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Facebook's executives are not terribly worried about upsetting people these days. Flush with cash and a high stock price, Facebook recently shocked investors by saying it planned to spend billions of dollars on projects that might never generate any profits.
And on Friday, the company told marketers if they wanted to reach customers through and on Facebook, they needed to buy an ad. The social network announced that starting January, it would change the rankings of some posts made by marketers, such as pitches to install a new mobile app or tune into a TV show, to reduce the number that appear in the news feeds of its 1.35 billion global users. That is likely to mean that fewer fans of a retailer will see its notice about a big sale and fewer fans of a video game company will see a post promoting its latest app. Even posts from big advertisers that spend millions of dollars on Facebook ads will vanish from the news feeds of their fans unless they turn them into ads.
"It is a clear message to brands: If you want to sound like an advertiser, buy an ad," said Rebecca Lieb, a digital advertising and media analyst at the Altimeter Group.
Facebook says it is all for the good of the users and that creative, engaging posts will still attract attention and bubble up into the feed. Marketers have little choice but to play along. Facebook has accumulated one of the biggest vaults of consumer data in the world. It dominates social media advertising the way Google dominates search ads, and analysts say that brands will keep flocking to the service.
"Facebook is saying, 'We're in charge. You're renting from us'," said Debra Aho Williamson, a social media analyst at the research firm eMarketer. "But businesses continue to spend more money on advertising on Facebook, and users continue to spend more time and share more information on it."
The change to the news feed is the latest blow to businesses that try to reach customers through their Facebook pages. So many posts, videos and images are being published on Facebook that the average user has about 1,500 new items they could see when they log on. Some people have as many as 15,000, the company says.
Over the last two years, the social network has repeatedly tweaked the system to show the top 300 or so items that it predicts each person will want to read. Facebook argues that people prefer to see videos, photos, news articles and updates from their friends and family more than from brands. So over time, posts by businesses have shown up less frequently. Now, when a brand publishes something to Facebook, two to eight per cent of its fans see it, according to outside estimates.
At the same time, Facebook has aggressively promoted its advertising products, such as ads that pop up on its users' mobile phones urging them to install a new app. In the third quarter, Facebook reported a 64 per cent increase in advertising revenue to $2.96 billion and said ad prices rose 274 per cent year over year, in part reflecting strong demand from advertisers.
Brian Boland, a Facebook Vice-President who oversees marketing of ad products, said the latest changes were not motivated by a desire to increase ad revenue but to make Facebook users happier, which helps everyone, including advertisers.
He said Facebook surveyed several hundred thousand users, who complained that they were seeing too many useless promotional posts in their news feeds. While some were paid ads, about two-thirds were posts from brand pages, so Facebook decided to downgrade their chances of showing up in the news feed.
"Most of the stuff we listed, like sweepstakes, probably doesn't fall in the category of great content," he said. "We're responding to what people want to see."
Mr. Boland said that Facebook's ads, which can target users by factors like interests and geographic location, are a better way to reach customers.
"An ad maker doesn't want to serve content to people who don't want to see those posts," he said.
And in contrast to page posts, advertising offers better tracking of results, which allows marketers to hold Facebook accountable, Mr. Boland said. "If we are not growing your business, stop spending with us."
Jan Rezab, chief executive of Socialbakers, a social media analytics firm, said that Facebook was doing the right thing by encouraging brands to focus on quality. "Brands with high-quality content, like Red Bull, or ones with high engagement, like Harley-Davidson, will still reach their fans," he said.
But Jordan Bitterman, chief strategy officer for North America at Mindshare, a digital advertising agency that is part of WPP, said Facebook continually made it more difficult for marketers to use its platform effectively, especially for content beyond traditional ads.
"Facebook is basically saying that their algorithm will be the arbiter of what's promotion and what's not promotion," Mr. Bitterman said.
Still, while some advertisers may now focus more on other social platforms that do not rank their content, such as Twitter, no one can afford to ignore Facebook. "They are sitting on such a wealth of data to be able to target effectively," he said. "They have dominance in the kind of products they are offering the market."
©2014 The New York Times News Service
