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Facebook Product Changes Aimed at Maximizing Revenue

Image representing Facebook as depicted in Cru...

Image via CrunchBase

Brands love being on the Facebook platform. With Facebook reaching 3 out of every 4 Internet users in the US, it’s been a great way to reach customers where they’re spending their days. And the best part? It’s free. That combination has been a powerful driver, bringing brands and marketers on to the platform, with companies forsaking their own websites, driving traffic to Facebook to gain new fans. All with the hope that this new opt-in-lite “fan” asset will be a longterm winner, creating new customers and revenues. But two recent seemingly-unrelated changes on Facebook may signify the party is almost over, and that Facebook will be coming for it’s cut of the pie for the privilege of connecting with customers on Facebook.

The first change rolled out week’s ago to much fanfare and debate. The new Sponsored Stories. The Sponsored Stories product lets brands promote organic mentions, reviews and other shared information by users of Facebook, gaining guaranteed visibility for the item that may otherwise have gone unnoticed in the river of the hidden-by-default “Most Recent” news items. Most marketers loved this idea, because trying to get your items into their much more visible “Top News” feed is an art and science that has yet to be figured out completely.

With Sponsored Stories, Facebook gave brands a way to pay to get that extra visibility that everyone wants, in a consistent and guaranteed way. It was pitched as a boon to advertisers who wanted to stand out among the noise, and already, brands like Levi’s have lined up to take advantage. It was a smart move for Facebook in terms of wooing advertisers, and an innovative way to drive revenue.

But, then, just a few days ago, Facebook changed what users see in their news feeds. Switching the default view of the feed to “Show posts from: friends and Pages you interact with the most”, hiding tons of content that could’ve previously been visible to the user under the old settings. Of course, there are some obscure controls at the bottom of the News Feed that let you customize and restore the “Show posts from: All of your friends and pages”, but really, how many users even know they can change the global settings on their news feed, let alone know that something’s been changed for them that’s materially altering their experience on the site?

And this is punch #2 of the 1-2 product punch for Facebook. Because with a new, more restrictive filter on the News Feed, plus a new vehicle for driving revenue with Sponsored Stories, Facebook is making it harder and harder for brands to get organic mentions in front of casual fans – the exact people they want to reach and engage with on Facebook. It’s a shrewd and calculating move. Cut off organic access quietly, shortly after trumpeting a new, innovative way to get more visibility. And I predict that as brands see less engagement on their organic posts, more and more are going to be considering the Sponsored Stories as the de facto way to ensure key messages hit their target audience on the site. Driving tons of new revenue to Facebook.

But how will this sit with the advertisers who have been lured into a false sense of security where now the only way to leverage Facebook is to pay whatever the going rate is? Will brands feel taken advantage of now that their organic updates are less effective and the only way to the customer is through the Facebook sales department? Or will brands just merrily pony up cash to reach more people on Facebook, counting their number of fans like chits and assuring themselves they’re building a permission-marketing asset?

What do you think? Did Facebook intentionally roll these changes out together to drive more revenue? Or is one just a case of improving user experience by reducing clutter and the other a new ad model? That’s the benevolent angle I guess – but not the one I’m betting on.

It remains to be seen; but either way, the trap has been quietly set, and Facebook is counting on reaping a ton of cash from access-starved marketers who, now addicted to connecting with their customers for free on Facebook, will pay the going rate to keep feeling the love.

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