
New Facebook Rules Will Sting Entrepreneurs - softdev12
http://online.wsj.com/articles/new-facebook-rules-will-sting-entrepreneurs-1417133694
======
Ensorceled
There are lots of businesses you might follow and _want_ to get updates from:
your kids karate school, your favourite band, the local revue theatre, your
yoga studio, the bar on the corner, your mayor ...

This ongoing "crack down" on company pages doesn't just "sting entrepreneurs"
it is day by day making Facebook less useful to me. Now our karate dojo needs
to take out an ad to let us know it is kata week?

I think this is one of the weaknesses that may allow a competitor to
eventually pry me away from Facebook; let _me_ control what I want to see.

~~~
MichaelApproved
In the end, email is the best way to communicate with your customers. You have
full control over the list. Even though gmail might push the content to
promotions tab, the customer can change that setting for your emails and
receive it in their inbox.

Facebook is double dipping. It's charging customers to acquire the likes and
then charging them again to communicate with those customers.

With email, you pay once to acquire the customer and then you can email them
all you like until they unsubscribe.

~~~
dspillett
_> In the end, email is the best way to communicate with your customers._

I can't say I agree there. It used to be, but not now.

The signal-to-noise ratio for mail is very wrong for many people especially
those who don't know any better and give out their address to every web form
that asks for it. Spam protection has too many false positives when you ramp
it up to the point of bringing that significantly down.

For a relatively technical audience RSS is probably the way to go, but for the
karate school example that isn't going to fly as you'll need to get people
"get into something new" to get their updates so just a basic web page is the
most reliable thing (though that has less "push" than the other options as
people have to remember to go look).

Facebook _used_ to be a good compromise. Changes over the recent times and
those that are planned are changing that.

~~~
Swizec
I think you overestimate how much email real people receive. Especially
because a lot of people use separate business/work and personal emails.

My mum for instance will absolutely at least see, if not open and reply to,
anything that hits her inbox.

These people also actively teach spam filters that they _like_ the email you
or I would consider spam. Think "Fwd: Re: Re: Fwd: Fwd: Re: Re: Look at this
slideshow somebody made 10 years ago"

And the more I observe people, the more I see that every demographic out there
religiously checks their email semi-regularly while everything on Facebook,
Twitter and the like goes mostly ignored and/or filtered out so they can't see
it. Email is the last bastion of "User actually sees your stuff". The only
more reliable way of reaching people than email is sending them an SMS.

Anecdata: I run an email list with 50% average open rate.

------
sparkzilla
I used to run a small bar. We spent thousands of dollars building up our
Facebook likes to around 4000 people. Then Facebook started deliberately
throttling our access so that we had to pay to reach the people we had
collected. People that, in part, stayed in Facebook, or came to it, because it
gave them information about small businesses like us. If we had been told
upfront that we would only get access if we paid perhaps we wouldn't have put
in the effort. But we weren't. There were other ways to upsell us which would
have maintained trust and built a respectful relationship. Instead they abused
the people who helped them, and sold their mendacity as a virtue.

I don't do that business any more, but I really feel for these small business
people who, in most cases, are struggling to get by, and who need support, not
abuse from a faceless, greedy corporation.

------
forrestthewoods
The moral of this story is don't let your business become overly reliant on
one source of users. Particularly when that source (Facebook) has goals
(generate revenue/profit) that do not align with yours (free marketing).

I've also come to accept and even appreciate that access to users is something
worth paying for. Getting users is hard. Damn hard. Sometimes that access is a
rev share and sometimes it's an advertising fee. That's fine. A mere 15 years
ago you couldn't pay that fee to access a user pool that large if you wanted
to.

~~~
7Figures2Commas
> The moral of this story is don't let your business become overly reliant on
> one source of users.

Having a higher-than-ideal concentration of referral channels is not in and of
itself a bad thing if you truly understand those channels. For example, a
business that derives the majority of its customer referrals from paid search
doesn't necessarily have a valid reason to diversify if it has the ROI
equation down and understands and manages the associated risks.

