customers. You have full control over the list. Even though gmail might push the content to promotions tab, the customer can change that setting for your emails and receive it in their inbox. Facebook is double dipping. It's charging customers to acquire the likes and then charging them again to communicate with those customers. With email, you pay once to acquire the customer and then you can email them all you like until they unsubscribe.
  - saraid216 12y ago
    > In the end, email is the best way to communicate with your customers. Except being flagged as spam kinda sucks.
    - deleted 12y ago
      [deleted]
  - bigbugbag 12y ago
    Also RSS.
  - bigbugbag 12y ago
    Event quadruple dipping as customers are sold to advertisers and with the recent ToS change, content posted on the site is now no more owned by posters.
Evolved 12y ago
I don't see why Facebook ever let unpaid ads be posted in the first place. The reason Facebook is able to be free is due to 2 things: users giving up data in exchange for the service being free and paid ads from businesses. That being said, if you're so reliant on Facebook for your advertising moreso than other channels then you need to reevaluate your marketing plan and diversify.
sparkzilla 12y ago
I used to run a small bar. We spent thousands of dollars building up our Facebook likes to around 4000 people. Then Facebook started deliberately throttling our access so that we had to pay to reach the people we had collected. People that, in part, stayed in Facebook, or came to it, because it gave them information about small businesses like us. If we had been told upfront that we would only get access if we paid perhaps we wouldn't have put in the effort. But we weren't. There were other ways to upsell us which would have maintained trust and built a respectful relationship. Instead they abused the people who helped them, and sold their mendacity as a virtue. I don't do that business any more, but I really feel for these small business people who, in most cases, are struggling to get by, and who need support, not abuse from a faceless, greedy corporation.
001sky 12y ago
Can't wait until the cable companies do this to facebook/. basically an anti-net neutrality approach to communication. obvioulsy 2 sides, but still...seems manipulative ate best but somebody has to pay the piper to pump that stock up
bigbugbag 12y ago
This was expected and the trend will not stop as this is how web companies built on investor story time operate. http://www.theatlantic.com/technology/archive/2014/08/advertising-is-the-internets-original-sin/376041/ http://www.theatlantic.com/technology/archive/2014/08/advert...
GFischer 12y ago
I'd change the title to say that the new rules will hurt small businesses, mom-and-pop shops and work-from-home businesses the most. I did some market research (in my country, Uruguay) on whether those kinds of businesses need a web page, Google ads, etc... and a Facebook page was MILES away their best bet in terms of ROI (much like the article says, but it's an understatement. Facebook is HUGE for small businesses). It's a CMS which everybody knows how to use, user engagement is built-in, and there's no need to pay for admin. My girlfriend likes nail polish, house decorations and other stuff, and she follows (and regularly buys from) several facebook pages, with posts like the ones described. Facebook should monetize it (it's a huge untapped potential revenue source), but I think that, for these kind of businesses, some kind of "business Facebook" monthly payment or something would make a LOT more sense than the "promoted posts" model. Maybe they don't care about 3rd world companies... the gemstone e-commerce site can afford it, but local struggling companies (and I'm talking under 1000 dollars per month in revenues) will never be able to.
- bsbechtel 12y ago
  I agree with the monthly payment model. For many small businesses, their margin is king. Promoted posts cut into the margin earned on each sale more so than a monthly payment.
- robk 12y ago
  How expensive is doing promoted posts in Uruguay though? I don't see how being "third world" has anything to do with it. I'd have to guess the cost to promote is roughly proportionate to the ad market prices in that country, which are of course lower than in the US.
  - GFischer 12y ago
    That's an interesting question, I'll run an experiment when I get back from work and see how much it quotes me.
dasil003 12y ago
Everyone complains about Facebook pulling the rug out from under them, but that is nothing new at all, you should expect that from every tech company ever. What a tech company needs and what it's willing to give change dramatically as they grow from 100K to 100M users and beyond. What's more interesting to observe is that Facebook's strategy has a fundamental in-built conflict of interest. That is the interest of selling advertising, and the interest of showing the user what they want to see. They have to toe this line very carefully because it will be so easy for them to lose users if they show them too much crap they don't want to see. But at the same time, it's always been Facebook's culture to push the envelope, and they are in desperate need to increase monetization to justify their valuation. I don't envy the decisions facing Facebook right now.
- bsbechtel 12y ago
