Facebook Inc. (NASDAQ:FB), the king of social media advertisements is planning to devise an all-monetizing Facebook platform. Although, the social media titan drives a major share of advertising (social media industry), it seems to still be unsatisfied or perhaps it fears a drop in revenue growth in upcoming quarters. Facebook in its blog reported that the news feed revamp which will provide users with more relevant news based on their engagement on a daily basis is likely to hinder organic reach of brand related content on the user’s feed. As demand for new articles, latest happenings from media publishers, is increasing, Facebook is focusing on updating the user with the news which they love to read and enrich their browsing experience. This is indirectly going to affect the ranking of unpaid brand related content or posts, forcing the advertisers to boost the reach through paid mode.
Will NewsFeed Revamp Affect Paid Ads?
According to Wallstreetpr, Facebook is expected to grab over 90% share of holiday shopping ad spent worth $9.4 billion. This indicates that advertisers are increasingly spending on Facebook ads with the intention of acquiring the desired engagement rate, they expect their posts to be promoted to top ranks in the user’s news feed, irrespective of whether the user likes them or not. The latest news feed revamp is likely to create a fear amongst advertisers with regards to the ranking of their posts due to the heavy competition between various news feed stories which creep to the top of the user’s feed.
Facebook’s user engagement rate has increased by leaps and bounds in the last few years. More than 73.5% or 874 million of its total 1.189 billion users are comfortably browsing diversified news on the mobile platform. If we analyze the number of likes, the recorded figure was approximately 4.5 billion per day (as in May, 2013) which is 67% more than the 2.7 billion likes/day as per August, 2012. Content shares too increased by a whopping 94% in the last one year, and the overall figure, as per May, 2013 was 4.75 billion, which is way ahead of the 2.45 billion recorded on August, 2012. The above figures have indeed excited brand advertisers to invest more, provided they get the desired results.
Facebook might have to reconsider its news feed revamp or inculcate a perfect balance between the user’s choice of news feed and appearance of promoted posts for Facebook brands. Although, media published sites are likely to increase their website traffic (via news feed revamp) and might even pay for getting their news articles promoted to the top of user’s feed, but the advertising revenue from other consumer goods firms (non-media publishing firms) is likely to get affected. Media publishers’ websites have witnessed an increase in Facebook referral traffic rate by a whopping 170% in last 1 year.
Facebook Brand Followers/Engagement Bartered For Monetary Units! Facebook No More A Free Advertising Platform!
Facebook has indirectly hinted that all those brands who are (who don’t buy Facebook ads) grabbing the user’s attention and engagement via interesting content for which they can’t use the Facebook platform for free. They have to consider investing certain amount of funds to promote their posts. Although there wasn’t any direct statement denoting the same, but tough competition prevailing between user’s choice of news feed and promoted brand posts gives brand advertisers’ post very little chance (those who use the platform for free marketing) to reach a user’s feed. More than 15 million businesses use the Facebook platform and if all of them subscribe to one or the other paid ads, its revenue is likely to boom higher than ever in a short span of time.
Facebook in its Blog, reported – As the dynamic nature of News Feed continues to follow people’s patterns of sharing, Page owners should continue using the most effective strategy to reach the right people: a combination of engaging Page posts and advertising to promote your message more broadly. Advertising lets Pages reach the fans they already have and find new customers as well. The fans you have matter. In addition to being some of the most loyal customers, fans also make the advertising on Facebook even more effective.
Facebook has hardly placed a foot wrong in innovating features which are non-monetizable. Facebook earlier in February had raised the bar by providing a PMD program badge to advertisers. The advertisers who were interested to be a part of the PMD program should buy ads on Facebook in order to qualify for the PMD badge. Those who do not wish to do so must demonstrate that they have “a Facebook holistic strategy which influences their clients on media spend”. This move was initiated claiming that they are emphasizing on necessary standards or quality of advertisers, but the main motto behind the move was driving more ad sales as advertisers would be eager to earn PMD badge for better recognition in the market. Hence they will definitely showcase themselves through paid ads.
Advertisers across the globe have expressed their frustration with the latest blog update indicating possible tough competition between user’s choice of feed and brand related posts (promoted or unpaid).