The real problem with social media channels like Facebook is that many folks
have been treating them (and investing in them) as if they were "owned media"
when they never have been and never will be. These people are just figuring
out that these channels fall under the categories of "earned media" and "paid
media" now that Facebook et. al. are turning the screws. The true tragedy of
this is that many of these unsophisticated marketers will have little to
nothing to show for their social investments when all is said and done.
They've been spending gobs of time and money building up their social profiles
and will now have to pay even more in perpetuity to use them going forward.

~~~
forrestthewoods
Well even the ROI calculated example is unstable ground. One change to one of
several invisible algorithms can turn your boom to bust. And user acquisition
costs tend to go up. You can find yourself priced out real quick. Particularly
during the holiday season.

~~~
lexap
So true. Just like when Adwords changed its quality score algo.

~~~
rfergie
I know businesses who had to adjust when the QS algo changed but I don't know
any for whom the change was dramatic enough to class as "going from boom to
bust"

What kind of sector/business are you thinking about?

------
mdesq
This was predictable, but the only reason I _like_ business FB pages to begin
with is so that I can receive content from them in a way that doesn't clutter
up my email inbox. If I'll now only be hearing from the businesses that can
afford (and then foolishly pay for) FB ads, the value of FB goes down
dramatically for me.

~~~
peterkelly
The value of facebook for you is the ability to see lots of ads?

~~~
veb
Advertisements in the sense you're probably thinking of is not what works on
Facebook. It's not just "$5 off all Amethyst Geodes today!"...

There's a very simple formula, and that is to humanise your business. Put a
face/person to it so to speak. Then, the people who 'like' the business page,
will get decent, curated content that they like (otherwise, they wouldn't
'like' the page). Rinse, repeat several times a week and you do get a very
good following and interaction.

Sadly, the article (in my experience) is right, organic is no longer a thing
-- you really have to 'boost' a post for it to be seen by a good number of
people (or just get really lucky). This was not the case about a year ago --
you'd get a decent amount of 'reach' and interactions with said post. It just
simply doesn't happen now for the majority of pages as Facebook is trying to
goad people into paying for each post.

------
mhoad
Consider this a friendly reminder that if 50% of your business comes from
Facebook, SEO or pretty much any source which you don't control entirely you
should be doing everything you possibly can to fix that problem ASAP and
ensure that you aren't setting yourself up for a very nasty surprise one
morning.

"Fairness" aside, be thankful in this instance that you are getting advance
notice. I wouldn't assume that you will always be as lucky in the future.

~~~
graeme
By fix the problem, do you mean diversify sources, or switch to sources you
control entirely?

Apart from direct return traffic I'm having trouble thinking what source could
quality as being entirely controlled by a business.

------
danenania
I'm not a big Facebook fan or anything, but this seems like a predictable
development. A user's attention and newsfeed real estate are limited
resources, while the number of pages they've liked increases with time. If ALL
business pages reached a large percentage of their followers for free, the
typical newsfeed would be inundated with promotions. It's a natural
monetization point--Facebook makes more money (which is the main purpose of
Facebook), and their users are insulated from seeing too much marketing
content.

If you want to reach people reliably, build a funnel that _you_ control.
Facebook/google/service X can all be valuable components of this funnel, but
none of them should be the foundation.

~~~
Igglyboo
A lot of people don't realize that if your business relies completely on
someone else's then you aren't going to get very large.

~~~
bbcbasic
Yes it is worse than that, the small biz owner can have the plug pulled on him
at any time. Even if he is paying for the advertising - e.g. adwords ban!

What she should do now is get as many email addresses as possible from her
existing customers and likers of her page, and have an e-zine or followup.
This could be in conjunction with a blog. All stuff that is in her control and
cannot so easily be pulled away.

~~~
ams6110
Does ANYBODY even open emails like that though? I know I never do.

~~~
bbcbasic
It depends.

Sure if it is sell, sell, sell people will hit the unsubscribe button.

If it is useful information, building a relationship with the reader, maybe
the occasional reference to a sold product. Then this may work.

------
fenomas
It's interesting to consider Facebook marketing as a game, where the players
are brand owners and the goal is to generate revenue by pushing the various
buttons Facebook provides.

Until now, Facebook has operated this game on a standard F2P/freemium model,
where skilled players can win with enough time commitment, and others can pay
for shortcuts. But it turns out it's very hard to make F2P profitable, so now
they want to move to a subscription/recurring revenue model. Sounds pretty
familiar.