  >>What's more interesting to observe is that Facebook's strategy has a fundamental in-built conflict of interest. That is the interest of selling advertising, and the interest of showing the user what they want to see. Isn't this the same problem radio and television face?
mpclark 12y ago
But surely this is a two-way street? If Facebook becomes less valuable to me as a website operator then I have less incentive to keep any Facebook integration on my site, and if I remove that then they lose the insight into my visitors that this currently affords them. That wouldn't bode well for their idea of selling ads based around users' off-site activity, would it?
netcan 12y ago
People tend to ascribe a kind of cartoonish malice to things like this. I know Facebook more from the advertiser end than the user, and I this is my take: The way adwords worked is that they put tools out there where advertisers can try X, and see what happens. If X works, they can try to do more of it. if not they can try something else. X can be the keywords you target, the ads you write, the bids you set, the landing page you use and a whole bunch for other settings. Over time advertisers got good at this. They got more out ads, bid against each other and the price shot up. The process took years and a qanta of advertising is still getting more expensive. The intelligence is mostly on the advertising side. Adwords is a fairly dumb toolset. The skill and experience of the advertiser can make a big difference to the ROI. The average skill level is pretty high in competitive markets. They tried a bunch of push-button methods. They would have their "expert team" set up your initial campaigns or propose changes. I tried these when they were first launch with disastrous results. They also had more automated turn key management tools. They're also not as good as a decent ad manager. It's hard to beat a person for creativity and intelligence. Who would have thought. FB adopted this model but their platform is very different. They added a bunch of hair at a rapid clip and adapted the adwords concept in confusing and inconsistent ways. The FB platform is more of a giant pile of tools, with 9 3/5 spanners and a hammer that can be used for a drill. This might be a little unfair. The gist of search advertising is pretty straightforward. Show this result to people in this area searching for this thing. FB is a lot more complicated. Anyway… They built up an ad platform that is enormous and opportunity loaded for a lot of kinds of marketing for which adwords doesn't work. Are you looking for pre school enrollments? Promoting a comedy club? Daily dela site? Even the traditional orange juice and washing powder companies can fool themselves into thinking they are "engaging" customers. Anyway, FB advertising works really well for all sort of things. The demand is there. The platform grew fast and no one really understand it very well. It changes fast and its confusing with multiple ways offing everything and lots of options you didn't know exist. There are lots of black boxes of the adwords adrank variety, but too many to easily understand. But, underlying it all it seems pretty obvious that Facebook want to make their system much "smarter" than adwords. In an ideal world, you tel it what your goals are and the system chooses who to advertise to, how, when and how. More turnkey, less control in advertisers hands. Batteries include. Pick your metaphor. Back to the topic at hand… I think that changing how the platform works fundamentally is allowed in the FB culture in a way that is on the extreme end of the spectrum. The way I see most software is that a software metaphor is defined by what it does. If making something a "header" in a word processor make the text big & bold that's what "header" means. If "follow" in twitter means send that person a message and show me all his future posts, that's what follow means. I will adjust my behavior accordingly. If I'm following too many people, I need to unfollow some. If twitter thinks I'm seeing too many tweets, they can't just select tweets to show me. That changes the meaning of follow. To keep the metaphor intact, they should make the unfollow button bigger, or even suggest I unfollow some people. Facebook would just look at the problem of too many posts, many commercial posts or similar and show fewer. Maybe they internally rank your friends and liked pages based on some black box algorithm and decide how many to show. Stuff like that. They're fine with this approach even though it means the definition of friend/like/etc. radically several times. In FBs defense they serve one of the least savvy median user of any software in existence. I don't think that's an exaggeration. FB was a lot of people's first app. In any case, I think this is just a manifestation of that core FB characteristic. Stuff changes in unusual ways. They have problems. Eg users who like hundreds of pages that would take over their stream. EG. my noisier friends drown out the occasional posters. The "normal" way of dealing with these things is to give user tools, controls or encourage them to use them. Unlike some pages. Curate your fiends list. The FB way is to decide themselves what stuff to show. It's possible that FB is being motivated by "how to increase revenue" for these decisions, but I doubt it. It would be short cited and it can be explained otherwise.

