Have you noticed a drop in the reach of your business’s Facebook page posts in recent months? You are not alone. Many businesses have been feeling the effects of recent algorithm changes that significantly decreased the organic reach of business and fan pages. Instead of being visible to fans who have already expressed an interest by “liking” their page, now businesses are pushed to pay to promote their posts. To use an old analogy, instead of continuing to give the milk away for free, Facebook is pushing businesses thirsty for exposure to rent the cow in the form of paid ads and sponsored posts.
Does this mean that you, as a small business owner, should give up on Facebook? Not necessarily. Although you should probably be prepared to increase your social media marketing budget to take full advantage of what Facebook has to offer you as a business.
Approximately 50% of small businesses have a Facebook page to promote their business, while only around 16% buy advertising on the network. However, businesses may decide they need to compensate for their lost organic reach on Facebook by purchasing ads on the network. This can be frustrating because businesses will not just be paying to be in front of new eyes, but also to be seen by people who are already fans or customers.
Facebook recognizes just how important small businesses are to their revenue model and has tried to implement products that make it easier for businesses to advertise. If you think about it, Facebook advertising can be particularly advantageous for local businesses because of the ability to target by geographic area as well as interests.
The company has admitted that its changing algorithm will result in a drop in pages’ organic reach. While it says the drop will be minimal, businesses around the web have reported huge drops in their reach over the last year. As the organic reach of posts decline, businesses are left with the problem of deciding whether or not to pay to promote their posts.
We might not like it, but it makes sense if you think about it from Facebook’s perspective. In order to please investors, Facebook has to figure out how to best monetize its network, particularly on mobile platforms. Increases in ad revenue equate to increased stock value. For example, on the day Facebook announced its better than expected ad revenues for the fourth quarter of 2013, its stock rose 10% in after-hours trading.
Think about it. Facebook has over 1 million advertisers, and 85% of the company’s revenue comes from advertising. As users, we might want Facebook to stick to its roots of connecting friends and family by allowing them to create and share content, but from a business perspective Facebook has to generate significant revenue and sustained growth in order to please shareholders. However, if it continues to tweak its algorithm to the benefit of paid advertising and the detriment of social interaction with friends and family, Facebook may reach the point where its users no longer believe in its value proposition.