Perhaps I'm being overly meta but once you start looking for this pattern it
crops up everywhere.

~~~
coralreef
F2P isn't hard to be monetize at all, its actually a fantastic model for
profitability.

Any F2P game (that makes money) would make a fraction of what it actually does
if they charged a flat retail price instead. Look at any F2P PC game like
League of Legends, or mobile game like Clash of Clans, Candy Crush, etc. They
are the top earners, but they earn even more than hit game franchises like
Call of Duty.

Its the reason why F2P is becoming more prevalent.

~~~
fenomas
I didn't say F2P is a bad model, I said it's hard to make it profitable.
(Every app store is littered with F2P games that never recouped their costs.)
A thing can be difficult even when it's the best thing available.

~~~
coralreef
_(Every app store is littered with F2P games that never recouped their
costs.)_

But this is true of any industry ever, regardless of business model.

------
djtidau
Whilst I understand Facebook's position on this and can see that they are
trying to clean up news feeds (whilst maximising revenue), it has always
rubbed me the wrong way that they DECIDE what I see. If I like a page, I want
to see the information from that page, if I didn't I would remove them from my
feed.

It's this kind of mismanagement of information I am subscribing to that will
surely have people looking elsewhere.

Will Facebook soon filter out friend requests from people they don't see as
being suitable?

~~~
lexap
I appreciate this perspective. If you're opting in to receive posts from a
brand, why should Facebook throttle that brand's posts. But as a counter
argument consider how many friends users have, how many pages they like,
etc... there are so many posts coming from all these friends and likes, that
it would take constant attention to see them all, information overload.
Facebook has to optimize the stream for usability.

~~~
djtidau
This is true, information overload is a serious problem that much greater
minds than mine work to tackle. Though personally I want to have a little more
control over my stream.

Google+ had an attempt at this with giving a kind of ranking to certain
circles depending on how noisy you want them to be. For me that is a much
better approach as I am more involved in making such a choice. Though then
comes the issue of giving the user too much work.

There are two sides to each coin I guess though in this case I do feel it is
weighted more toward boosting FB's share price rather than truly looking out
for their users.

~~~
graeme
Facebook does effectively allow you some control. If you click on a post/hover
over it/like it/comment you'll see a lot more posts from that source.

------
Silhouette
Remember, boys and girls: A "like" has _no intrinsic value whatsoever_. It is
worth exactly as much as the paid conversions it eventually drives.

If Facebook reduce the exposure your posts get to interested potential
customers who have voluntarily liked your page, then those likes are worth
less accordingly. You should be proportionately less willing to spend money
promoting on Facebook as a result.

The only reason this sort of strategy works for Facebook is because too many
people don't understand the basic economic model at work here and just throw
more money at the auction hoping for the best, which is a race to the bottom
that drives prices up for everyone and benefits no-one but Facebook.

Of course, Facebook do just about everything they can to obscure how much
money you're actually paying and what you're really getting for it. Even with
paid ads, the numbers they themselves report frequently appear contradictory
unless you know exactly what they mean (and sometimes even then). Never trust
these numbers. The _only_ things that matter are how much money in total you
spent on Facebook in a given period, and how much money people visiting from
Facebook spent with you in turn.

~~~
sparkzilla
Good point. The problem is that many people spent time and effort to create
likes (see my post above) so they feel the likes have value.

The whole thing seems backwards to me. Facebook should make money from
encouraging more interaction between its participants, not throttling the
connection and charging for access.

------
GFischer
I'd change the title to say that the new rules will hurt small businesses,
mom-and-pop shops and work-from-home businesses the most.

I did some market research (in my country, Uruguay) on whether those kinds of
businesses need a web page, Google ads, etc... and a Facebook page was MILES
away their best bet in terms of ROI (much like the article says, but it's an
understatement. Facebook is HUGE for small businesses).

It's a CMS which everybody knows how to use, user engagement is built-in, and
there's no need to pay for admin.

My girlfriend likes nail polish, house decorations and other stuff, and she
follows (and regularly buys from) several facebook pages, with posts like the
ones described.

Facebook should monetize it (it's a huge untapped potential revenue source),
but I think that, for these kind of businesses, some kind of "business
Facebook" monthly payment or something would make a LOT more sense than the
"promoted posts" model.

Maybe they don't care about 3rd world companies... the gemstone e-commerce
site can afford it, but local struggling companies (and I'm talking under 1000
dollars per month in revenues) will never be able to.