107 points by softdev12 12y ago

If 50% of her business comes from FB posts, why shouldn't she just pay for them? I understand it was once free, but her posts sound like advertisements. And advertising costs money everywhere else.

sillysaurus3 12y ago
The advertising doesn't really help you, though. You're forced to pay for advertising which ends up targeted at people who don't engage with your brand. Check this out: https://www.youtube.com/watch?v=oVfHeWTKjag#t=3m10s https://www.youtube.com/watch?v=oVfHeWTKjag#t=3m10s Unless something has dramatically changed since that video was created 9 months ago, the situation is pretty grim.
- thinkmassive 12y ago
  That video complains that page likes often come from click farms instead of actual people. If that's the case then posts going to 70k so-called fans are seen by far fewer sets of eyes, whether they're paid or not. You can't have it both ways, and in either case the metrics are far more reliable than TV/radio/print.
  - deleted 12y ago
    [deleted]
k-mcgrady 12y ago
I sort of agree but the fact that she had to build that base of people that see her posts makes me feel she should be able to post whatever she wants and as long as they engage she shouldn't be penalised. Facebook didn't hand her 70,000 likes - she had to spend a lot of time and money marketing to get that following. Are those Facebook's customers or yours?
- osolo 12y ago
  Facebook's trying to double dip. They want you to pay to get your fans and pay again when you want to market to them. It's nothing short of a scam. I think that this stunt will increase Facebook's profits in the short term, mainly because of businesses that have already invested in building their pages. Longer term, however, we'll definitely see a shift to direct email marketing. Once you have someone's email, you own that relationship and there's no gatekeeper to charge you for every interaction. As business start realizing valuing of the direct relationship, Facebook will start taking a hit, and rightfully so.
  - girvo 12y ago
    > It's nothing short of a scam. How's that supposed to work? Frankly, Facebook is a business that doesn't have your small business' interests at heart. Never has, never will. We've shouted from the roof-tops to never build solely on a third-party platform, and now non-tech businesses are going to learn that lesson. But, this is Facebook; they're not a benevolent entity, and they don't owe you or your business squat. Saying they're "double-dipping" or are a "scam" is ludicrous.
    - josho 12y ago
      I absolutely agree with your points. Except I still agree with the parent as well. It is a scam because FB built a platform and marketed it to businesses as a way to build their fan base and communicate with them. FB then turned around and changed the rules of the game. That's called a bait and switch. Very few companies behave this way (offer something for free then turn around one day and charge for it--drug dealers come to mind as the only business that does this). Those companies that do treat their customers to bait and switch tactics usually don't stick around for long. FB rightly so has lost the trust of their business users, so I hope this turns out badly for FB as I don't want this behaviour to become the norm for business.
      - girvo 12y ago
        I agree with your points, too. I think I wasn't clear, I feel that Facebook's behaviour is deplorable, I just don't find it surprising is all :) Also, somewhat off-topic but > drug dealers come to mind as the only business that does this Drug dealers don't even do that themselves (product is too expensive and it takes while to become an addict, and even then it's not guaranteed revenue)!

mhoad 12y ago

Consider this a friendly reminder that if 50% of your business comes from Facebook, SEO or pretty much any source which you don't control entirely you should be doing everything you possibly can to fix that problem ASAP and ensure that you aren't setting yourself up for a very nasty surprise one morning. "Fairness" aside, be thankful in this instance that you are getting advance notice. I wouldn't assume that you will always be as lucky in the future.

graeme 12y ago
By fix the problem, do you mean diversify sources, or switch to sources you control entirely? Apart from direct return traffic I'm having trouble thinking what source could quality as being entirely controlled by a business.

sehugg 12y ago

... And local musicians whose shows I keep missing because their posts get squelched, even though I've liked their page.

jkaunisv1 12y ago
Frankly the musicians should be creating events and inviting you to them. That's how my friends do it and I always see them.

