Is Facebook becoming too expensive?

In this guest post, Justin Kabbani argues that the early adopter days are over for brands on Facebook 

Over the past few months, Facebook has evolved in a way that sees brands paying more to achieve what they were previously doing for less.

Historically, the lion’s share of money brands spent on Facebook was for ‘acquisition’ ads, designed specifically for attracting new Likes (or fans). The assumption was that once the fans had ‘opted in’ (been acquired), brands could converse with them on a regular basis, building affinity, community, and ultimately sales. Many companies invested heavily in stimulating these conversations, employing internal staff, outside agencies or a combination of the two.

Eighteen months ago, between 15 and 25% of a brand’s posts would appear in their fans’ News Feed (think ‘reach’), though if asked, I’m sure many would have believed it to be significantly more than this.

The massive influx of brands joining Facebook, together with the introduction of promoted posts, mobile ads, paid personal posts and sponsored stories have pushed the organic (unpaid) reach of these posts closer to 10-15%. Sure, brands can still hit 25% of their fans or more – but now it comes with a cost.

No one can be upset with a business for trying to make money, especially one with millions of shareholders and a billion customers who’ve never paid a cent. But many are calling this the ‘Facebook double-dip’. Charge us once to get fans, then again to converse with them.

Understandably, marketing teams are asking why they’re getting a diminishing return on their social spend. The answer is a simple product of supply and demand.

There are far more active brands (and people) on Facebook now than there were six months, 12 months and 18 months ago – and there’s only so much room in people’s News Feeds. If Brand A is willing to pay more to appear in a fan’s News Feed than Brand B, why shouldn’t Facebook attach a dollar value to that?

Being the first to recognise the potential of a new medium, then the first to throw money behind it, should come with rewards. But only for as long as it’s considered new, innovative and ‘risky’. When everyone else turns up, we expect things to ‘normalise’, creating lower perceived risks, and therefore lower rewards. The soap companies, among other early adopters of TV advertising, would have enjoyed similar windfalls in their day, pumping out messages to millions of housewives for a pittance by today’s standards.

The innovator and early adopter days appear to be over for brands on Facebook. We’re now at the status-quo, the ‘normal value’ compared to the previous ‘excellent value’ that the brave few enjoyed.

Will brands stop spending on Facebook because it’s more expensive? Some will. Most won’t. Have brands stopped advertising on TV where costs are, in many cases, still increasing, but viewership is declining and our gut tells us that people just shut the ads out anyway? Same answer.

Justin Kabbani is co-founder and managing director of Hardhat Digital.



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