~~~
robk
How expensive is doing promoted posts in Uruguay though? I don't see how being
"third world" has anything to do with it. I'd have to guess the cost to
promote is roughly proportionate to the ad market prices in that country,
which are of course lower than in the US.

~~~
GFischer
That's an interesting question, I'll run an experiment when I get back from
work and see how much it quotes me.

------
sehugg
... And local musicians whose shows I keep missing because their posts get
squelched, even though I've liked their page.

~~~
jkaunisv1
Frankly the musicians should be creating events and inviting you to them.
That's how my friends do it and I always see them.

------
jliptzin
This should not surprise anyone. FB has a long history of pulling the rug out
under its developers and advertisers in the name of maximizing their own
profits. I cannot recommend strongly enough against building a business that
is dependent on Facebook in any significant capacity.

~~~
josho
I find it interesting to contrast FB with the early days of Microsoft--from a
a developer perspective.

FB is routinely hostile to its developers* killing off APIs and screwing
around with the system. Microsoft, however, went through extreme measures to
ensure backwards compatibility of applications between OS upgrades.

I suppose the difference is that Microsoft needed developers to create its
network effect and grow their DOs/Windows monopoly. FB however needs users,
not developers, to create its network effect and grow their monopoly.

This begs the question, why can FB be so hostile to their own users? I suppose
the answer must be because their users don't leave FB the ecosystem.

*Obviously I'm using the term developer loosely here. The article isn't so much about developers as it is about business' building on FB, not unlike business' that built on MS.

~~~
crxgames
Which brings up the question: What would it take to get users to leave FB for
an alternative service?

~~~
megablast
Easy, once most of their friends have left, they will leave.

~~~
marktangotango
That's like a proof by induction but skipping the induction step; how to get
the k'th user to leave? The alternative should be free, easy to use, 100%
control to start, imo.

------
dubcanada
If 50% of her business comes from FB posts, why shouldn't she just pay for
them? I understand it was once free, but her posts sound like advertisements.
And advertising costs money everywhere else.

~~~
k-mcgrady
I sort of agree but the fact that she had to build that base of people that
see her posts makes me feel she should be able to post whatever she wants and
as long as they engage she shouldn't be penalised. Facebook didn't hand her
70,000 likes - she had to spend a lot of time and money marketing to get that
following. Are those Facebook's customers or yours?

~~~
osolo
Facebook's trying to double dip. They want you to pay to get your fans and pay
again when you want to market to them. It's nothing short of a scam.

I think that this stunt will increase Facebook's profits in the short term,
mainly because of businesses that have already invested in building their
pages. Longer term, however, we'll definitely see a shift to direct email
marketing.

Once you have someone's email, you own that relationship and there's no
gatekeeper to charge you for every interaction. As business start realizing
valuing of the direct relationship, Facebook will start taking a hit, and
rightfully so.

~~~
girvo
_> It's nothing short of a scam._

How's that supposed to work? Frankly, Facebook is a business that doesn't have
your small business' interests at heart. Never has, never will. We've shouted
from the roof-tops to never build solely on a third-party platform, and now
non-tech businesses are going to learn that lesson. But, this is Facebook;
they're not a benevolent entity, and they don't owe you or your business
squat. Saying they're "double-dipping" or are a "scam" is ludicrous.

~~~
josho
I absolutely agree with your points. Except I still agree with the parent as
well. It is a scam because FB built a platform and marketed it to businesses
as a way to build their fan base and communicate with them. FB then turned
around and changed the rules of the game. That's called a bait and switch.

Very few companies behave this way (offer something for free then turn around
one day and charge for it--drug dealers come to mind as the only business that
does this). Those companies that do treat their customers to bait and switch
tactics usually don't stick around for long. FB rightly so has lost the trust
of their business users, so I hope this turns out badly for FB as I don't want
this behaviour to become the norm for business.

~~~
girvo
I agree with your points, too. I think I wasn't clear, I feel that Facebook's
behaviour is deplorable, I just don't find it surprising is all :)

Also, somewhat off-topic but

 _> drug dealers come to mind as the only business that does this_

Drug dealers don't even do that themselves (product is too expensive and it
takes while to become an addict, and even then it's not guaranteed revenue)!