jliptzin 12y ago

This should not surprise anyone. FB has a long history of pulling the rug out under its developers and advertisers in the name of maximizing their own profits. I cannot recommend strongly enough against building a business that is dependent on Facebook in any significant capacity.

josho 12y ago
I find it interesting to contrast FB with the early days of Microsoft--from a a developer perspective. FB is routinely hostile to its developers* killing off APIs and screwing around with the system. Microsoft, however, went through extreme measures to ensure backwards compatibility of applications between OS upgrades. I suppose the difference is that Microsoft needed developers to create its network effect and grow their DOs/Windows monopoly. FB however needs users, not developers, to create its network effect and grow their monopoly. This begs the question, why can FB be so hostile to their own users? I suppose the answer must be because their users don't leave FB the ecosystem. *Obviously I'm using the term developer loosely here. The article isn't so much about developers as it is about business' building on FB, not unlike business' that built on MS.
- crxgames 12y ago
  Which brings up the question: What would it take to get users to leave FB for an alternative service?
  - megablast 12y ago
    Easy, once most of their friends have left, they will leave.
    - marktangotango 12y ago
      That's like a proof by induction but skipping the induction step; how to get the k'th user to leave? The alternative should be free, easy to use, 100% control to start, imo.
  - 12y ago

danenania 12y ago

I'm not a big Facebook fan or anything, but this seems like a predictable development. A user's attention and newsfeed real estate are limited resources, while the number of pages they've liked increases with time. If ALL business pages reached a large percentage of their followers for free, the typical newsfeed would be inundated with promotions. It's a natural monetization point--Facebook makes more money (which is the main purpose of Facebook), and their users are insulated from seeing too much marketing content. If you want to reach people reliably, build a funnel that you control. Facebook/google/service X can all be valuable components of this funnel, but none of them should be the foundation.

Igglyboo 12y ago
A lot of people don't realize that if your business relies completely on someone else's then you aren't going to get very large.
- bbcbasic 12y ago
  Yes it is worse than that, the small biz owner can have the plug pulled on him at any time. Even if he is paying for the advertising - e.g. adwords ban! What she should do now is get as many email addresses as possible from her existing customers and likers of her page, and have an e-zine or followup. This could be in conjunction with a blog. All stuff that is in her control and cannot so easily be pulled away.
  - ams6110 12y ago
    Does ANYBODY even open emails like that though? I know I never do.
    - jkaunisv1 12y ago
      Yeah, some people do. I ignore a lot of them but I always read through the newsletter from my tea store. It's like tea porn and even though I order infrequently I like seeing the pictures.
    - 12y ago

mdesq 12y ago

This was predictable, but the only reason I like business FB pages to begin with is so that I can receive content from them in a way that doesn't clutter up my email inbox. If I'll now only be hearing from the businesses that can afford (and then foolishly pay for) FB ads, the value of FB goes down dramatically for me.

peterkelly 12y ago
The value of facebook for you is the ability to see lots of ads?
- veb 12y ago
  Advertisements in the sense you're probably thinking of is not what works on Facebook. It's not just "$5 off all Amethyst Geodes today!"... There's a very simple formula, and that is to humanise your business. Put a face/person to it so to speak. Then, the people who 'like' the business page, will get decent, curated content that they like (otherwise, they wouldn't 'like' the page). Rinse, repeat several times a week and you do get a very good following and interaction. Sadly, the article (in my experience) is right, organic is no longer a thing -- you really have to 'boost' a post for it to be seen by a good number of people (or just get really lucky). This was not the case about a year ago -- you'd get a decent amount of 'reach' and interactions with said post. It just simply doesn't happen now for the majority of pages as Facebook is trying to goad people into paying for each post.
- gonzo 12y ago
  From companies he "likes".
wodenokoto 12y ago
Why is it foolish for them to pay for an ad you already admitted to wanting to see?
- mdesq 12y ago
  Paying for FB ads probably makes sense for Nike, Coke, etc. but I live in an area with a little smaller population. Local businesses I like subsist off a core of maybe a couple hundred customers max. My local family-owned wood-fired pizza shop and a new wine bar in the area are struggling little places where one or two sales makes the difference between profit and loss for the day. A FB message posting a promotion or tasting opportunity because the day is slow may make them a few bucks more, but it often does not. When they ask me about advertising, FB is probably not the right solution for them, ROI speaking.

