With over 2 billion users across the world, Facebook is unarguably the most popular social networking platform in the entire world. But it’s not just about acquiring more users for Facebook, almost all the revenue of Facebook is dependent on ads which make advertisers its most important assets.
In 2017 only Facebook earned around $40 billion of revenue from ads and going by ads revenue graph, it’s going to go further up in the scale. So what makes us question the worth of one of the biggest ad-revenue model in the world.
Well, the year 2018 has not been a smooth sailing for Facebook. The chain of recent events or we should say ‘blunders’ at the beginning of the year led to a huge chaos in the Silicon Valley as well as across the globe.
If you are thinking about the Cambridge Analytica scandal which collectively affected over 87 million users and some major political events, well it’s not what we are talking about. The Cambridge Analytica data breach has much to do with the end users and governments and it’s less of a concern for the advertisers.
So coming back to the point, the thing which surprised or shocked the whole advertising world is the new “algorithm update ” announced by Mark himself on his profile post.
The update addresses the core of Facebook’s intent, “The User Experience”. Lately, there has been a lot of buzz in the online world that Facebook has been focusing more on advertising than on connecting people. The audience is quite annoyed by the huge chunk of their timeline filled with personalized ads which in fact is true.
Adding to the misery is the new bunch of Social Media platforms capturing Facebook’s user base as it no longer enjoys the monopoly as it used to in its initial years. The graph has been saturated and even declining as per the recent market research.
This, in turn, triggered loud alarms in Facebook and led to this new algorithm update. In his public post, Mark seems to be clearly stating the importance of “meaningful social interactions” for Facebook users and that the company has been off the mark(pun intended) with its intentions of providing a healthy social platform to its users.
Quoting Mark himself “As we roll this out, you’ll see less public content like posts from businesses, brands, and media. And the public content you see more will be held to the same standard “, the update clearly targets the advertiser’s community as the users are going to get less of public posts from business and a lot more pixels are going to focus the personalized social experience with more of your friends and family.
Not just this, Facebook will now require operators of large Pages to be authenticated as well and will give their followers information on the content that Page shares and any name changes it may have made in the past. The company did not, however, define what constitutes a large Page, provide details on what the authentication process will entail, or clarify what specific information followers will be able to see.
The update is going to have a lot of negative implications for the people who are advertising on the platform, especially the businesses whose major source of traffic is none other than Facebook.
On an upside, Facebook has mentioned clearly that the update will only affect the organic reach of posts and won’t affect the paid ads. As much as it sounds relieving, it’s still expected to be a nightmare for the advertisers.
So basically, most of the organic pages you see on Facebook are from brands with a huge fan following and page likes. The content from these bands along with their with their fan base usually go viral on the platform. This makes them organically visible on hundreds of thousands of profiles, without paying a single penny to Facebook.
At first glance, this doesn’t seem like a problem to the small and medium-size businesses as most of them have limited followers and quite insignificant organic reach as compared to the big players.
These businesses often rely on paid ads as Facebook has been luring platform for them. The reason being Facebook’s integration with 3rd party data companies and its hold on their precious data layered with Facebook’s own database.
This was a huge asset to the advertisers as they were able to target segments of people that had never been within reach of the smaller advertisers.
Things are going to change a lot now as most of these big brands will shift their focus to paid ads now. This will raise competition which will in the increase of PPC ads in all genres whether small and big.
This altogether is a bad news for both advertisers and Facebook themselves as the actual stock of the company went down by almost 5%, which was quite expected.
Whether it’ll make a difference in the user experience is the question of future but as for its a big blow to the advertisers and Facebook a marketing platform.