~~~
josho
Lol. So, FB comes out worse in comparison to drug dealers.

I agree with you that it isn't surprising because it seems to be in FB's DNA
to perform bait and switch like tactics (privacy policies come to mind as
well). I wonder if that DNA spreads to their business internals (e.g.
treatment of staff, inter-departmental agreements, etc)

------
anaolykarpov
Given how shitty the fb search is, I'd say that businesses that earn sales
from their fb posts are just the ones based primarily on impulse buyings -
like the cheap jewelry store in the article, but unlike the water pumps
business.

The businesses that sell products that need careful research before buying
(cars, phones, houses, wedding dresses, etc) benefit from Facebook strictly
because of its high search engine rankings. It is much easier to make a fb
page that ranks well in search engines than it is to make a website that is on
the first page.

As an effect is the fact that business owners believe that their customers
come from fb (because that's what they see in their analytics), when they
actually come from Google, via Facebook.

------
dasil003
Everyone complains about Facebook pulling the rug out from under them, but
that is nothing new at all, you should expect that from every tech company
ever. What a tech company needs and what it's willing to give change
dramatically as they grow from 100K to 100M users and beyond.

What's more interesting to observe is that Facebook's strategy has a
fundamental in-built conflict of interest. That is the interest of selling
advertising, and the interest of showing the user what they want to see. They
have to toe this line very carefully because it will be so easy for them to
lose users if they show them too much crap they don't want to see. But at the
same time, it's always been Facebook's culture to push the envelope, and they
are in desperate need to increase monetization to justify their valuation.

