There’s a scene in the 2010 film The Social Network where Napster founder Sean Parker and Facebook founder Mark Zuckerberg discuss monetizing TheFacebook.com.
“TheFacebook is cool,” Parker says. “That’s what it’s got going for it.”
“Yeah,” Zuckerberg agrees.
“You don’t want to ruin it with ads because ads aren’t cool,” Parker continues.
Lately, Facebook hasn’t been very cool. Scroll through your newsfeed when you have a spare minute: Brands are taking over. What happened with connecting and share things with other people? What happened to all the baby pictures?
Facebook has apparently been asking the same question, and soon you’ll once again be able to discover what the entire Class of ’76 is up to without having to make awkward small talk to do it. On March 19, Silicon Valley Gawker blog Valleywag quoted an anonymous source prophesying on the future of Facebook:
“A source professionally familiar with Facebook's marketing strategy, who requested to remain anonymous, tells Valleywag that the social network is ‘in the process of’ slashing ‘organic page reach’ down to 1 or 2 percent. This would affect ‘all brands’ … Companies on Facebook will have to pay or be pointless.”
Facebook is a business, and like all businesses it wants to make money — why give up for free what you can charge for? But to stay relevant, Facebook needs to please its users who make the company run and contribute all that social equity. If these users don’t want brand promotion in their newsfeeds, Facebook has to listen. Users didn’t come to Facebook for the brands, the brands came for the users.
If this is true, what does 1-2% “organic page reach” look like?
The article references Nike, which has approximately 16 million Facebook likes. One percent organic page reach means a given post will find only about 160,000 fans — those who like a page. But what about smaller businesses such as credit unions?
According to the Financial Brand, the average Facebook likes for the top 10 national credit unions totals approximately 151,842. Factor out Navy, a clear outlier, and the average falls to 48,100. So, 1% organic page reach lies somewhere between 1,518 and 480 people. And that’s for the credit unions with the largest followings. Smaller credit unions will have even more difficulty reaching people.
Facebook is assuming many brands will pay to stay — or at least those that can afford to will. But already brands like Eat24 have left the site angry. You can bet others will join them. After all, there are ways outside of Facebook to market to the younger generation. Even free, Facebook might not have been all that effective a resource.
So what’s a credit union to do?
When Facebook was free for commercial accounts, it was easy to assign one or two employees to handle it. The institution could cultivate a distinct social media presence through news postings, updates, and even, hopefully, a funny meme or two. Now, credit unions will be forced to ball on a budget — and the unknowns are many. How much will they have to pay? How frequently will they have to pay it? How will this added cost impact their marketing budgets? Will Facebook even be affordable?
We’ll find out together in the next few weeks. In the meantime, Facebook still has a long way to go until it becomes cool to its desired demographic again. This is likely the first step of many for Facebook, a company worth billions of dollars. The fact that it comes at the expense of smaller brands like credit unions is disappointing.