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Facebook’s algorithm update: Should marketers be worried?

As you should have already heard by now, Facebook recentlyannounced yet another change in its algorithm, changing the focus of the newsfeed from one that surfaces relevant content to one that surfaces content which you’re more likely to engage with, and not only engage with from a “like” or “share” perspective but continuous engagement. My sense is that they are looking at posts which might spark back and forth conversations.

I’ve been taking a bit of time to think about this and what it means for us who are involved in social media marketing. On the surface, we already knew that Facebook organic reach was declining over the past year or so, and paid social media budget was always a key component of any social media engagement strategy. This won’t change. However, what I think will change is this: Paid social is going to become, over time, more and more expensive. We might not notice it now, but perhaps in a year’s time, CPCs and CPMs on Facebook will go up. Why? Because more entities on Facebook, who didn’t use to bid, will now come into the mix. In the past, news organizations, publishers and perhaps even entertainment brands could still reach their audiences organically as they had more relevant content. With this newsfeed change, they might now need to wade into the pay to play mix to sustain their main KPI – traffic. With that, this group of organizations may be amongst the more aggressive advertisers on Facebook, further saturating what is already becoming a more crowded space. Of course, this is good for Facebook as it boosts their income, but bad for the majority of advertisers who are going to be pushed to either spend more, or leave as the model becomes unsustainable. While I certainly hope this will not be the case – I personally think that branded content on Facebook does enrich our overall experience – as marketers, we should be forward-looking and not just hedge our bets on Facebook alone.

So what should we be looking at? I’ve been thinking about how a marketing strategy is very similar to an investment strategy, where one of the main streams of thought when it comes to portfolios is to diversify – and that’s certainly what we can and should be doing. How can we do so? A couple of thoughts.

Firstly, it’s usually better to be an owner and rent out your property than to rent a place and sublet it. The second model is what brands are doing on Facebook – renting a space from this mega-landlord and then trying to get individuals to come and reside (engage) on their page. The problem with the subletting model is that you’re at the whims of the owner – in this case, if Facebook decides to change their algorithm, you have no choice but to comply, or leave. But the simple reason why people continue to stay is because the alternative of setting up your own community is expensive and time-consuming. That said, if you look at the home rental market, it always makes more sense to own rather than to sublet, because you not only have full control, but at the same time you can find other ways to monetize your property. Similarly, if you have an owned community, for example, like the Playstation community by Sony, beyond full ownership of the space, there’s always the opportunity to monetize your investment by allowing selected partner brands to pay for a presence on the site. Whilst it’s expensive and hard to push through, I think that such endeavours make sense in the long run and will ultimately be cheaper once you defray the cost over a period of 5 years or more. If you’re a brand that believes there is long-term value in community engagement, then this is something to seriously consider.

Second, if you’re a brand that’s hedged all your bets on Facebook, then it’s time to diversify and find other places where your audiences are engaged on. This doesn’t necessarily have to be other online platforms, as your audiences could meet in real life around interest groups, meetups, and the like. Think beyond online – approach the topic holistically. Of course, this exercise is easier for a brand like Nike than a niche brand that sells packaging products. Tools like Google Correlate come in handy here, as it’ll help you find topics or interest areas that overlap with your brand (and hence, are alternatives to reach your audience).

Third, even if you aren’t hedging your bets fully on Facebook and already have diversified your social strategy, perhaps it’s time to rethink your budget allocation. Based on your objectives, do you need to scale up your investment, or should you scale down your investment and allocate more budget to other initiatives? When considering this question, you probably want to layer on data as the rationale for making any changes. Throughout the course of this year, observe your return on investment when it comes to Facebook spend, and after around 3 months, I think a picture should start to form on whether the newsfeed algorithm change is impacting your platform engagement, and you can then rejig your strategy from there.

All in all, we shouldn’t be surprised to see these changes coming from Facebook, and in fact, expect more to come. Ultimately, they serve two sets of customers, their users as well as advertisers, and keeping both (who seemingly have opposite goals!) happy is a tricky balancing act that the platform will need to continue to manage if they want to survive in an economy where the customer is fickle and can easily be swayed by the next solution that comes along which serves their needs.

Julian Chow

Julian Chow is a Digital Consultant at Text100 in Singapore. Mr Chow has been with Text 100 Singapore for four years, and leads new business development for integrated communications briefs along with providing client counsel for digital, PR and integrated communications accounts on a strategic level. His client roster past and present covers big brands such as Lenovo, SanDisk, BlackBerry, Nokia, Cisco, Adobe, ZUJI, Red Hat, Gemalto, Schneider Electric and PayPal, covering a host of activities spanning social media marketing, community management, advocacy programmes, direct marketing, event marketing, blogger engagement and media relations. Mr Chow's work on two campaigns, Nokia Rangers and Flip Your Profile for Cisco Consumer Products, was nominated for the Holmes Report Global and APAC SABRE Awards, with the Flip Your Profile Campaign eventually bagging the award for Best Blogger Outreach on a global and APAC level, while the Nokia Rangers Campaign won Best Multi-Market Campaign in APAC.
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