Facebook’s free ride is finally over

As Facebook announce plans to filter out unpaid promotional posts, small business owners are left wondering how on earth they’re going to generate free traffic in the future.

If you’re a small business using your Facebook page to generate free traffic and sales, you’re in for a rough ride. It might be time to dust of the old digital strategy and think about investigating Facebook’s paid ad formats.

The social giant announced recently that they’ll be changing their news feed algorithm in the new year to filter out unpaid product or service promotions from business pages. This means you’ll no longer be able to leverage your Facebook fan-base to drive free traffic to your website or mobile app in the way you have been in the past.

Naturally, a lot of small business owners are not going to be happy.

This move was inevitable, though. Facebook is a business, just like any other, and need to make a profit for their investors. They’ve sunk an enormous amount of time and money building a captive audience, and the (arguably more) valuable bucket of data they’ve left behind them. Why should they give it to us for free?

We should be used to this by now. Google is a master at this; build a free service that works so well that everybody wants to use it and no viable alternatives exist at an equivalent cost (free), build it to a point of absolute saturation and then — when entire markets are dependent on it — take away the most valuable part and charge a premium for it. Simples.

Google did it first with search, and are currently in the process of doing exactly the same with analytics. It shouldn’t be a surprise that Facebook are now doing exactly the same thing. This is how our freemium digital economy works.

So, if you want Facebook traffic, you’re going to have to pay for it. What impact will this have on digital marketing as we know it?

For household brands… none whatsoever. At scale, social and ‘viral’ marketing are largely top-down dynamics — it takes a big brand with bigger reach (bought and paid for) to gain sufficient penetration fast enough to matter. As a general rule, it doesn’t work the other way around (unless you’re exceptionally lucky). Big brands will continue to dominate in social media, because it’s in Facebook’s interests to ensure they do.

But what about you? What about small, regional businesses with limited budgets and even more limited reach? For you the impact will depend on your resistance to paying to eyeballs, and how much value you really place on Facebook traffic.

The main advantage social media held over traditional media for smaller and regional marketers was accessibility. If a local retailer couldn’t afford or justify the waste associated with advertising on TV to an audience far beyond her local catchment area, she always had the option of ‘going guerilla’ online. Unlike radio, television, press or OOH, social media was free.

Not any more.

It’s not all bad news, though. Online advertising — especially of the flavour offered by Facebook — has distinct advantages for local businesses over traditional media, stemming from its targeted nature and level of personal data used in that targeting. You want men aged 18–25 who play golf at the weekend and watch Dr Who? You’ve got ’em. And you don’t pay for anyone else.

This approach means that although you pay more per-person, the people you reach are far more likely to be your next customer, and best of all — you don’t need to buy in bulk. This drives cost down, and conversion rates up — perfect for a regional challenger looking to get a foot-hold in local markets without biting off more than they can chew.

This is something that hasn’t escaped the attention of the television advertising industry in recent years, where pay-to-view cable and satellite operators like Sky are now offering targeted, dynamic ad placement within their broadcast TV programming to help smaller regional businesses make the leap into television advertising.

So if everyone is paying for Facebook clicks, doesn’t this mean that challenger brands will be fighting household heavyweights for attention? Doesn’t this create an unfair advantage for big, established brands? Doesn’t this create exactly the kind of environment that made traditional mass media so inhospitable for emerging brands in the first place? Kind of.

This really depends on Facebook’s management of automated ad placement, especially around mobile devices, where localised products and services would be arguably more valuable to an end-user than a massive global grand with little or no contextual relevance. If Facebook expects small businesses to pay their way, it needs to ensure that they’re treated with the respect they deserve.

If they don’t, they risk creating an economy in which the biggest fish continue to dominate, while the smallest waste (what to them is) a lot of money for meaningless penetration. Household brands will always have more money to spend, and thus better economies of scale, allowing them to dominate the news feeds of users who’d be better served by localised promotions.

So is Facebook within its rights to expect small business owners to start paying for their success? In my mind, yes — it’s only fair.

We can’t expect Facebook to foot the bill for creating for us this vast community and not expect to pay for our small slice of it. Before social media existed, the very idea of allowing businesses to make money from a captive audience free of charge indefinitely would have been laughed out of the board room.

Time to start getting to grips with advertising.