Category Archives: EdgeRank

Facebook Announcing Plan To End Pay To Play For Pages – A Dream?

Facebook Pay to PlayYes, most likely it IS a dream. But since Facebook is about to release an earnings report this month on the 23rd, I believe it will be the peak of their revenue climb with this pay to play shift and that by the end of the year we will begin to see a dramatic decline in revenue and page activity if they stay the course.

But in a perfect world, I would love to see a $12.1 Billion revenue announcement that consisted of a new monthly page fee. Why? It would mean that they came to their senses and realized that the current pay to play model they have implemented is not sustainable as a business model and page owners, managers and brands are fleeing the Facebook platform for greener pastures. It would also mean that they have further had a reality check and finally understood social media marketing, their users and customers in a real way.

I previously wrote a piece before Facebook enacted the Pay to Play business model that included what I believed to be a better solution to their then EdgeRank Newsfeed algorithm, stock price plummeting and revenue model challenges.

Since then Facebook deployed what has come to be known as their “Pay to Play” requirement, that I believe is a completely unsustainable revenue model and one that delivers zero benefit to users, marketers or Facebook itself over the long run. This is backed up by a recent eMarketer report showing organic reach declining at an increasing rate. Diminishing returns the platform can and will deliver to brands, marketers and page owners. I decided to do some deeper research and have put together basic financials that compare what Facebook is currently doing as compared to what I propose, and the compelling differences between the two.

But before I get into that, let’s take a peek at some of Facebook’s 2013 Public Business Highlights:

Revenue for the full year 2013 was $7.87 billion, an increase of 55% year-over-year.

Income from operations for the full year 2013 was $2.80 billion. (advertising revenues)

Net income for the full year 2013 was $1.50 billion.

Free cash flow for the full year of 2013 was $2.85 billion.

Facebook currently has 54.2 Million active pages.

Facebook has 25 million small business pages.

Removing Pay To Play and Replacing It With Monthly Fees:

I went ahead and ran some numbers using my plan and compared the results with what Facebook is currently doing. This plan is predicated on Facebook displaying all page posts to newsfeeds, similar to friend posts. If they abandoned their unsustainable Pay to Play model and instead adopted my page monthly fee model, the revenue improvement to Facebook is massive and the benefits to page owners, marketers and end users is even bigger! Facebook Revenue Plan By the numbers:

  • I am factoring a little more than half of pages would participate and pay the monthly fee, remaining an active page on Facebook.
  • Small business pages would pay a small $30/mo fee, other smaller pages a $20/mo fee, non-profit and charities only $10/mo and larger big brand pages an average of $200 per month.
  • Ad revenue would still be a factor for Facebook and actually become even more valuable since you know you would be able to reach new likes that you add to your page with this new model. I pegged the ad revenue much lower to take into account the changes to the model though.
  • New 2014 annual revenue jumps from $2.8 billion to $12.1 billion under my plan – a $9.3 billion improvement over 2013!

Benefits of the Monthly Page Fee Model:

Newsfeeds would be competitively driven Facebook users would control what content they want with the power of their like/unlike

Focus would shift to creating and sharing great content and that would drive the newsfeed

The playing field for SMB’s would be leveled against Big Brands wouldn’t have a substantial advantage because of their huge budgets Efficiency/Result value would shift to time spent creating content rather than managing ad systems

So many more benefits, but you get the idea

The BIG Winners:

Users – They see content from pages they liked and wanted content from to begin with. Users would power the Facebook page success model, rather than big brands and/or budgets.

Marketers – Can access the likes they already invested heavily to obtain. The nominal monthly fee makes it a very viable marketing platform again.

Facebook – Duh. HUGE revenue win for Facebook and a lot of good will earned for listening to its users and developing an alternative that benefits everyone. (there’s a first for everything) Everyone wins! Tell me what your thoughts are on this alternative monthly fee model for Facebook Pages? What do you like, dislike or wish Facebook would do?

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a P.S. for those that enjoy those.

Here Are Just A Few Problems with the current Pay To Play Model:

Not sustainable – In another post I did some time back I discussed “By restricting the previous value of pages to marketers of all sizes, Facebook is setting the stage for a collapse of the Facebook page model and pushing both users and marketers to other platforms…”  When you require people to reach the audience they have already spent a ton of time and effort to establish, and many paid Facebook for ads to do this, then you change the game and require them now to also pay to reach them, nothing but diminishing returns will occur. If Paying for page reach via ads is the only method available, the expertise and time requirements to make that successful in a diminishing return environment pushes many right out of the market.

Users are the losers – They are not seeing the content from pages they liked and want content from.

Money, NOT content drives pages success

Not a level playing field – Most small and medium businesses can’t compete with big brands for eyeballs on the platform effectively.

Diminishing Returns –  The current model will continue to decline in results, rather than improve return and value to business stakeholders. It’s pretty simple to determine the long-term outcome of something with diminishing returns.

