For Facebook (And Others), Small Businesses Aren’t the Focus

facebook-logo1Facebook’s decision to throttle organic reach has drawn ire among the small business community, and led some in the technology  industry to question the viability of the social network’s future. But the big question for Facebook is not whether the it is “dying” and more whether its focus on advertising is sustainable in the long run.

“Facebook has made itself nearly irrelevant to small business users,” Evan Spiegel, chief executive at Snapchat, said last year. “[Small businesses] were blindsided mid-year, when Facebook tightened its control over the flow of information to business and personal users, deciding what users would and would not see in their feeds.”

In many ways, Facebook’s recent decisions stem from a broader shift in the way social media businesses operate. As Street Fight’s deputy editor Steven Jacobs pointed out recently in the Wall Street Journal, small businesses now “rent” audiences on Yelp, Angie’s List and Facebook. Too many business owners have made organic reach on these platforms a consistent part of their marketing strategy, only to get their legs pulled out from underneath them when these large players change their strategy.

Consider Yahoo, which switched its review platform to Yelp in the spring of 2014, and neglected to tell existing businesses of the change. These businesses then saw years of curated content about them disappear overnight. On the one hand, it’s hard to argue with the changes these companies make, especially when they are offering the features at no charge. However, the decisions that Yahoo, Yelp and Facebook have been making make it very clear that the consumer, not business, is their focus.

Business owners that rely on these companies to market their brands need to realize they will never be the primary priority.

Facebook has gotten aggressive with boosting posts — most people I speak with express surprise at how often Facebook suggests that posts can be boosted for a “small charge.” It’s likely that charging as little as $5 will incent many small businesses to try a boost or two and see how it works.

However, just like most advertising done by small business owners, there will be few metrics to measure how effective the boosts are and what tangible results come from the effort. In addition, most marketing efforts are campaigns that occur over several months and target certain segments in a specific manner. Random boosts of posts or promotions are not likely to have any quantifiable effect.

Companies such as Facebook, Angie’s List and even Google and Yelp have large user bases, but not necessarily a focus on the users that you want to get to. Unlike a Google Ad, these promotions are paid for regardless of how many people see or click on them. And these companies have become so large that they need significant growth to maintain their lead, but in a market that is becoming saturated and more players jumping into the fray.

Facebook (and Yelp, Yahoo, Angie’s List) will not die anytime soon — but in order to survive, they have made a public and deliberate push to reduce organic reach and increase paid engagement. It’s clearly their best path to future growth, but it’s at the hyperlocal business’s expense.

Scott BarnettScott Barnett is a serial entrepreneur with 25+ years experience in Software Development, Product Management, Sales and Marketing. He is currently Founder of Bizyhood, a startup focused on Content Distribution and Engagement tools for local publishers and businesses.

  1. katzgrau
    February 23, 2015

    Nice article Scott. If boosting a post was a little more transparent in terms of metrics, I’d bet their strategy would pay off pretty quickly. If you boost a post, you only get a limited view of who is engaging with the post. And I’ve found out that very often strange and or spam accounts “like” my boosted posts.

    I did a little digging, and I found that an account which liked our posts also “liked” 7,000 other pages. That looks a bit spammy/automated.

    You can also pay for page likes, which also attracts fake-looking accounts. And then when you boost a post, it’s being displayed to those fake likes you just bought!

    It all seems extremely fishy, and if that pattern continues, Facebook’s fading popularity with SMBs will disappear completely.

    1. February 23, 2015

      Thanks Kenny. I totally agree – with a lot of these social media platforms, transparency is totally the issue. They rely on momentum and fear (of missing out) to motivate people to do things where they get little feedback if it’s effective or not.

      I just wrote a post about Yelp suing a company that tries to “fix” the problem of Yelp controlling the review process and not giving the business any say. Both are wrong of course.

      PS – I’d love to see StreetFight fix the CSS for Disqus so short comments like ours don’t make you scroll so much 😉

  2. Joey
    February 23, 2015

    Yelp offers performance based products to SMB’s as well as multiple conversion tools to turn “user views” into “customer leads”. The Boston Consulting Group performed a survey on 4,800 businesses that advertised with Yelp and found that their ROI was 300%. People don’t go to Facebook with the intention of buying a product or service. They go to Facebook to see who is getting married and what grandma is up to. Half of the businesses I “Like” on Facebook I have never even been to.

    Boston Consulting Group Study >

    1. February 23, 2015

      Joey, the measurement tools are critical, especially for a report like this. Business owners saw an $8000 increase in sales even without advertising – so how exactly did Yelp contribute to that $8000 increase? And for the people that did advertise, is there any information about the increase in new customers and what % came from Yelp? Given that most small business owners tell me they have no idea where their new customers are coming from (a problem itself), I’d really like to see how BCG is measuring the value of Yelp. I also love the fact that Yelp sponsored this report, and they are the only tool mentioned.

      1. Joey
        February 24, 2015

        Yelp’s ROI is so high because the users have a need. If my toilet is broken I am going to Yelp, raising my hand and saying I need a plumber. Nielsen performed a study on consumers and found that 78% of people are turning to review sites to find a local business. 85% of people make a purchase have revisiting a review site. Nielsen performed an individual study on Yelp and found that 82% of the people who visit the site have the intention to buy. 90% of people who visit Yelp make a purchase within a week. Why is Yelp such a home run for SMB’S? What they do is considered inbound advertising. Yelp has 139 million users that visit the site per month with the intention to buy. If I own a Pizza restaurant in Chicago should I print 1,000 money mailers and randomly place them on peoples doors? What if the person who gets the mailer is gluten free? What if they are lactose in tolerant? What if they don’t like pizza? OR should I advertise on Yelp? Where x amount of people came last month within a 15 mile radius of me and looked for Pizza? These people had a need for pizza and weren’t loyal to another restaurant. Yelp is a wonderful place for a SMB to advertise.

        1. February 24, 2015

          Two things don’t make sense here. First, as you say, a very small percentage of the 139m users are in my target market. So what matters to me is how many people are searching within that 15 mile radius. Does Yelp share that info with me as a business owner? And secondly, studies have shown that Yelp has nearly 75% annual churn in their customer base. If the ads are working so well, why are people dropping them at such high volume?

          1. Joey
            February 25, 2015

            1.) Yes. Yelp sells Ad’s based on searches that are going on within a 15 mile radius of the business. Yelp can’t sell Ad’s to a snow removal company in Hawaii. 2.) Over 75% of surveyed business owners reported that advertising with Yelp had positively impacted their business, and more than 90% were satisfied with their returns on investment.
            More than 90% of surveyed advertisers on Yelp said that they would continue to advertise in the next year, and more than half of them said they would actually increase their spend.

            -Citi Investment Research & Analysis, April 11, 2012

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