Facebook's Dirty Little Secret: It's Broken for Business

If Facebook wants to avoid becoming the new MySpace, it has to deliver more of the status updates that both individuals and businesses believe are being delivered.

If your company has a Facebook business page, formerly known as a "fan" page, I've got some bad news for you. Nobody is seeing your updates. Well, almost nobody, according to a new report.

For the most popular businesses on Facebook, those with more than a million "fans," fewer than 3 percent of those fans are seeing the companies' daily updates. That's low enough to be a rounding error.

The picture improves for smaller companies. For those with between one thousand and ten thousand "fans," the percentage is just under 10 percent.

The report found a general reverse correlation between number of fans and percentage of fans seeing updates every day.

This is a disaster. Note that these numbers aren't "taking action," "clicking," "reading" or "noticing" numbers. These are the percentages of people who "see" your posts. Presumably, this "seeing" process involves a whole lot of mindless skimming.

This news no doubt comes as a shock to businesses that bought into the Facebook-is-the-new-Internet idea, and transformed their SEO people into EdgeRank experts. (EdgeRank is Facebook's secret algorithm for deciding when and how to sever the connection between Facebook users, and also between businesses on Facebook and their "fans.")

I told you in February about how Facebook's EdgeRank algorithm secretly ends user relationships.

In a nutshell, EdgeRank looks at how often users click or comment on, or generally interact with, another user's or a business's Facebook posts. They use that information using some deep, dark fuzzy-logic voodoo to determine an overall EdgeRank score, which determines whether a post shows up in a user's "Top News" or "Most Recent" news feeds (or both, or neither).

As I wrote in my previous column, EdgeRank essentially cuts connections that users and businesses believe have been established. I think it's likely that it's slowly dawning on users that Facebook isn't giving them all the updates from their friends, and isn't delivering all their own updates to friends. This knowledge makes Facebook unpredictable and unsatisfying, and could be driving users away.

Facebook, which has more than 675 million users, is still growing. But hidden in that growth is a trend toward shrinkage. Several of the countries that were first to embrace Facebook are seeing huge declines in membership.

During the month of May alone, the number of Facebook users in the United States fell by 6 million, in Canada by 1.5 million, and in the UK, Norway and Russia more than 100,000 each.

The growth is coming mainly from late-adopters to Facebook who are catching up. But the declines are coming from the early indicator countries. The trend is not good for Facebook.

But the growing stranglehold of EdgeRank on businesses may suggest even bigger problems for Facebook. As companies come to terms with the fact that big Facebook fan bases are useless if those users are unreachable, they'll start to follow users out the exit door.

Facebook's current "solution," which is to advertise to existing user bases feels exploitative.

Here's the Faustian bargain Facebook appears to offer businesses: Come to Facebook where all the users are, and build massive "fan" bases. Just one catch: We'll deliver your messages to a tiny one-digit minority of those users for free. If you want to reach all your "fans," well, that's not so free. Our advertising system lets you reach 100% of your fans by selecting the option to target existing users.

In other words, Facebook lets you build massive lists of "fans" or "followers," but won't let you communicate with them unless you pay.

Of course, you can work hard to raise your EdgeRank score. You do this by making content more interactive. Encourage visitors to click on things, “Like” content, add comments and participate in polls.

This kind of marketing, however, makes sense or doesn’t make sense depending on the kind of business. And with a growing number of companies trying to manipulate users into jumping through hoops, users are likely to experience EdgeRank fatigue, further degrading the Facebook experience and giving them another motivation to join the 6 million Americans who left Facebook in May.

I believe Facebook is in crisis. The company is losing visitors, and I believe will soon either lose businesses, or get them to divert marketing resources away from Facebook and just let their Facebook pages languish.

Facebook is still one of the hottest companies on the Internet, and enjoys huge advantages from its popularity, as well as its successful “Like” program. But if the company doesn’t want to become the new MySpace, it has got to deliver more of the status updates to the users that both individuals and businesses believe are being delivered.




Tags: Facebook


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