Merchant Blog

Blog Article: The New Face of Facebook Advertising

Putting a Price on Sharing

The Merchant Advance Blog has previously extolled the virtues of social media as a place for small businesses to get the word out about the great work they’re doing. Proper use of sites like Facebook can connect you to a huge community of customers as well as provide the potential to advertise your goods and services to many other people. Furthermore, social media creates two-way relationships of the kind that drive the small business “sharing economy.” Recent changes to Facebook advertising cost policy, however, have left some small business owners wishing they could un-Like. Read on to learn more about the changing face of one of the world’s biggest advertising platforms.

Organic Reach Withers on the Vine

One of the most important metrics used by Facebook to measure the success of a given post is called organic reach.” Facebook defines organic reach as  “the number of unique people who saw your post in News Feed or on your page” – in short, just by being connected to you digitally, it is the likelihood that someone you know on Facebook will see your content without going to look specifically for it. Organic reach has never been a terribly efficient way to get people to see your content (which may be stellar in its own right.) About two years ago, in-house analyses conducted by Facebook estimated that 16% of people following you would be able to see any given post “organically” with no additional searching or promotion. As of this past spring, it has been reported that Facebook is cutting the effectiveness of organic reach down to anywhere from six to two percent. Two percent! That means that if a small business has a huge bushel of followers, say 20,000, a mere 400 of those would see any given post made. The work that many businesses have to do in order to amass a large count of followers can consume quite a lot of time and promotional effort – and relying on organic reach alone for promotion is increasingly getting worse and worse return for that effort, potentially culminating in a scenario where organic reach potential bottoms out at zero percent.

Fight For Your Right… to Promote!

Facebook has been accused of banking on the decreased appeal of organic reach. Facebook advertising has always allowed brands to “promote,” or pay for, advertising of their posts in exchange for vastly improved viewability and conversion rate. As the effectiveness of organic reach declines, competition for Facebook’s auction-style advertising space market heats up: this, in practice, drives Facebook advertising costs ever higher and puts efficiency-minded small businesses at a significant disadvantage. The company has denied these accusations, saying that the squeeze on brand content is simply due to the fact that, as the world’s pre-eminent social network, simply too much information at once is competing to reach its viewers’ news feeds. Prioritization of the most relevant content has become a difficult juggling act even for Facebook’s mighty algorithms, which need to pick 300 items to pin to your news feed out of a potential 1500. Many small businesses will need to spend more on Facebook advertising costs in order to stay visible and relevant on the feeds of prospective customers.

Relationship Status: It’s Complicated

As the owner of a small business, what should your approach be to your presence on Facebook and/or the use of Facebook advertising? This depends drastically on the resources you have at your disposal. In short: Facebook advertising is still valuable. At greater length: the value must be carefully weighed. On one hand, your business can simply buy in to the increased cost model and hope for the best. Perhaps a better approach would be to understand and optimize the “targeting” of your advertising – figuring out exactly to whom your content will matter most, narrowing down a very specific list of search terms that will lead customers to your page, and hopefully maximizing the benefit per click and per dollar you pay to keep your content visible in customers’ feeds. Facebook also retains value as a place where your existing fans can spread the word about your business – word of mouth is a powerful force, and the potential that a viewer may notice that a friend of theirs likes your business may add value to your existing ads. Facebook also continues to allow the creation of data and insights into a microcosm of your customer base which can be used to shape your marketing efforts.

Facebook advertising will likely cease to be a promotional free lunch for most small businesses very soon. However, with smart management of your presence thereon, the site still offers important tools and valuable information that can benefit any small business.

What’s your take on the changes to Facebook as a small business advertising platform? Let us know in the comments, or use the buttons below to interact on Twitter and, unsurprisingly, Facebook!


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