fenomas 12y ago

It's interesting to consider Facebook marketing as a game, where the players are brand owners and the goal is to generate revenue by pushing the various buttons Facebook provides. Until now, Facebook has operated this game on a standard F2P/freemium model, where skilled players can win with enough time commitment, and others can pay for shortcuts. But it turns out it's very hard to make F2P profitable, so now they want to move to a subscription/recurring revenue model. Sounds pretty familiar. Perhaps I'm being overly meta but once you start looking for this pattern it crops up everywhere.

coralreef 12y ago
F2P isn't hard to be monetize at all, its actually a fantastic model for profitability. Any F2P game (that makes money) would make a fraction of what it actually does if they charged a flat retail price instead. Look at any F2P PC game like League of Legends, or mobile game like Clash of Clans, Candy Crush, etc. They are the top earners, but they earn even more than hit game franchises like Call of Duty. Its the reason why F2P is becoming more prevalent.
- fenomas 12y ago
  I didn't say F2P is a bad model, I said it's hard to make it profitable. (Every app store is littered with F2P games that never recouped their costs.) A thing can be difficult even when it's the best thing available.
  - coralreef 12y ago
    (Every app store is littered with F2P games that never recouped their costs.) But this is true of any industry ever, regardless of business model.

djtidau 12y ago

Whilst I understand Facebook's position on this and can see that they are trying to clean up news feeds (whilst maximising revenue), it has always rubbed me the wrong way that they DECIDE what I see. If I like a page, I want to see the information from that page, if I didn't I would remove them from my feed. It's this kind of mismanagement of information I am subscribing to that will surely have people looking elsewhere. Will Facebook soon filter out friend requests from people they don't see as being suitable?

deleted 12y ago
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lexap 12y ago
I appreciate this perspective. If you're opting in to receive posts from a brand, why should Facebook throttle that brand's posts. But as a counter argument consider how many friends users have, how many pages they like, etc... there are so many posts coming from all these friends and likes, that it would take constant attention to see them all, information overload. Facebook has to optimize the stream for usability.
- djtidau 12y ago
  This is true, information overload is a serious problem that much greater minds than mine work to tackle. Though personally I want to have a little more control over my stream. Google+ had an attempt at this with giving a kind of ranking to certain circles depending on how noisy you want them to be. For me that is a much better approach as I am more involved in making such a choice. Though then comes the issue of giving the user too much work. There are two sides to each coin I guess though in this case I do feel it is weighted more toward boosting FB's share price rather than truly looking out for their users.
  - graeme 12y ago
    Facebook does effectively allow you some control. If you click on a post/hover over it/like it/comment you'll see a lot more posts from that source.

forrestthewoods 12y ago

The moral of this story is don't let your business become overly reliant on one source of users. Particularly when that source (Facebook) has goals (generate revenue/profit) that do not align with yours (free marketing). I've also come to accept and even appreciate that access to users is something worth paying for. Getting users is hard. Damn hard. Sometimes that access is a rev share and sometimes it's an advertising fee. That's fine. A mere 15 years ago you couldn't pay that fee to access a user pool that large if you wanted to.

7Figures2Commas 12y ago
> The moral of this story is don't let your business become overly reliant on one source of users. Having a higher-than-ideal concentration of referral channels is not in and of itself a bad thing if you truly understand those channels. For example, a business that derives the majority of its customer referrals from paid search doesn't necessarily have a valid reason to diversify if it has the ROI equation down and understands and manages the associated risks. The real problem with social media channels like Facebook is that many folks have been treating them (and investing in them) as if they were "owned media" when they never have been and never will be. These people are just figuring out that these channels fall under the categories of "earned media" and "paid media" now that Facebook et. al. are turning the screws. The true tragedy of this is that many of these unsophisticated marketers will have little to nothing to show for their social investments when all is said and done. They've been spending gobs of time and money building up their social profiles and will now have to pay even more in perpetuity to use them going forward.
- forrestthewoods 12y ago
  Well even the ROI calculated example is unstable ground. One change to one of several invisible algorithms can turn your boom to bust. And user acquisition costs tend to go up. You can find yourself priced out real quick. Particularly during the holiday season.
  - lexap 12y ago

ulyssesv 12y ago

Television, reinvented.

