Last week, Mark Zuckerberg published an explanation of his vision for 2018. You can read the text here. In a nutshell, the CEO has seen the light that his audience of users – more than 1/3 of the Earth’s population – is spending too much time on Facebook. And, Zuckerberg has realized that posts from businesses, brands and media are “crowding out the personal moments that lead us to connect more with each other”. Both are true, but what the 33-year-old billionaire is actually doing is introducing the concept of scarcity into Facebook advertising.
It’s 2018, and Facebook is the new TV
Imagine it’s 1998, and your business needs to reach millions of consumers to sell your new product offering. At this time, the most powerful way of doing that is to advertise on TV. You have a couple of choices: run an ad during an episode of Seinfeld or run an ad during the SuperBowl. Both were amazingly effective, and both were millions of dollars.
Why? Because there was limited air time for commercials during these two shows. There was a scarcity of ad space, so the TV network could charge for an ad based on the demand for limited ad space. The economic laws of supply and demand work very nicely when there is already strong demand, and you control the cost of the supply.
Facebook Controls the Cost of the Supply
I ask nearly every week in Pitch Practice, when we’re talking about who the customer is, “how many customers does Facebook have?” The answers vary, because the number is constantly changing, but “billions”, “1.5 billion”, “2 billion” are typical, but wrong. If you’re on Facebook, you’re a user, not a customer. Their customers are advertisers, big and small. The have thousands, maybe millions, of advertising customers.
Starting now or very soon, Zuckerberg has declared that, “in News Feed, where you can expect to see more from your friends, family and groups, you’ll see less public content like posts from businesses, brands, and media.” That’s great for Facebook users, but the simple translation for all the aforementioned Facebook advertisers is this: it’s going to cost you more to get in front of your target audience.
Nothing Wrong With That
I have no problem with either one of these changes. It’s simple economics, and Facebook has built a user magnet that advertisers have found incredibly valuable for reaching their highly targeted audiences. In other words, it’s going to cost more, but it will be worth it, because there will be fewer ads, held to higher standards, and costing more to the advertisers.
There is a downside; however, and that is that Facebook advertising will soon be out of reach for the little guy, the small business. Just like small businesses couldn’t put an ad during Seinfeld or the SuperBowl (ok, unless they were a zealously funded and now dead dotcom), small businesses will be pushed out of advertising on Facebook.
But I do disagree with one thing Zuckerberg said in his post.
Don’t believe it for a minute
Zuckerberg said, “I expect the time people spend on Facebook and some measures of engagement will go down.” I disagree. The reason I spend less and less time on Facebook today is because of all the ads. If there are fewer ads, and my experience is improved, then I will probably end up spending more time on it.
Side note: if you really want to know exactly how much time you spend on Facebook, and on your phone in general, try the Moment mobile app. I’m sure there are others like it, but the free version of moment shocks you with the amount of time you spend opening and staring at that 4″ screen.
What Mark Z has done here is double down on scarcity by introducing perceived scarcity. Tell advertisers that people will be spending even fewer hours on Facebook, and you can charge them even more for ads, at least in the beginning while their data scientists figure out the optimal mix of ads to continue to increase revenue.
He brought truth to this perceived scarcity with this statement: “But I also expect the time you do spend on Facebook will be more valuable.” Yes, more valuable to Facebook, because they can charge more for fewer ads. Again, I have no issue with this approach. I hope everyone’s News Feed gets cleaned up and that we all see fewer, but better and more relevant and targeted, advertisements.
Content is Still King
In the meantime, if you have a business on Facebook, and you don’t pay for advertising, your game hasn’t really changed. You rely on great content for your followers to drive engagement. That hasn’t changed. If someone follows your brand, they will still see your content. You will have to pay (more) to get in front of new followers. Just like network TV advertising before the interwebz was a thing, and now it’s going to be just as expensive.