Six Pixels of Separation - The Blog
April 24, 2014 9:43 PM

Facebook And A New Era In Paid Media

Will the brands revolt?

Facebook has been making some serious moves when it comes to what a user sees in their newsfeed. The implication on brands (and brand pages) has been massive. In one corner, you have brands that have accumulated friends and followers to connect with that they're no longer reaching. In the other corner, Facebook is now throttling that content via an algorithm and forcing brands to pay for the opportunity to put a message in front of these individuals (who have already asked to be connected). It seems strange, but the free gravy train for brands is coming to an end on Facebook. Facebook knows that if brands have free access to send out as many messages that they like (free of charge) that brands will... and they have. We would like to think that marketers didn't take advantage of this opportunity, but they did. Who among us did not see a brand post that was something like this: a picture of the sun with a message that read: "like this, if you like sunny days!" ? Facebook is asking brands one simple question: if you had to pay for that kind of post, would you have done it? The hope is that paying for access to the audience will make the brands think and do smarter things.

Will the brands revolt?

Aren't consumers smart enough to decide when a brand is being good and kind to them on Facebook? Whatever you think, Facebook can't risk it. They are now a public company, and billions of dollars are at stake. Yesterday, Facebook posted their earnings. Here is a snapshot of the details:

  • Facebook has 1.01 billion users on small screens (smartphones and tablets).
  • They earned $2.5 billion in revenue this past quarter.
  • 802 million daily users.
  • 609 million daily mobile users.
  • 59% of ad revenue came from mobile devices.

They are winning in the mobile ad space.

Mobile ads made up 53% of ad revenue. There has been much punditry about Facebook and the futility of their ads in the past (not relevant, in the wrong space, size issues, viewability, etc...). So, where did all of this money come from? If you want people to play a game, download an app, etc... getting a sponsored post in a consumer's newsfeed is still valuable. Facebook nailed this format with beautiful simplicity in the mobile space. As you're thumbing through your newsfeed, they are inserting pieces of content that look like your newsfeed, take up the whole screen, but do not interrupt or stop the flow of the Facebook mobile experience. You could argue the "interrupt" component of my argument, but it's pretty easy to flick past a paid post as much as it is to flick past that picture of your friend's kid that you are not interested in. Because Facebook users share interesting pictures, articles and videos, these sponsored posts feel even more at home and less interruptive. Facebook continues to impress with the way in which they have adapted to the mobile realities of the consumer (and the speed with which they switched from Web-based to mobile-first).

Can it keep going?

This is the big (and tough) question. Many feel that Facebook is now a mature platform and, because of this, that interest could start to taper off. If that consumer interest floats to Instagram, Facebook is still in a good place (they own Instagram). The real question may be: are brands going to continue to pay for these posts in a world where Facebook isn't giving them much more room to earn media from their organic work? The ramifications of these changes in content algorithms from Facebook has yet to hit the (wall) street (we'll have to see next quarter, and the ones after that). Perhaps this throttling is just a temporary measure that Facebook is taking to to regain control of the newsfeed, demonstrate to brands which types of paid posts work (and which ones don't) before allowing the brands who are playing nicely to have more organic reach than the spammers?

Who knows?

In the end, it seems like Wall Street (and many people on Twitter) are thrilled with how Facebook is performing these days. They are posting big adverting revenues. This feels like the beginning of a new Facebook. A Facebook that is less about corporate social media (sharing and conversation), and much more about a new paid media model that works in conjunction with a very social consumer. The challenge is that many brands have positioned Facebook as a way to engage with their consumers... not another paid media option. Of course, it's not so black and white. Of course, many brands are still using Facebook to engage, connect and grow an audience. If anything, the Wall Street reporting proves that Facebook is making significant strides and changes to who they are d how they make money.

Now, we have to watch and see if brands see the long-term value in this ever-evolving model.

By Mitch Joel

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