What do you do now that your Facebook organic reach is about to hit zero?
OK, maybe not totally zero, but virtually zero. Facebook organic reach is on its way out. There has been speculation for some time, but it is now all but plastered on our Facebook Page: organic reach is out. And to replace it, the 96% of brands that are not yet advertisers are going to have to reach into their wallets.
Why Facebook Organic Reach is Disappearing
As a company, Facebook boasts a price tag of over $150 billion. At the end of 2013, Facebook’s assets sat at roughly $18 billion. That’s quite a discrepancy. This is not unusual, however. Is Facebook’s stock price inflated? Maybe slightly. But that does not take away from the huge potential it has with regards to revenues.
As I noted above, only 4% of brands are currently advertising on the network. With roughly 25 million brands on the network, that leaves an untapped market of 21 million potential customers. Facebook needs to make to start making real money somehow, and this is their best bet. (And a pretty safe one, at that.)
Why Brands Won’t Leave
You might be saying to yourself, “Well, if brands need to pay-to-play, they’ll just leave the network.” Unfortunately for the brand, Facebook has reached that critical mass every company hopes to hit. Sometimes bad for Average Joe and Joanne (i.e. any bank that’s ‘Too Big to Fail’) great for the brand at critical mass (i.e. I return to the ‘Too Big to Fail’ example).
With its current active user base, the fact that WhatsApp has completely devoured the SMS market overseas and the numbers that show the value in using networks like Facebook for business development, brands will not have much of a choice but to buy into the advertising model on Facebook. Luckily, there is so much potential there, so it’s not all bad.
The Good News
Brands need not fear when it comes to advertising on Facebook. By phasing out Facebook organic reach, the network is going to have to entice brands to advertise on the platform. That means a very attractive pricing model.
Contrary to established digital advertising platforms – namely Google’s Search and Display Networks – Facebook is trying to attract new advertisers with a sensationally pricing model. Take the term, ‘social media’ for instance. Using the AdWords Keyword Planner, estimates show that to run an effective campaign that reaches as many of the 60K+ users searching for the term (in the United States) you would need to set a bid at close to $6.00. That’s six dollars per click.
Based on suggested bids per click on Facebook, six dollars can get you over 10 clicks – and that’s on the more expensive end. Here, we’re looking at a ten fold price discrepancy. It won’t be like this for long, but right now, marketers are looking at huge potential when they invest in Facebook advertising.
More good news comes in the ability to narrow your targeting down to the exact audience you’re looking for. Don’t get me wrong: Google has some extremely intelligent software when it comes to behavioural targeting. That said, social networks are filled with people that are explicitly telling you what they are interested in. Here, you know who you’re reaching and the more targeted your ads the more likely it is that the clicks result in some sort of action.
Historically, these kinds of moves tend to happen much faster in the social world than they do in conventional business. If you look at your clients and tell them that you will be introducing a new pricing model, you’ll likely grandfather it in over time. Take the recent announcement by the government, for example, that they plan on raising minimum wage…over the next three years. In the socialsphere, things tend to happen much faster.
We’ve already seen sharp declines in our pages’ organic reach. It won’t be long before our content reaches a mere handful of fans before its halflife is hit. My recommendation is to make the move to the ad platform sooner rather than later. Familiarize yourself with the ins and outs and start setting ad spends for your brands. Now, no longer will every individual be a publisher, but an advertiser as well.
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