The Changing World of Facebook
I have been hesitant about writing this article because there are many “experts” weighing in on the new changes to Facebook, but after reading many blogs and articles, I will now weigh in with my opinion. According to Social@Ogilvy, Facebook’s organic reach has dropped from 12 -16% to 2-3% and is expected to reach zero sometime in the near future.
This change should not come as a surprise to brands but it does change the “Earned” media game. Many mid (5,000 – 25,000 employees) to small (0 – 5,000 employees) sized companies that have over invested in Facebook are having difficulty adjusting to the new reality.
Over the last few years, many companies have been hiring social media marketing employees to manage and build their social presence. Mid to small sized companies have been adding small teams 1-20 employees to manage these important accounts, Facebook being the cornerstone of their responsibilities. The new changes threaten everything that has been built over the last few years.
2% Only Serves 1% – Economics of Facebook
The new economics of Facebook are has follows: If your brand has 10,000 followers, you can reach 200 of them organically. The reason I say 2% only serves 1% is because most mid to small sized companies do not have the budgets to compete for ad space with the 1% of companies that have multi-million dollar budgets.
Every brand can boost a post but you are still competing with major brands (Nike, Apple, BMW, etc.) for feed space. The brand that pays the most will “win” that space. Most Facebook users are fans of at least one or two major brands, which means you are now in competition, and most mid-small brands can not compete.
Before a company could hire 3-5 employees to manage their social presence and in return they received “free” advertising. But, now they have to pay for the costs of the employees and the cost of advertising or abandon Facebook.
If we no longer see Facebook as a free advertising tool, I believe many mid-small companies will abandon Facebook. Firing 3-5 employees will save money and since they are no longer providing “value”, it is much easier to justify to upper management.
The conversation will go something like this: A: “We need more money for social media” B: “Why?” A: “Because Facebook is no longer free.” B: “How much is the current budget?” A: “XXXXX dollars.” B: “That is too much! Find a way to cut costs. Fire someone.”
2% only serves the 1% because as Facebook becomes less valuable for mid-small companies, they will abandon the platform and/or switch control of the page from marketing to customer service. The 1% will be able to pay to play and their programs will not change, just cost more.
Why Create Better Content is Bad Advice!
Many of the “experts” are writing that Facebook is still valuable and that all brands need to do is create better content, but this is bad advice. If we look at content in terms of resources, we realize that brands are already creating the best content they can based on time and budget (aka resources).
If brands were only reaching 12% of their audience before this update, we can not expect to see “better” content. The brand was already neglecting 88% of their audience. The advice is easy but useless. It makes sense create better content and more people will engage with your brand. But this is not realistic.
I believe every brand has been creating the best content they can based on their current resources. It would not make sense that some brands have been “holding back” and now they will produce better content because it is needed.
So what can we expect? I think there will be an initial surge of “better” content. Brand managers will spend more resources at first, but then there will be a slow and steady decline. Let’s look at this economically: the brand has 10,000 fans and used to spend one hour creating a Facebook post and that post was seen by 1,000 – 2,000 fans. Now, the brand spends one hour creating a Facebook post and the post is seen by 100-500 fans and soon it will be zero.
The initial surge will look like this: The brand will now spend two hours creating a Facebook post that will be liked and shared more (better content) but they will only be reaching 1,000 – 2,000 fans. This new model is taking twice as much resources for the same results. This will cause brands to look for other platforms and slowly change the role of Facebook in their marketing mix.
Facebook (platform) will Fail….
There are very few growth opportunities left for Facebook (platform). They have already admitted that younger users are not joining the platform and there are no new markets. China is not a growth factor because even if the government unblocked the platform, I feel few Chinese internet users would not use the platform. The company Facebook (Facebook, Instagram, WhatsApp, etc.) has a strong outlook, but I feel the platform will slowly decline because there is little or no growth opportunities.
When brands switch from marketing to customer service, the platform will decline. I feel many brands will not have the budget to pay for advertising on Facebook and they will change the role of their Facebook page. Brands will have one employee monitoring the page and providing customer service. This will save money and still provide value.
When brands leave, people will leave. The only brands that will be able to advertise on Facebook with be the 1% with multi-million dollar budgets. These brands have already been using the advertising features and they will continue. But the problem with this is I and you do not care about McDonalds, Ford, or Coca Cola. The platform will lose value because it well become less social.
The local brands I love to follow will stop posting because it provides ‘Zero’ value to the brand. But those posts provide value to the fans. 99% of what Coca Cola posts will not have any affect on my life but 99% of what a local brand posts directly affects my life. When local leaves, social leaves! Local brands that provide value to users will stop posting because of the changes and users will stop checking in because there is less value provided. This will be the decline of Facebook.
There is no death to social. Myspace is still a social media networking site and people still use it, but the death is nobody talks about it or worries about it or cares about it. Facebook (platform) is the cash cow. They will pump it dry and invest in new software, hardware, and social (Instagram, WhatsApp, Oculus VR, etc). The company Facebook will be fine but the platform will slowly die, while making a ton of money.
What do you think? Am I way off the mark? What are your thoughts on Facebook (platform)?