A few months ago, Jason Feinberg, an executive at Epitaph Records, home of Weezer, Rancid and Social Distortion, noticed something alarming about his artists' Facebook presence-their reach with fans suddenly dropped.
The declines weren't dramatic--only a few percentage points--but they occurred across the board. Feinberg investigated and discovered that Facebook had quietly made a small but significant change to an algorithm it uses to determine which posts it serves to its 1 billion users. In order to guarantee people see a post, Facebook suggested marketers use its Promoted Posts product, which charges a fee to bump up the number of people who see the content.
Epitaph wasn't the only one affected by Facebook's changes. Roc Nation, which manages Rihanna, Shakira, Timbaland, Kylie Minogue and others, ran into the same issues.
"I'm building my fan base on your platform, and now you're telling me I have to pay up [to have artists' content seen by their own fans]?" Roc Nation VP of digital marketing Dorothy Hui said at a social media event prior to the Grammy Awards. "You can spend a lot of time building up these audiences, but when things change constantly on the platform, it's very challenging."
The incident highlights the power of Facebook in influencing, almost overnight, the attention of its users--attention that is highly sought after by promoters and marketers. It also brought into sharp relief the notion that Facebook's interests may not always overlap harmoniously with those of brands.
Hundreds of thousands of musicians, from garage bands to established stars, rely heavily on Facebook to connect with their fans, to inform them of new releases and upcoming gigs. But when their reach with fans took an unexplained hit, many jumped to the conclusion that the social network, under pressure as a publicly traded company to increase revenue, had dialed down the free sharing in order to get users to pay for ads and promotions.
Facebook later insisted that the changes were meant to downplay posts from pages that weren't engaging or had higher-than-average complaints from other users. But it left many brands wary.
"In the past we put Facebook first, Twitter second," Dallas Mavericks owner and chairman of HDNet Mark Cuban wrote in an article that appeared on the Huffington Post in November. After the changes, "Facebook has been moved to the bottom of a longer list."
Is Facebook focused only on getting rid of spammy posts and surfacing relevant, high-quality content in its feeds? Or is it nudging companies and brands to pay for access to its massive audience?
Michael Doernberg, CEO of ReverbNation, a direct-to-fan digital music marketing firm, believes the answer is both.
"You're seeing Facebook tweak this giant machine to make the experience better for users, but also make products in order to build revenue," Doernberg says. "They're essentially saying that brands will pay, while users will still get a better experience."
Twitter is also pushing promoted tweets as a way to make money. But the difference is that Twitter doesn't have an algorithm that determines what users see--every tweet is shown in chronological order. The Facebook feed algorithm is actively handicapping some content over others, but exactly how it does so is a closely guarded secret. That's because Facebook wants to minimize the amount of manipulation that can happen if word got out about what exact factors are favored.
Still, the secrecy frustrates artists, especially when Facebook is constantly changing its algorithm, sometimes on a weekly basis.
"At some point, they have to help their users create better content," says Jack Conte, a singer/songwriter with indie band Pomplamoose. "YouTube is incredible at this. With Facebook, it seems more like a crapshoot. Some posts get traction. Some don't. And we don't always know why. I've heard a lot of artists complain about this."
Musicians weren't the only ones hit last year by Facebook's changes. EdgeRankChecker, a Chicago-based marketing research firm that provides analytics for 200,000 Facebook pages, sampled 3,000 client pages in October and found that, on average, the number of fans who saw their posts dropped 25%. Ogilvy & Mather, a global advertising and marketing firm, estimated that individual brands had anywhere from a 5% to as much as a 40% decline in reach on the world's largest social network.
The criticism was so widespread that Facebook in November veered from its default stance of not going into detail about its news feed algorithm and publicly explained the tweaks that it had put into effect in late September.
In a session with reporters at the company's Menlo Park, Calif., offices, news feed product manager Will Cathcart said the company docked pages that had received higher-than-average negative feedback from users in an effort to bubble up more engaging posts. It also tipped the scale in favor of pages and content that users engaged with, by clicking the "like" button, hitting a play button, sharing it with friends or commenting. As a result, some pages had declines in exposure, but others had increases, Cathcart said. But the average reach, the company insisted, stayed the same. It also gave a piece of advice: Try using some of Facebook's paid products to guarantee reach.
