Plan B: A World Without Facebook

October 24, 2017

At least when North Korea threatens to be trying to blow up the world, they take credit and openly say they are. Facebook, not so much.

It’s only Tuesday and Facebook is causing a firestorm within publishers this week. Most of you have heard they ran tests in six countries by splitting up the news feed and throwing publisher posts into a separate category, only showing friends and ads in the main feed. They also released new guidelines for publishers on how to post on its platform.

Two months ago, I published a 22-page whitepaper titled How to Boil a Frog, explaining in detail how Facebook makes money from its News Feed. Publishers, take note. You are the frog. Facebook is the pot of hot water. Although this week’s news may lead you to feel that the water has hit the boiling point, in fact there’s still more to go. But I think it will, within the next 18 months or so.

Enter Plan B.

Facebook does not like anyone who is making more money from their users than they are. Facebook owns the relationship with the 2.01 Billion people who log onto its platform every month. Not you. And they get to decide who has access to their audience.

In 2013, they introduced overnight a toll for brands to access audiences on the platform, practically eliminating any organic reach to brand pages. A few months ago, they introduced a toll for influencers to promote any content associated with brands to audiences. They have already made it impossible for retailers with promotional messages to reach anyone. And they are proactively killing the publisher’s branded content margin by allowing brands to boost posts under the publisher handle directly.

Any publisher leader who has a long-term view on their business should be building a Plan B. That is, a business and product strategy for your digital business that assumes zero organic reach for any content via Facebook. Whether my prediction of Facebook charging a toll for all publisher posts comes true or not, you owe it to your shareholders to have a plan just in case.

Recap of this week’s events (thus far)

On Monday morning, Facebook confirmed it was running tests which had completely removed publisher content from the news feed, rather opting to only have posts from family and friends appear in the feed. Instead, Facebook placed all publisher posts in a river of content separate from the main feed. In this scenario, publishers would now have to pay (likely a steep premium) to appear in the newly exclusive “family and friends” section.

The test happened in six countries, including: Sri Lanka, Bolivia, Slovakia, Serbia, Guatemala, and Cambodia. Facebook claims to have no immediate plans of rolling it out globally, yet.

A spokeswoman from Facebook claims that “people have told [them] they want an easier way to see posts from friends and family, so [they] are testing two separate feeds, one as a dedicated space with posts from friends and family and another as a dedicated space for posts from Pages”.

Was this really just a test? Or, is this just the tip of the iceberg of a potential long-term strategy for Facebook to drive revenue growth at rates faster than user growth?

Yesterday, Facebook reiterated its guidelines to publishers on how to post on its platform. Guidelines such as “People on Facebook Value Content That’s Meaningful and Informative” are obvious. What really needs further clarity is for those who rely on Facebook as a distribution platform. And publisher posts that receive free organic reach do not drive as much revenue for Facebook compared to paid posts.

Implications for publishers

Immediately, the implication for organic audience reach via Facebook is minimal. This raises the question about what the long-term strategy will be for your brand in a potential scenario where Facebook removes organic reach for publisher content (as they have already done for brands).

For a publisher’s branded content business though, changes over the past few months introduce major implications.

Here’s a brief recap of the key changes [more here]:

  • Q2 2016: Facebook introduces the handshake tool. They change their policy to require publishers and influencers to tag advertisers in promoted posts or branded content.
  • Q4 2016: Social marketing agencies and platforms start to notice a decline in organic reach on Facebook for any post tagged with the handshake tool.
  • Q4 2016: Publishers start to pay Facebook even more money to boost posts for branded content to achieve audience distribution targets that their marketers expect.
  • Q1 2017: When a brand is tagged with the handshake tool, they get to see all of the performance data for the post, including how much the publisher paid Facebook to boost it. Initially buyers did not understand where to find this data, so Facebook’s account management team was directed to train and educate buyers on where to see the data. The net result? Buyers now question publishers on their massive margins and downward price pressure on publishers intensifies.
  • Q3 2017: Facebook announces that a brand who is tagged under the handshake tool can now boost the post directly with paid spend, using the publisher or influencer’s handle. This means the publisher margin will be cut to zero. This most recent announcement allowing brands to boost publisher posts they are tagged in fundamentally changes the game.

And finally, we have started to hear rumblings that Facebook is taking direct aim at branded content pitches going head-to-head against publishers in RFP responses.

To understand more about how Facebook’s News Feed algorithm works and the implications on the ecosystem at large, see our whitepaper here.


About the Author:

Kunal Gupta is the Founder & CEO of Polar. At Polar, Kunal leads a talented team transforming the media publishing industry with technology. He is passionate about leadership and finding focus in a modern era. Follow his leadership blog at findfocus.today. Connect with him on LinkedIn, Medium or Twitter.

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