Don’t Build a Business Around a Platform You Don’t Control

Last week, the digital publication Little Things announced it was closing its doors, due to Facebook’s recent algorithm changes.

It was another example of a media company that had become overly reliant on Facebook to feed it eyeballs, and was solely at the tech giant’s whim for an audience, and therefore, revenue. When Facebook, also in the business of attracting and retaining eyeballs, realized that “publisher-driven content” (i.e. articles, images and videos from media companies such at the New York Times, Fox News, or Little Things) was less important to users than updates from family or friends, it adjusted their news feed algorithm to prioritize personal content, at the expense of professional content.

These changes led to an overall better experience on Facebook, unless you were relying on it to pay your bills.

Little Things is an extreme case, but I would argue that media companies, influencers, and brands have grown too reliant on channels they have zero control over to build their business. The result is even minor changes from these platforms can have massive consequences on the publishers that use them to connect with their audience.

Facebook Gives and Takes Away

Wherever a large audience emerges, so too does the opportunity for new business. Like a miniature city, Instagram and Facebook provide a central gathering place, where demographically diverse people, aligned by interest and networks, can meet, form bonds, and share elements of their life with each other.

Inside this city, new ways to provide value crop up as well. A class of social media superstars, called influencers, have emerged; people who are trusted for their endorsements, and whom brands will compensate for recommending certain products to their audience.

Likewise, Facebook’s shift towards video in 2015 led to hundreds of new media companies, built primary around the platform and its incredible distribution. Mastering Facebook’s organic algorithm, companies such as Little Things, NowThis, and Diply, among others, were able to build massive platforms within Facebook’s platform, reaching millions of people and then, through native advertising models, work with brands to co-develop content for those audiences.

However, Instagram or Facebook (and YouTube, Snapchat, Pinterest, or any other platform), were not designed to be revenue-generating vehicles for other companies. Facebook’s primary goal is not to provide value for Little Things, or NowThis; its primary goal is to provide value for itself. And when it becomes convinced that its interests, and the interests of publishers or influencers are at odds, there’s only one party that emerges unscathed.

Users First, Everyone Else Second

When Facebook was in its infancy, it had one goal: grow exponentially. Revenue, it was convinced, would come later, if it had the audience. Core to the company’s DNA (and almost every similar network-effect tech company like it, including Twitter, YouTube, and Instagram) the prevailing mantra has been “what’s best for the user is best for business”.

Clearly, such a philosophy was not misplaced: the result is that Facebook now has over 1.5 billion users globally, and is among the 5 most valuable companies in the world.

This means that the new class of publishers and influencers that have emerged are not the company’s primary stakeholders, and are not the ones responsible for its massive wealth. Ultimately, Facebook is going to take measures to protect the experience of its users, and as the past few months have shown, that decision often comes at the expense of publishers.

About a year ago, Instagram made the decision to switch from a reverse chronological feed to an algorithm-based feed (similar to Facebook’s). Over night, many users saw their engagement halve, at least. For publishers or influencers that are compensated by how much reach their posts get, the results were cataclysmic: their profile or Facebook page was suddenly worth a fraction of what it was the day before.

Instagram users revolted, but no change was made. The company argued that this change was better for users, because they would only see the most relevant posts at the top of their feed (coincidentally, this also forced brands to pay for advertising if they wanted their posts to continue to be seen).

Regardless of Instagram’s intention, the effect on users who relied on it for revenue of their own was profound. It should have been a warning sign for businesses like Little Things: building your own business within the ecosystem of somebody else’s means you’re living on land you don’t own.

Still Want to Try? Diversify!

For all their flaws, however, Facebook, Instagram, Twitter and YouTube have turned ordinary people into massive celebrities, and created enormous wealth for not only themselves, but oftentimes others in the process. Facebook and Instagram Advertising especially are phenomenal marketing vehicles, and do a fantastic job connecting brands that exist outside of Facebook, with users who live inside Facebook.

But moving inside the ecosystem itself is risky. For those who want to roll the dice and leverage one of these channels to launch a business or create additional revenue streams, I’d suggest the following:

Diversify Across Channels

A single algorithm change from Facebook was enough bring down Little Things, because Little Things was built almost entirely around Facebook. Had it spanned its reach and revenue across multiple channels, like Buzzfeed and Tastemade have done, it would be able to withstand a hit from any one source.

If you’re looking to become an influencer, Instagram is obviously ground zero in most industries. However, avoid the temptation to triple-down on Instagram. Depending on your audience, YouTube and Snapchat might be good crossovers (plus, you can monetize YouTube from day one). Regardless, it’s your job to ensure that, if Instagram continues to down the “pay-to-play” path Facebook forged, you’ve got a safety net in place.

Look for Offline Income Streams

Many full-time YouTubers don’t pull the majority of their revenue from YouTube, but instead from merchandise. Logan Paul, one of the biggest, and most infamous, YouTube influencers at the moment, has a full-fledged e-commerce site dedicated to merchandise. This is beyond a t-shirt or sticker, but has extended to pants, shorts, and even flags branded by Paul.

Other influencers have begun Twitch streaming or launched a speaking career to supplement their ascendance on social media. Remember, the more control you have over your revenue, the better. Putting all your eggs in YouTube’s basket leaves you vulnerable for risk.

Watch What You Pay For

For years, businesses provided Facebook with free advertising, adding a “Like Us on Facebook!” logo to their billboards, TV commercials, and the back of your cereal box.

As a way of saying thanks, Facebook changed their algorithm, meaning that companies now had to pay to reach the massive audience of fans they’d spent years building up. With hundreds of thousands of dollars invested already, most companies had no choice but to oblige, otherwise only a fraction of their fans would see their posts.

In subsequent years, that fraction has become smaller and smaller, as Facebook forces more businesses to pay to reach any of their fans. Today, organic reach is essentially dead for many publishers.

What does this mean? Awareness campaigns, or clickthrough campaigns on Facebook Ads are incredibly effective. Facebook’s ability to target new potential customers through its demographic data is unparalleled.

Using ads to increase your audience on these channels (i.e. paying for new followers), however, is a fool’s errand. You’re essentially spending to reach a bigger audience that Facebook and Instagram have shown they’re willing to cut off access to at any moment, unless you continue payments in the future as well.

Tread Carefully

Good entrepreneurs identify opportunities and are willing to take big risks. The social media landscape has been ripe with both over the last few years: Facebook’s platform has both spawned new ventures, and killed them.

I’m curious, what has been your experience using social media to not only market businesses, but build them? Have you been burnt by the algorithm gods, or have Facebook and Instagram been a largely positive endeavour for you? Let me know below!