Three years ago, Facebook’s COO Sheryl Sandberg called the small business advertising market the web’s holy grail. Now, after fits and starts, the social network appears to be making good on her statement, announcing earlier this month that two million businesses advertise on its platform.
But the news comes as the relationship with those small business has worsened. In October, the company warned advertisers that “unpaid marketing pitches” would see a “significant decrease in distribution” in News Feed, the company’s core distribution product. Facebook framed the decline in organic reach as a necessity to protect the quality of the News Feed product, but many small businesses scoffed at the characterization viewing the move as a bait and switch.
Now, in an interview with Street Fight, Jonathan Czaja, the head of small business in North America at Facebook, says that the decline in organic reach reflects a wider evolution of the social network as an advertising platform. He admits that the type of relationship marketing, which become popular among small businesses in the early days of Facebook, will become less valuable as the company moves from more basic social advertising metrics to “business objectives” and discusses new initiatives to build customer service into the company’s engineering-first culture.
In many ways, the big question for Facebook’s small business team has not changed since we spoke with Dan Levy, the director of small business globally, a year ago: for many advertisers, it feel like a bait and switch. They spend the time and money building these communities on Facebook, and then suddenly, Facebook starts to charge these businesses to reach the audience they developed.
The reality is that Facebook as an advertising platform is evolving. We started with ads based on social metrics, and what we’ve done is spend a ton of time building advertising products based on business objectives rather than social actions. We’ve seen this platform evolve and now our advertisers are having to evolve with us.
The guiding light in [the decision to reduce organic reach] is to protect the news feed experience. We believe the best way to help advertisers reach the people they want to reach is is to make sure consumers are thrilled with News Feed experience. News Feed is getting crowded — there’s just more competition so [the decision to reduce reach] is a reality of newsfeed getting bigger.
A few days after Facebook indicated that it would reduce organic reach, Forrester analysts Nate Elliott advised marketers in a post that they should stop relying on Facebook solely as a relationship marketing tool. Do you agree?
I do. I think the way that folks think about utilizing Facebook has changed for a lot of reasons. A decline in organic reach does limit the amount in which you can communicate with your customers in the way you used to be able to do on the platform. I would agree with that.
So what’s driving small businesses to go out a build a community on Facebook even given the declines in organic reach??
There’s still a lot of value to the Page apart from distributing content to your fans. We’ll have a lot more to say about Pages going forward, and we do think it’s important that small business create a presence on Facebook and demonstrate the value they bring to their customers.
You come from Bonobos where you headed up one of the most lauded customer service organizations in retail. Could you talk a little about the customer service problem at Facebook and the need for the company to build these non-technical aspects of their business?
Facebook has underinvested in the service it has provided to small businesses. These companies are pouring their heart and money into their platform so we need to not only build products for them, but also provide the support to help them use our platforms.
Subsequently, we’re starting to heavily in building a customer service organization because we realize small business require a level of support that we’re not providing. For instance, we’re testing live chat capabilities today, so we can talk with Facebook advertisers to do things like screen sharing and we’re close to testing voice support as well.
Facebook has taken a more product-based approach to this marketplace in part because we’re an engineering-first company, and like a lot of tech companies service is something that trails in our priorities. But we realize that we need investment, and you’re going to see a big push by us to reestablish that connection.
Can you expand on the push to build a customer service organization? Do you have any criticisms of how Google — arguably the largest small business advertising platform — has built out their organization?
You’re not going to be blown away by the stuff we’re doing because the first step for us is to provide customer experience that is on par with the basic ecommerce experience. We need to offer the ability to contact us if you have an issue. We’re also going to invest heavily in self-help tools, online courses and other self-help information. For us, we need to figure out how to delight customers with a level of service that also operates at meaningful scale. How do you apply this in a way that meet the need of two million advertisers in a cost effective way?
Among brands, one of the big initiatives to move beyond social metrics has been the development of Lift, a tool that allows marketers to measure the relationship between in-store sales and Facebook advertising. Is that a viable model for small businesses?
We’re seeing a lot of promising results [with Lift,] but the challenge is that, at the moment, it’s only effective for the larger advertisers who can provide a large enough sample of point-of-sale data to demonstrate lift. Without that large dataset its much harder for marketers to measure performance, so I’m not quite sure if it will apply all the way down to single stores in small locales.
Steven Jacobs is Street Fight’s deputy editor.