The Shifting Line Between Free and Paid Local Marketing Services

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It’s fundamental to the business model of many of the largest internet companies: provide access to free services that offer a compelling value, bring in lots of eyeballs, then monetize by selling access to those eyeballs in the form of advertising. Put in those simple terms, the model is no different from that of traditional media and television in particular.

One signal difference on the internet, of course, is the desire to present advertising content in the guise of useful information, as though every TV commercial were a public service announcement. So we see sponsored content in the margins of SERPs, webmail pages, IYP pages, and the like that is clearly demarked with a colored background or some other indicator, but is really meant to appear similar to page content. Sponsored posts in your Facebook or Twitter feeds today are an excellent case in point: we are meant to gloss over the notation that tells us this is sponsored content, and see the post as just one more potentially interesting item in the newsfeed.

Facebook, in particular, appears to be trying to resolve a bit of a contradiction in this approach to sponsored content. Whereas the site is driving ever more sponsored content into the newsfeed, it has also been welcoming to businesses who work to build engagement with consumers via free methods: creating a business page, gathering likes and followers, and posting content of interest to one’s audience. News has been emerging over the past several days suggesting that Facebook is about to severely limit the reach of posts from business pages to 1-2% of the page’s total audience. I hear from contacts in search marketing that this is already happening.

Put in context, Facebook has already been careful to limit the reach of so-called organic posts, and that reach has been declining steadily. According to one study, organic reach as of February was at around 6%, down from 12% just four months prior. This means that if your page has 1,000 likes, a given post as of February reached about 60 people. If the 1-2% number becomes standard, that reach goes down to 10-20 people. The numbers may still make sense for national brands whose like counts are much higher – Chipotle has over 2 million likes as of this writing and massage chain Massage Envy has about 124,000 — though brands will clearly have to step up their advertising spend on Facebook in order to reach a significant proportion of their audience.

For small businesses, the situation is quite different. An informal survey of some of the more popular local businesses in my area shows like counts ranging from only 20 for a local realtor to about 2,500 for a popular hotel. At these audience sizes, only sponsored posts will be worthwhile. This is not to say small businesses must plan for huge increases in their marketing budgets; the cost is only around $0.25 per 1,000 impressions, making it one of the best bargains in online marketing. But the shift means business owners who were drawn to Facebook for its ease of use and lack of payment gateways will need to understand and believe in the value of spending money to reach followers. More broadly, it’s a shift in the use case of the non-personal Facebook user, who up until now has been assumed to be a more or less equal contributor to a community of linked information sharers. Of course, there has always been a commercial motive behind the social networking activity of businesses large and small, and it’s hard to fault Facebook for wanting to capture revenue from these relationships. On the other hand, some of those businesses are also media outlets and public or private organizations whose sharing benefits the community at large. One wonders if Facebook will honor that distinction.

The manipulation of organic reach on Facebook is one of many examples of the shifting boundary between free and paid local marketing services. In “pure” local search, that boundary has tended to be relatively clear: look for a local business in your typical IYP and you’ll see sponsored listings at the top of the results page, set off with a different background color or some other indication, followed by organic results. But that boundary is likely more clear to those of us who know what to look for than it is to the general user, who may not make fine distinctions between items in a list and may see sponsored content as simply part of the organic result. So too with any paid service that seeks to help businesses become more prominent in organic results, from website SEO to local listings management. Though it may not be visible to consumers, smarter businesses pay to stand out.

Damian Rollison is Director of Market Insights at SOCi. SOCi is the leading CoMarketing Cloud for multi-location enterprises. They empower nearly 1,000 brands to automate and scale their marketing efforts across all locations and digital channels.