"In other words, if you want to reach 100,000 people, you can either do the hard work of building that community organically," EdgeRankChecker founder Chad Wittman says, "or you can take a shortcut and pay to reach them. That's the game."
Does the game work? After some initial hesitation, Epitaph's Feinberg became a convert.
"We started to think of Facebook as advertising," he says. "It's a harsh way to think about it, but when we did, we actually saw that Facebook has a very good return on investment. It's one of the most effective forms of advertising you can get."
One product in particular, Promoted Posts, works well with content marketers, Feinberg says. Costing as little as $10 a campaign, Feinberg can pay to have an artist's post show up more prominently in fans' news feeds--thereby increasing the post's reach. It's like paying to inject a little steroid into a post's viral reach.
"As long as you optimize your content, the promoted posts can be by far the highest return of all the online investments we can make," Feinberg says. "It's also very affordable, which is a huge factor for us because we have limited budgets."
Another bonus: Feinberg can select exactly the type of person who sees each post. For Bad Religion's "True North" release, for example, he could choose to target 15- to 34-year-old single males who live in Los Angeles, are into skateboarding and like Pretty Lights. A post about Calexico's Algiers, on the other hand, could be sent to women in Seattle who watch "South Park" and like to travel.
"For contextual, targeted ads, the CPMs [cost per thousand impressions] are half the price of other online ad methods that are less effective," Feinberg says. "We can get CPMs of $2-$2.50, which is extremely low for highly targeted advertising."
It would be a mistake, however, to treat content marketing the same way as advertising. That's because straight-up ads that are served as posts in a social network news feed are more often than not regarded as intrusive, or "spammy." In Facebook's new algorithm, being marked as spam carries a heavy penalty that could result in not just the particular post but also future content from the brand page being seen by even fewer people.
"Before you could get by with [repurposing advertising for social marketing purposes]," Wittman says. "That's no longer an option. The weak marketers are being separated from the strong."
That's because Facebook's broader goal is to have the most engaging content for its users, whether that content is a status update from a best friend or an entertaining video suggested by a brand they like. For Facebook, the proxy for quality content is what prompts people to comment, like or share.
"Facebook has gotten away from massive numbers to focus on more intimate interactions," says Geoffrey Colon, VP of Social@Ogilvy, Ogilvy & Mather's social media practice. "The new barometer is now engagement. Facebook has evolved, and brands need to evolve with it. There is no free earned media."
Is Facebook still relevant to marketers? Most people say yes.
"For marketers, it's the quest to capitalize on eyeballs, and the reality is that Facebook has a zillion eyeballs," says P.J. McNealy, president of Digital World Research and author of "Early Days: The Social Gaming Market and Facebook's Achilles' Heel."
As more people pile into Facebook, the social network's demographic will come to reflect that of the overall population.
"In the U.S., Facebook has become a true cross-section of America, rather than a trendy, niche thing," Wittman says. "It's becoming the Walmart of social networks."
Facebook also sits on a massive database of people's social connections, their affinities, locations and other valuable profile information. "They are the largest repository of social data in the world," ReverbNation's Doernberg says. "That's why people continue to be excited about Facebook. It's more than just the site. It's woven into the part of the fabric of how people interact."
While many marketers think Facebook has become somewhat entrenched, they also believe that it is still finding its way through the thickets of online monetization.
"The tools are there. The data is there. And the capabilities are largely there," McNealy says. "But the execution isn't quite there yet."
Facebook says it's working on that.
Brian Boland, Facebook's director of product marketing for ads and pages, says the company late last year embarked on a project to see if spending on Facebook can be linked back to results that marketers care about.
"Last year, we asked, 'What is the right metric for measuring effectiveness?'" Boland recalls. "For many brands, that's totally sales. We then worked with two independent research firms, Nielsen and Datalogix, to help us provide those metrics for our brand partners so they can connect their spending on Facebook back to sales at the register, so there will be no question as to whether it works."
As for conspiracy theories that Facebook is deliberately reducing brand reach to sell more ads, Boland maintains that the social network has to protect the asset that made it so valuable in the first place: the user experience.
"We design our news feed to be the most compelling possible," Boland says. "It's always hard when you have people who assume the worst. It's hard to combat that. People love the negative conspiracy theory. But we are focused on our users first, and then creating value for advertisers. Those are the two things that drive us internally."