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Filed under Brand, Content, EdgeRank, Facebook, Marketing, Pay to Play, Retweet, Social Media, Social Media Marketing

The Same Power That Got Twitter To Revert Block Policy Can Make Facebook Change

By now you have heard of the Thursday night Twitter fiasco related to changing their blocking policy. The announcement caused immediate and social-wide outrage and contempt for the now publicly traded company.

Social PowerI even tweeted “I CANNOT believe @Twitter changing their block policy. Is every CEO of every social network losing their minds? We will NOT stand for this!”, referencing the continual Facebook decisions that are negatively effecting millions of business pages as well.

Didn’t hear about the situation? Here’s story from via Yahoo News.

Things declined rapidly, quickly causing Twitter to take action and revert back to the old Blocking function. An update here

This is an incredible event that shows how clearly the power of the social network user has to influence the networks and “push back” on the things that negatively effect users, brands and marketers.

The important point here is that this same power and influence can also be used with our buddy Zuck of Facebook. The “pay to play” advertising and post boost requirements for pages to see any reach and effectiveness on the platform is counterproductive to social networking, social media marketing and all other facets of the industry in general. (click to sign the petition at the bottom)

Should there be costs associated with social media marketing? For sure! But they need to be implemented the right way, that doesn’t negatively effect users and brands alike. How? I previously wrote a post that outlines this plan, but in short; a nominal monthly fee for pages. Simple, clean and huge revenue opportunity for Facebook with a once loved and effective platform in tact.

So there is an opportunity, right now! Right now, to conduct a similar effort with Facebook that yields similar results as was accomplished on Twitter. On the heels of this victory, the people together should stand up and let Facebook know they will not stand for the changes they are making. Right now, we should impact the other major social network positively for users, brands and marketers alike.

When discussing this in the social graph last night, one of my friends said the “Zuck is really stubborn”. To which I replied, “Stubbornness is easily effected when you are public and groundswell becomes tidal wave.”

So I say grab your surf board and lets ride this tidal wave and instead of the Arab Spring, it can be call the Social Winter.

What say you?

**Update**

After a lot of suggestions and requests, I have started a petition. Since Facebook is not a public company, something like this making the news (as with Twitter) is not at all a good thing and they would have to address it. If we could get 50,000 Marketers and even Facebook users to sign this, the story would get picked up and force Facebook to respond and deal with it.

Here’s the petition and link.

Facebook Petition

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Filed under EdgeRank, Facebook, Social Media

When Facebook Research Asked Me About Pages And What I Wished I Could Say

Facebook Survey EmailYesterday I received an email from Facebook Research requesting that I complete a survey to provide my thoughts and views on Facebook Pages. At first I was excited to be able to tell them what they really needed to hear. Quickly my hopes were dashed as the questions were largely irrelevant to the actual issues facing Facebook users and especially marketers.

After some cursory questions about how often I am on Facebook and a range of options for how many pages I like the survey stated – “we’d like to ask you some questions about Facebook pages. ” Given the recent discussions about the substantial problems marketers are encountering with the controlled reach and paying for boosts and ads, I thought maybe they were starting to hear the noise and potentially interested in getting real input, so I made my selections and clicked next.

In this series they seem to trying to determine the emotion behind a page like. The questions are structured in a way that doesn’t allow the answer to actually get to the core of their reasoning however. Based on the way the question was structured, I was forced to select the most extreme options for options two and three.

FBSurvey1

In the next question series appears to be trying to figure out how to increase the number of likes on pages and how easy the respondent feels it is to find pages.

FBSurvey2

This question really requires context and comment fields to really provide proper feedback. Another indication that the survey was not really trying to understand pages and users input. How could you answer whether Facebook pages post high quality updates?? The question is so general. Some do, some don’t.

FBSurvey3

To me, this next question was full of duh moments and then hyper news and local focused. A clear trend that we are going to continue to see in our newsfeeds. News and local…

FBSurvey4

The second to the last question finally got down to some important matters. Clearly they are trying to determine their algorithm acceptance with respect to the levels of different kinds of content in the streams of users.  My answers specifically attempt to get the message across that there is a substantial dissatisfaction with content coming from Pages and Brands I like.

FBSurvey5

I missed the screen shot of the last question and was unable to go back to it. The final question was:

How satisfied are you with Facebook pages:

My answer was – Very dissatisfied

What I wished I could say to Facebook:

Facebook Flies on the wallIt is my opinion that Facebook is making a very grave error with their business and revenue models. They are alienating their page owners by dramatically restricting their ability to reach their fans any longer without constantly paying for boosts and ads. I do not fault Facebook for their desire and frankly need to become a business and scales revenue, however I do completely disagree with their method of doing so. The average SMB (small or medium business) is not going to keep paying for something with diminishing returns, nor should they.