lakeeffect 12y ago

I imagine that most of these small businesses will end up with a better sense of a posts value and the net result could potentially be for a 100k a year business to become a half million dollar business. Its hard for small businesses to rationalize going from free to paid, especially if rhey neglect the cost of the time sink in dispersing the information for free.

anaolykarpov 12y ago

Given how shitty the fb search is, I'd say that businesses that earn sales from their fb posts are just the ones based primarily on impulse buyings - like the cheap jewelry store in the article, but unlike the water pumps business. The businesses that sell products that need careful research before buying (cars, phones, houses, wedding dresses, etc) benefit from Facebook strictly because of its high search engine rankings. It is much easier to make a fb page that ranks well in search engines than it is to make a website that is on the first page. As an effect is the fact that business owners believe that their customers come from fb (because that's what they see in their analytics), when they actually come from Google, via Facebook.

Silhouette 12y ago

Remember, boys and girls: A "like" has no intrinsic value whatsoever. It is worth exactly as much as the paid conversions it eventually drives. If Facebook reduce the exposure your posts get to interested potential customers who have voluntarily liked your page, then those likes are worth less accordingly. You should be proportionately less willing to spend money promoting on Facebook as a result. The only reason this sort of strategy works for Facebook is because too many people don't understand the basic economic model at work here and just throw more money at the auction hoping for the best, which is a race to the bottom that drives prices up for everyone and benefits no-one but Facebook. Of course, Facebook do just about everything they can to obscure how much money you're actually paying and what you're really getting for it. Even with paid ads, the numbers they themselves report frequently appear contradictory unless you know exactly what they mean (and sometimes even then). Never trust these numbers. The only things that matter are how much money in total you spent on Facebook in a given period, and how much money people visiting from Facebook spent with you in turn.

deleted 12y ago
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sparkzilla 12y ago
Good point. The problem is that many people spent time and effort to create likes (see my post above) so they feel the likes have value. The whole thing seems backwards to me. Facebook should make money from encouraging more interaction between its participants, not throttling the connection and charging for access.

peterkelly 12y ago

Title should be changed to "Facebook reduces amount of free advertising it gives companies"

hagbardgroup 12y ago

FB's demoting the value of that 'like' button for non-publisher brands, while preserving its value for publishers. Remember, small to mid sized advertisers make up roughly 55% of US ad spending [1], so if Facebook wants to fulfill its mission, it can't just churn and burn these little guys and hope that they come back wallets open. There are such a dazzling array of options that aren't Facebook that it isn't as if they're the only guys in town. FB should understand that advertisers could, for the most part, care less if a giant fireball hit Facebook's offices and the company disappeared tomorrow. There are tons of perfectly serviceable replacements for, users, the people who pay for the social network, and investors looking for better opportunities. [1]http://kantarmedia.us/press/kantar-media-reports-us-advertising-expenditures-increased-09-percent-2013 http://kantarmedia.us/press/kantar-media-reports-us-advertis...

Ensorceled 12y ago

There are lots of businesses you might follow and want to get updates from: your kids karate school, your favourite band, the local revue theatre, your yoga studio, the bar on the corner, your mayor ... This ongoing "crack down" on company pages doesn't just "sting entrepreneurs" it is day by day making Facebook less useful to me. Now our karate dojo needs to take out an ad to let us know it is kata week? I think this is one of the weaknesses that may allow a competitor to eventually pry me away from Facebook; let me control what I want to see.

