Two days ago I wrote an article about Facebook “Like” Ads, calling it Facebook’s first “killer app.” Here’s its second and, potentially, more potent one.
A brief description of the problem:
Businesses work very hard to get existing and potential customers to “like” their page on Facebook for the privilege of sending updates to those customers’ News Feeds. But most of the time, these updates aren’t even seen by those who opted into receiving them. 84% of these people might never see the updates. Why? Facebook uses something called EdgeRank, its in-house algorithm that determines whether an update gets to the top of a fan’s News Feed.
The algorithm has three main components: Affinity, Weight, and Time. Without going into the details of these calculations, which of course remain Facebook’s secrets, they basically determine how much an update is relevant to a fan’s interest. The more relevant, the more likely the update will show up at the top of that fan’s News Feed.
How is Facebook going to make money off of this “problem”?
Visibility. Businesses that want their updates to show up at the top of their fans’ News Feeds will pay Facebook to ensure that that happens. They’ve expended efforts and money in getting people to become their fans, and it would be a shame to never actually reach them. So they pay Facebook money to bypass EdgeRank and go straight to the top of the News Feeds.
The image at the top of this post is from my News Feed, just now; and that sponsored post was designed to coincide with the launch of the Samsung Galaxy S III. (A very nice gadget, btw.)
As an exercise, I attempted to set up a sponsored post for LawNovo, which would’ve targeted people who graduated from law schools and currently residing in Washington, DC. The post would’ve cost me $1.06 every time someone clicked on the link. $1.06/click adds up to a lot of money! Just ask Google. To Facebook’s credit, the user interface for creating ads couldn’t have been simpler, and the targeting options are extremely powerful.
So, who’s got issues with this (other than the recipients of these ads, for obvious reasons)?
Thomas Baekdal does. Thomas is a publisher of premium marketing content. And he’s very good. However, he thinks Facebook is basically hijacking the relationships that exist between businesses and their fans — who actually opted into receiving updates from them. Perhaps because I’m a bit more cynical than Thomas, but I think he’s asking too much of Facebook.
As I’ve said before, the grand bargain that users have with Facebook is that they allow Facebook to use their information and preferences to enable businesses to market to them. On the other side of the coin, businesses trying to reach Facebook users have to play on Facebook’s rules, which, in some sense, serve to protect Facebook and its users’ interests in not turning the social network into one giant spam-producing machine.
As a business, you don’t own the relationships with your customers on Facebook. Facebook does.
Now that Facebook needs to make a lot more money to justify its valuation, it’s willing to allow those who pay to bypass its EdgeRank, which is effectively Facebook’s spam control mechanism. (I use the word spam loosely here, as it actually means receiving unwanted promotions. Here, the Facebook user has opted into these promotions at some point.)
Businesses shouldn’t have any problem with paying for visibility, especially because they haven’t paid Facebook a dime for having gained relationships with their fans on Facebook as a result of “likes.” There’s no free lunch here. This is just the cost of marketing on this social network. Facebook is a for-profit company, and its primary duty is to make money for its shareholders.
The relationship that exists between Facebook and its users has always been a delicate one, and it will be further tested as Promoted Posts gain more traction with Facebook advertisers. If this method gains any traction — and there’s a good chance that it might — we’ve just entered into a new era of social commerce. This, I think is better than constantly getting bombarded with grossly irrelevant promotions.
[A side note.]