It has been a less profitable holiday season for many online retailers thanks to a small change Facebook made to how the site works.
On December 2, Facebook published a post on its official blog announcing that it had made a small change to the algorithm that determines what users see on the News Feed — that center column of status updates, news stories, and photos you see when you go to Facebook.com or open a Facebook app.
In the blog post, Facebook said it was tweaking the algorithm to favor more "high quality" news stories — articles that surveyed Facebook users say they prefer over funny photos and the like.
At first, Facebook-watchers took the company at its word, and assumed the tweak would only harm meme-oriented publications like Viral Nova and Upworthy that appear in the News Feed.
And maybe Viral Nova and Upworthy have been hosed by the change.
But, if so, they aren't the only big losers.
So are a whole class of retailers.
Over the past five years, retail companies big and small spent a lot of time and money over building up their visibility on Facebook. They built up "Brand Pages" on Facebook, and attracted attention to them with a constant stream of posts. They put on contests. They hired "social media marketing" firms. Some companies began selling products directly through these Facebook posts.
These online retailers did all this with the full support and encouragement of Facebook, which was eager to show the world Facebook.com and Facebook apps are a place where consumers want to shop.
Facebook allowed these brands to set up their pages and reach out to the Facebook users who "liked" them for free. And, by November 2013, many of them had the Facebook News Feed into a source of actual, high-margin revenues.
Then came December 2, 2013, the day Facebook made its change to the News Feed. Suddenly, all that work went for naught.
It turns out the News Feed tweak did more than just highlight "high quality" news stories. It also totally buried posts from retailers on Facebook.
A source from one retailer told us that her company's "reach" on Facebook declined 40% to 50% after the change. Another source from a different online retailer said that since Facebook's change, her company's posts are getting seen by an 80% smaller audience.
We asked several sources close to e-commerce companies about this trend, and almost all said they'd seen the same pattern.
(These companies asked us not to reveal their names because they have working relationships with Facebook, and don't want to reveal internal metrics.)
All the retailers we spoke to emphasized that their actual sales have not declined since Facebook made the change. But each said they've only been able to maintain sales by increasing the amount of money they spend on Facebook ads.
One source at a retailer said: "Our overall traffic from FB is up due to our paid activity, while our 'organic' traffic from Facebook has been consistently going down."
Retailers aren't the only ones getting hosed by Facebook's change. Pretty much all corporate Facebook Fan Pages are getting less play in the News Feed since the change. That means lots of social media marketing agencies that manage how big brands present themselves on social media now have to explain to their clients why their bills are going up.
This isn't the first time Facebook has tweaked the News Feed to reduce how widely-exposed free Facebook Brand Page posts can get. The first such came about a year ago. It wasn't as drastic as this month's, however.
On some level, you have to admire what Facebook has done here. It spent years making itself a free and easy place for business to market themselves or sell actual products. Then, as soon as these businesses grew addicted to Facebook's users, Facebook began charging for access to them.
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