What Facebook’s Big Algorithm Change Means for Businesses

A couple of weeks ago, the world’s largest social network announced a big shift in their algorithm. The change is based on staying true to Facebook's core value of friends and family first, meaning the News Feed will prioritize posts from friends and family, and limit those from businesses and media sources.

So more of mom's crochet and less of CNN's breaking stories.

On the surface, Facebook’s motivation is to improve user experience. But if you look behind the curtain, you might find something a little less varnished. The catalyst driving the change appears to be more revenue-related than anything else. This is the third major change in the last few months, all of which points to Facebook pushing a pay-to-play model.

The social giant's advertising revenue jumped 57%—$5.2 billion from $3.3 billion—in the first quarter alone, this year. Further to that, Facebook is expected to take home 12% of the total $186 billion from the global digital-advertising market (WSJ).

... 22 billion reasons why the algorithm keeps changing. 

How does the recent Facebook algorithm update affect businesses?

Okay, so what does this mean for businesses using Facebook for marketing? In a nutshell, it means organic reach is going to plummet—more so than it already has (DMR). Since the new algorithm favors posts from friends and family, businesses are going to have a helluva time getting into News Feed by way of organic posts.

This particularly hurts media companies and publishers, especially when most rely on Facebook to scale. Pew Research says that 44% of adults in the US regularly read news content on Facebook, while Parse.ly, a digital analytics company, cites 41% of referral traffic to news sites comes from Facebook—which is more than Google.

To get any type of real organic traffic, you’re at the whim of people sharing or liking your stuff. In other words, I wouldn't put too much stock into Page posts.

Here’s how Facebook positions the matter:

“Overall, we anticipate that this update may cause reach and referral traffic to decline for some Pages. The specific impact on your Page’s distribution and other metrics may vary depending on the composition of your audience. For example, if a lot of your referral traffic is the result of people sharing your content and their friends liking and commenting on it, there will be less of an impact than if the majority of your traffic comes directly through Page posts. We encourage Pages to post things that their audience are likely to share with their friends.”

Wait, didn’t Facebook just release Instant Articles to help brands?

Les’ be honest, Facebook and brands have always had a bit of a rocky relationship. And rightly so. Facebook’s massive influence on digital marketing is a big draw. But the red tape around what shows up in News Feed, even before the recent change, has always frustrated businesses—especially... yup, media companies and publishers.

Earlier this year, in what media companies and publishers believe was an olive branch, Facebook released Instant Articles—a new feature that lets brands post directly to News Feed.

Indeed, it’s been hugely popular, as Instant Articles are getting a favorable rotation in News Feed. The increased traffic has been helping alleviate some of the pain from the recent referral drop.

Though, the fun in the sun might be short-lived. Industry experts believe Instant Articles' fortuitous placement will also fall victim to the friends and family first algorithm. It seems, in due time, brands will once again be at odds with News Feed.

So much for civility.

So what the hell are you supposed to do about it?

Sorry, that sounded like a rallying cry. It's not.

Let’s face it, businesses are at Facebook’s beck and call. Zuckerberg holds the keys to a 1.65 billion person marketplace. You can't exactly take your toys and leave the sandbox—not unless you're down with e-blasts and banner ads. Until there is something better, the reality is, you’ve gotta pay to play.

Basically, Facebook's algorithm changes are forcing businesses to surrender to creating ads. Friends and family first sounds great, but it's the moolah that makes Facebook go round. I'm skeptical serendipity is responsible for the price increase you may have noticed for ads lately.

I will admit they're still relatively cheap... for now. Depending on their goals, businesses should still be able to tweak  marketing budgets to continue to see ROI on Facebook.

... I say for now, because as the demand for ads goes up, no doubt, so will the costs to use 'em.

Man, this blog has been pretty glum.

So glum, think I might head to the bar to shake it off.

But before I go, I'll feel better if I leave you with this: Facebook has at least created a pretty awesome ad platform to help businesses to hit their marketing goals.