MichaelApproved 12y ago
In the end, email is the best way to communicate with your customers. You have full control over the list. Even though gmail might push the content to promotions tab, the customer can change that setting for your emails and receive it in their inbox. Facebook is double dipping. It's charging customers to acquire the likes and then charging them again to communicate with those customers. With email, you pay once to acquire the customer and then you can email them all you like until they unsubscribe.
- saraid216 12y ago
  > In the end, email is the best way to communicate with your customers. Except being flagged as spam kinda sucks.
  - deleted 12y ago
    [deleted]
- bigbugbag 12y ago
  Also RSS.
- bigbugbag 12y ago
  Event quadruple dipping as customers are sold to advertisers and with the recent ToS change, content posted on the site is now no more owned by posters.

Evolved 12y ago

I don't see why Facebook ever let unpaid ads be posted in the first place. The reason Facebook is able to be free is due to 2 things: users giving up data in exchange for the service being free and paid ads from businesses. That being said, if you're so reliant on Facebook for your advertising moreso than other channels then you need to reevaluate your marketing plan and diversify.

sparkzilla 12y ago

I used to run a small bar. We spent thousands of dollars building up our Facebook likes to around 4000 people. Then Facebook started deliberately throttling our access so that we had to pay to reach the people we had collected. People that, in part, stayed in Facebook, or came to it, because it gave them information about small businesses like us. If we had been told upfront that we would only get access if we paid perhaps we wouldn't have put in the effort. But we weren't. There were other ways to upsell us which would have maintained trust and built a respectful relationship. Instead they abused the people who helped them, and sold their mendacity as a virtue. I don't do that business any more, but I really feel for these small business people who, in most cases, are struggling to get by, and who need support, not abuse from a faceless, greedy corporation.

001sky 12y ago

Can't wait until the cable companies do this to facebook/. basically an anti-net neutrality approach to communication. obvioulsy 2 sides, but still...seems manipulative ate best but somebody has to pay the piper to pump that stock up

bigbugbag 12y ago

This was expected and the trend will not stop as this is how web companies built on investor story time operate. http://www.theatlantic.com/technology/archive/2014/08/advertising-is-the-internets-original-sin/376041/ http://www.theatlantic.com/technology/archive/2014/08/advert...

GFischer 12y ago

I'd change the title to say that the new rules will hurt small businesses, mom-and-pop shops and work-from-home businesses the most. I did some market research (in my country, Uruguay) on whether those kinds of businesses need a web page, Google ads, etc... and a Facebook page was MILES away their best bet in terms of ROI (much like the article says, but it's an understatement. Facebook is HUGE for small businesses). It's a CMS which everybody knows how to use, user engagement is built-in, and there's no need to pay for admin. My girlfriend likes nail polish, house decorations and other stuff, and she follows (and regularly buys from) several facebook pages, with posts like the ones described. Facebook should monetize it (it's a huge untapped potential revenue source), but I think that, for these kind of businesses, some kind of "business Facebook" monthly payment or something would make a LOT more sense than the "promoted posts" model. Maybe they don't care about 3rd world companies... the gemstone e-commerce site can afford it, but local struggling companies (and I'm talking under 1000 dollars per month in revenues) will never be able to.

bsbechtel 12y ago
I agree with the monthly payment model. For many small businesses, their margin is king. Promoted posts cut into the margin earned on each sale more so than a monthly payment.
robk 12y ago
How expensive is doing promoted posts in Uruguay though? I don't see how being "third world" has anything to do with it. I'd have to guess the cost to promote is roughly proportionate to the ad market prices in that country, which are of course lower than in the US.
- GFischer 12y ago
  That's an interesting question, I'll run an experiment when I get back from work and see how much it quotes me.

dasil003 12y ago

Everyone complains about Facebook pulling the rug out from under them, but that is nothing new at all, you should expect that from every tech company ever. What a tech company needs and what it's willing to give change dramatically as they grow from 100K to 100M users and beyond. What's more interesting to observe is that Facebook's strategy has a fundamental in-built conflict of interest. That is the interest of selling advertising, and the interest of showing the user what they want to see. They have to toe this line very carefully because it will be so easy for them to lose users if they show them too much crap they don't want to see. But at the same time, it's always been Facebook's culture to push the envelope, and they are in desperate need to increase monetization to justify their valuation. I don't envy the decisions facing Facebook right now.