By restricting the previous value of pages to marketers of all sizes, Facebook is setting the stage for a collapse of the Facebook page model and pushing both users and marketers to other platforms, not to mention opening the door to competitive platforms to fill the hole Facebook itself has created. Facebook needs to quickly realize that what they are doing will eventually lead to even larger brands and social media agencies and marketers to abandon the page model and THAT will result in a mass exodus of everyone else.

I previously wrote about a better revenue and results model that Facebook should implement that addresses all parties concerns. Read:  Solution To Facebook’s EdgeRank, Revenue And Stock Price Issues for my insights on this issue way before these changes started to take hold.

What are your thoughts on how Facebook is managing revenue and page reach?

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Filed under Agency, Content, EdgeRank, Facebook, Fanpage, Marketing, Results, Social Media, Social Media Management, Social Media Marketing

Solution To Facebook’s EdgeRank, Revenue And Stock Price Issues

Monday night I was climbing into bed fairly early and thinking about all of the posts and articles about Facebook and their need to drive revenue now that they are a publicly traded company. My thought process also veared to the recent firestorm and frustration surrounding Facebook’s ever-changing EdgeRank algorithm that is increasingly limiting personal and page content reach. As I continued to ponder these two connected issues I began to formulate an idea that I believe to be an effective solution to both.

An article I shared Monday from Computerworld outlines some of the changes social media is experiencing with the “pay” requirement that is creeping into the space and the frustrations that could damage the industry. Their article “Here comes the shameless social money grab” outlines why charging for social networking sites is wrong. Though not comprehensive, it does detail the huge potential backlash starting in the industry. This article was the catalyst that got me thinking on a solution.

Mark Zuckerberg, this is for you buddy. If only you would listen…

My three point Facebook plan involves core changes to EdgeRank implementation, how pages are monetized, as well as new search capabilities within Facebook. These changes are designed to improve user experience, reduce frustration, expand page capabilities and reach, as well as provide Facebook with substantial and sustainable revenue streams. Let’s jump in and review my suggested plan.

Part 1: Facebook Pages – According to Inside Facebok, there are approximately 42 million active pages on Facebook at this point. Given this valuable business use of Facebook’s network, I propose making pages a paid medium for brands at three levels. $3/mo for small, $10/mo for medium and $20/mo for large pages, depending on number of likes.

Pages represent the biggest opportunity for Facebook to enhance value to both business and consumer users of their platform and derive revenue from doing so. My proposed nominal fees for fanpages should also coincide with the removal of EdgeRank placement for these pages in users newsfeeds that have liked the page. Pages that do not subscribe to the paid platform keep EdgeRank in place, resulting in extremely limited reach to their audience.

There are numerous benefits to this aspect of my plan, but I will highlight just a few:

1) Reduction of useless and inactive pages on Facebook’s network

2) Enhanced REAL value to page owners

3) Likers get the content they have opted into without restrictions

4) Pages have more focus to attract real likes rather than fake numbers

5) Clear path to $1 Billion in annual revenue for Facebook, achieved very rapidly

6) Existing Facebook advertising revenue options still applicable, but more valuable to page owners

Part 1: EdgeRank – The EdgeRank algorithm that currently controls what content users see in their newsfeeds is a substantial barrier for Facebook’s average users experience within the platform. Part two of my plan would be to immediately remove the algorithm for personal profiles. Should a user wish to adjust their newsfeed content using existing lists they have created or purchase additional exposure, per Facebook’s recent test offering, these will remain as viable options.

Again, there are numerous benefits to removing EdgeRank for personal accounts, here are just a few:

1) User experience increases dramatically and immediately

2) Significantly more engagement and time on site will occur right away and result in more ad placement opportunities for Facebook, while not harming the personal user the way EdgeRank currently does.

Part 3: Search Enhancements – The next logical step in my plan is to modify Facebook search to mimic a Google-like web search platform for content within Facebook pages. The idea would be to allow users to search for posts that exist on all pages that is relevant to what they are looking for.

A few significant benefits:

1) Users find relevant content and new pages to like INSIDE Facebook easily

2) More users stay inside Facebook for new content discovery

3) Pages are forced to focus more on providing relevant content for their target audience

4) Facebook gets massive new Google Adwords-like revenue stream

5) Pages have additional path to target and grow likes

6) Facebook helps pages to grow from small to medium or medium to large, thus increasing revenue from Part 1 of my plan

I am not saying that I have an end all, be all solution here, but I do believe I have formulated a plan that delivers real increased value to page owners and users alike, while giving Facebook a real path to substantial revenues and ultimately a reflected stock price. As with regular and proper social media marketing, strategies based on delivering value always get the best results. My three part plan would result in value to all levels of users, pages Facebook executives and shareholders.

This is a slam dunk!

Robert M. Caruso
@fondalo
http://fondalo.com
Founder/CEO – Bundle Post

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Filed under EdgeRank, Facebook, Fanpage, Marketing, Social Media, Social Media Marketing, Strategy, Uncategorized