Facebook (FB) has a big problem with marketers who are unhappy about how their so-called organic reach is tumbling, and that could be why FB announced last week plans to start selling even more of its user data to advertisers.
As they say in the tech industry, if the product is free (like Facebook), then the user is the product. That’s certainly the case with Facebook. The social network collects a treasure trove of data and information about its users, which is of great value to marketers.
But marketers also depend on something called organic reach. Organic reach, per Facebook, is the total number of unique visitors who are shown a marketer’s post through unpaid distribution. And because that reach is unpaid, it’s considered to be more valuable than paid reach, which is the total number of unique people who are shown a marketer’s FB post as a result of ads.
At the end of the day, organic reach is sort of like true love. Paid reach is kind of like paying someone to go to the prom with you.
At any rate, marketers were used to having their Facebook pages generate organic reach figures in the mid-teens. That is, anywhere from, say, 14% to 16% of the fans of the marketer’s FB page would see a post. But now those numbers have dropped down into the low single digits.
That has marketers wondering just how effective Facebook is as a marketing platform — and they might be pressuring FB to mine even more of its users’ data.
After all, why would Facebook be planning to sell personal information like the websites you visit and the mobile apps you download — third-party data the social network previously said was not for sale?
The way Facebook makes it sound, the two developments are unrelated. The declining numbers in organic reach are simply a consequence of how incredibly popular the fast-growing social network is. And selling third-party data is just part of the FB mission to deliver ever-more targeted ads.
As Facebook explains, plunging rates of organic reach are largely a reflection of the fact that so much new FB content is created every day. This ever-rising flood in the FB news feed makes it that much harder for marketers’ messages to stand out — and get liked.
As Facebook explains in a post:
“On average, there are 1,500 stories that could appear in a person’s News Feed each time they log onto Facebook. For people with lots of friends and Page likes, as many as 15,000 potential stories could appear any time they log on. As a result, competition in News Feed — the place on Facebook where people view content from their family and friends, as well as businesses — is increasing, and it’s becoming harder for any story to gain exposure in News Feed.”
Facebook says there’s little to worry about when it comes to falling organic reach — and that by selling this additional data, users will get ads that are more relevant to their interests.
But the average FB user right to worry that the site is bowing to marketer pressure over falling organic reach.
Selling information that Facebook previously said was off-limits probably won’t hurt FB stock — but it sure could hurt Facebook’s image.
As of this writing, Robert Martin did not hold a position in any of the aforementioned securities.