Monday, June 18, 2012

The Facebook Like Correction Has Begun

With its first earnings report looming, Facebook the business is determined to show proof of a healthy quarter and has found new ways to integrate advertising into the site. Yet at the same time, Facebook’s users are showing signs of advertising fatigue, taking it upon themselves to “unlike” brand pages.
A joint report from comScore and the National Retail Federation (NRF) revealed that the number of consumers who reported following retailers on the likes of Facebook, Twitter or Pinterest fell to 51 percent from 58 percent last year. 

On Facebook, the unlike trend is likely a result of members’ cluttered newsfeeds which itself can be traced back to Sponsored Stories – a brilliant ad product that commandeers users’ likeness for the purpose of advertising. Essentially, Sponsored Stories pinned down and commoditized word of mouth, long heralded as the most effective, yet elusive mode of advertising. No surprise, Sponsored Stories became a digital darling on Madison Avenue, powering the “like acquisition” mania that catapulted Facebook into becoming the top seller of display advertising. 

Ironically, Sponsored Stories were too effective! Rather than reward brands who create awesome content, Facebook conditioned advertisers to depend on Sponsored Stories for like acquisition. As a result, many brands never learned to create compelling content, but nevertheless built enormous followings. Now, brands are trying to harvest their enormous fan bases into sales, polluting newsfeeds with clunky advertisements, like coupons. The report from the NRF suggests users are proactively addressing their cluttered newsfeeds, taking it upon themselves to unlike brand pages.

But rather than recognize the trend, Facebook is doubling down. In recent weeks, Facebook has introduced new ad products that enable brands to interject their messages directly into users’ newsfeeds. The intrusion into the newsfeed is unprecedented; ads used to be relegated to the sidebar. But, what’s worse: It’s not enough for users to personally unlike a brand in order to stop seeing its content, now the users’ friends have to unlike it too. That’s because the newsfeed placement is also a Sponsored Story, so even if you don’t like McDonalds, the golden arches can still show up in your newsfeed as long as one of your friends does.

Facebook defends the newsfeed ad, explaining how only content with a sufficient virality quotient (sum of likes, comments and shares divided by total impressions) can appear in the newsfeed. Still, the newsfeed intrusion seems risky in light of the nascent unlike trend which clearly indicates consumers are trying to be more selective about what brand page content they see. The timing is also troubling - Facebook is transferring power away from users and toward advertisers at just the moment users began to demonstrate their power. 

If Facebook continues to prioritize its business interest over user experience, the organic unlike trend could pick up steam and become a movement.