I don't envy the decisions facing Facebook right now.

~~~
bsbechtel
>>What's more interesting to observe is that Facebook's strategy has a
fundamental in-built conflict of interest. That is the interest of selling
advertising, and the interest of showing the user what they want to see.

Isn't this the same problem radio and television face?

------
hagbardgroup
FB's demoting the value of that 'like' button for non-publisher brands, while
preserving its value for publishers.

Remember, small to mid sized advertisers make up roughly 55% of US ad spending
[1], so if Facebook wants to fulfill its mission, it can't just churn and burn
these little guys and hope that they come back wallets open. There are such a
dazzling array of options that aren't Facebook that it isn't as if they're the
only guys in town.

FB should understand that advertisers could, for the most part, care less if a
giant fireball hit Facebook's offices and the company disappeared tomorrow.
There are tons of perfectly serviceable replacements for, users, the people
who pay for the social network, and investors looking for better
opportunities.

[1][http://kantarmedia.us/press/kantar-media-reports-us-
advertis...](http://kantarmedia.us/press/kantar-media-reports-us-advertising-
expenditures-increased-09-percent-2013)

------
ulyssesv
Television, reinvented.

------
Evolved
I don't see why Facebook ever let unpaid ads be posted in the first place. The
reason Facebook is able to be free is due to 2 things: users giving up data in
exchange for the service being free and paid ads from businesses.

That being said, if you're so reliant on Facebook for your advertising moreso
than other channels then you need to reevaluate your marketing plan and
diversify.

------
lakeeffect
I imagine that most of these small businesses will end up with a better sense
of a posts value and the net result could potentially be for a 100k a year
business to become a half million dollar business. Its hard for small
businesses to rationalize going from free to paid, especially if rhey neglect
the cost of the time sink in dispersing the information for free.

------
mpclark
But surely this is a two-way street?

If Facebook becomes less valuable to me as a website operator then I have less
incentive to keep any Facebook integration on my site, and if I remove that
then they lose the insight into my visitors that this currently affords them.

That wouldn't bode well for their idea of selling ads based around users' off-
site activity, would it?

------
bigbugbag
This was expected and the trend will not stop as this is how web companies
built on investor story time operate.

[http://www.theatlantic.com/technology/archive/2014/08/advert...](http://www.theatlantic.com/technology/archive/2014/08/advertising-
is-the-internets-original-sin/376041/)

------
peterkelly
Title should be changed to "Facebook reduces amount of free advertising it
gives companies"

------
001sky
Can't wait until the cable companies do this to facebook/.

basically an anti-net neutrality approach to communication.

obvioulsy 2 sides, but still...seems manipulative ate best

but somebody has to pay the piper to pump that stock up

------
netcan
People tend to ascribe a kind of cartoonish malice to things like this. I know
Facebook more from the advertiser end than the user, and I this is my take:

The way adwords worked is that they put tools out there where advertisers can
try X, and see what happens. If X works, they can try to do more of it. if not
they can try something else. X can be the keywords you target, the ads you
write, the bids you set, the landing page you use and a whole bunch for other
settings. Over time advertisers got good at this. They got more out ads, bid
against each other and the price shot up. The process took years and a qanta
of advertising is still getting more expensive. The intelligence is mostly on
the advertising side. Adwords is a fairly dumb toolset. The skill and
experience of the advertiser can make a big difference to the ROI. The average
skill level is pretty high in competitive markets.

They tried a bunch of push-button methods. They would have their "expert team"
set up your initial campaigns or propose changes. I tried these when they were
first launch with disastrous results. They also had more automated turn key
management tools. They're also not as good as a decent ad manager. It's hard
to beat a person for creativity and intelligence. Who would have thought.

FB adopted this model but their platform is very different. They added a bunch
of hair at a rapid clip and adapted the adwords concept in confusing and
inconsistent ways. The FB platform is more of a giant pile of tools, with 9
3/5 spanners and a hammer that can be used for a drill. This might be a little
unfair. The gist of search advertising is pretty straightforward. Show this
result to people in this area searching for this thing. FB is a lot more
complicated.

Anyway… They built up an ad platform that is enormous and opportunity loaded
for a lot of kinds of marketing for which adwords doesn't work. Are you
looking for pre school enrollments? Promoting a comedy club? Daily dela site?
Even the traditional orange juice and washing powder companies can fool
themselves into thinking they are "engaging" customers. Anyway, FB advertising
works really well for all sort of things. The demand is there.

The platform grew fast and no one really understand it very well. It changes
fast and its confusing with multiple ways offing everything and lots of
options you didn't know exist. There are lots of black boxes of the adwords
adrank variety, but too many to easily understand.

But, underlying it all it seems pretty obvious that Facebook want to make
their system much "smarter" than adwords. In an ideal world, you tel it what
your goals are and the system chooses who to advertise to, how, when and how.
More turnkey, less control in advertisers hands. Batteries include. Pick your
metaphor.

Back to the topic at hand…

I think that changing how the platform works fundamentally is allowed in the
FB culture in a way that is on the extreme end of the spectrum. The way I see
most software is that a software metaphor is defined by what it does. If
making something a "header" in a word processor make the text big & bold
that's what "header" means. If "follow" in twitter means send that person a
message and show me all his future posts, that's what follow means. I will
adjust my behavior accordingly. If I'm following too many people, I need to
unfollow some. If twitter thinks I'm seeing too many tweets, they can't just
select tweets to show me. That changes the meaning of follow. To keep the
metaphor intact, they should make the unfollow button bigger, or even suggest
I unfollow some people.

Facebook would just look at the problem of too many posts, many commercial
posts or similar and show fewer. Maybe they internally rank your friends and
liked pages based on some black box algorithm and decide how many to show.
Stuff like that. They're fine with this approach even though it means the
definition of friend/like/etc. radically several times.

In FBs defense they serve one of the least savvy median user of any software
in existence. I don't think that's an exaggeration. FB was a lot of people's
first app.

In any case, I think this is just a manifestation of that core FB
characteristic. Stuff changes in unusual ways. They have problems. Eg users
who like hundreds of pages that would take over their stream. EG. my noisier
friends drown out the occasional posters. The "normal" way of dealing with
these things is to give user tools, controls or encourage them to use them.
Unlike some pages. Curate your fiends list. The FB way is to decide themselves
what stuff to show.

It's possible that FB is being motivated by "how to increase revenue" for
these decisions, but I doubt it. It would be short cited and it can be
explained otherwise.