bsbechtel 12y ago
>>What's more interesting to observe is that Facebook's strategy has a fundamental in-built conflict of interest. That is the interest of selling advertising, and the interest of showing the user what they want to see. Isn't this the same problem radio and television face?

mpclark 12y ago

But surely this is a two-way street? If Facebook becomes less valuable to me as a website operator then I have less incentive to keep any Facebook integration on my site, and if I remove that then they lose the insight into my visitors that this currently affords them. That wouldn't bode well for their idea of selling ads based around users' off-site activity, would it?

netcan 12y ago

People tend to ascribe a kind of cartoonish malice to things like this. I know Facebook more from the advertiser end than the user, and I this is my take: The way adwords worked is that they put tools out there where advertisers can try X, and see what happens. If X works, they can try to do more of it. if not they can try something else. X can be the keywords you target, the ads you write, the bids you set, the landing page you use and a whole bunch for other settings. Over time advertisers got good at this. They got more out ads, bid against each other and the price shot up. The process took years and a qanta of advertising is still getting more expensive. The intelligence is mostly on the advertising side. Adwords is a fairly dumb toolset. The skill and experience of the advertiser can make a big difference to the ROI. The average skill level is pretty high in competitive markets. They tried a bunch of push-button methods. They would have their "expert team" set up your initial campaigns or propose changes. I tried these when they were first launch with disastrous results. They also had more automated turn key management tools. They're also not as good as a decent ad manager. It's hard to beat a person for creativity and intelligence. Who would have thought. FB adopted this model but their platform is very different. They added a bunch of hair at a rapid clip and adapted the adwords concept in confusing and inconsistent ways. The FB platform is more of a giant pile of tools, with 9 3/5 spanners and a hammer that can be used for a drill. This might be a little unfair. The gist of search advertising is pretty straightforward. Show this result to people in this area searching for this thing. FB is a lot more complicated. Anyway… They built up an ad platform that is enormous and opportunity loaded for a lot of kinds of marketing for which adwords doesn't work. Are you looking for pre school enrollments? Promoting a comedy club? Daily dela site? Even the traditional orange juice and washing powder companies can fool themselves into thinking they are "engaging" customers. Anyway, FB advertising works really well for all sort of things. The demand is there. The platform grew fast and no one really understand it very well. It changes fast and its confusing with multiple ways offing everything and lots of options you didn't know exist. There are lots of black boxes of the adwords adrank variety, but too many to easily understand. But, underlying it all it seems pretty obvious that Facebook want to make their system much "smarter" than adwords. In an ideal world, you tel it what your goals are and the system chooses who to advertise to, how, when and how. More turnkey, less control in advertisers hands. Batteries include. Pick your metaphor. Back to the topic at hand… I think that changing how the platform works fundamentally is allowed in the FB culture in a way that is on the extreme end of the spectrum. The way I see most software is that a software metaphor is defined by what it does. If making something a "header" in a word processor make the text big & bold that's what "header" means. If "follow" in twitter means send that person a message and show me all his future posts, that's what follow means. I will adjust my behavior accordingly. If I'm following too many people, I need to unfollow some. If twitter thinks I'm seeing too many tweets, they can't just select tweets to show me. That changes the meaning of follow. To keep the metaphor intact, they should make the unfollow button bigger, or even suggest I unfollow some people. Facebook would just look at the problem of too many posts, many commercial posts or similar and show fewer. Maybe they internally rank your friends and liked pages based on some black box algorithm and decide how many to show. Stuff like that. They're fine with this approach even though it means the definition of friend/like/etc. radically several times. In FBs defense they serve one of the least savvy median user of any software in existence. I don't think that's an exaggeration. FB was a lot of people's first app. In any case, I think this is just a manifestation of that core FB characteristic. Stuff changes in unusual ways. They have problems. Eg users who like hundreds of pages that would take over their stream. EG. my noisier friends drown out the occasional posters. The "normal" way of dealing with these things is to give user tools, controls or encourage them to use them. Unlike some pages. Curate your fiends list. The FB way is to decide themselves what stuff to show. It's possible that FB is being motivated by "how to increase revenue" for these decisions, but I doubt it. It would be short cited and it can be explained otherwise.