24 Mar 2014

How much will you need to pay Facebook?

Facebook wants you to pay.

paybook

This probably doesn’t come as much of a surprise to anyone who uses Facebook for marketing, but recent reports indicate that Facebook has throttled the organic, non-paid reach of brand Pages again.  It’s a SHIFT tradition that we like to dig into the numbers ourselves and see if we can determine what’s actually happening. To that end, we’ve examined the Facebook Pages of 313 Fortune 500 brands to see how engaged their audiences are. This report is based on the belief that engagement is correlated to reach (and in fact has a causal relationship); the less reach you have, by default, the fewer people who will engage with you. Engagement isn’t just a function of reach, but without reach, engagement can’t happen.

We analyzed the 7-day engagement rate of each page (number of people who interacted with the Page) and used math to determine how much of the total audience (all Likes) was engaged with the brand Page. Unsurprisingly, the numbers look like a power law curve: a few brands doing exceptionally well, and a lot of brands suffering with very poor engagement. A few highlights:

  • Mega-retailer Walmart engaged 53,692 people, which sounds great until you realize they have 34.5 million Likes, meaning they are engaging 0.16% of their audience.
  • One of largest brands, Disney, engaged 726,543 people, a mere 1.56% of their total audience of 46.6 million Likes.
  • One of the big winners in engagement was healthcare firm Aetna, engaging 6,025 of their 16,930 Likes, or about 36%.

Of all the 313 Fortune 500 companies, here’s what their Facebook Page engagement rates look like:

Screenshot_3_24_14__7_07_AM

With engagement rates at the world’s largest companies as poor as it is, it’s logical to wonder how to increase your own engagement rates. Facebook has made it abundantly clear that the free lunch of unpaid social media marketing using their service has come to an end; this “strategy pivot” is punishing brand Pages repeatedly until they pay to reach their audiences. After all, consumers can’t engage with what they can’t see. With some reports of unpaid organic reach dropping below 1%, we set out to find out just how much Facebook wants you to pay.

Facebook’s recommended budget per Promoted Post appears to be (at the time this post was written) a linear relationship with the number of Likes you have. The more Likes your page has, the more you’ll have to pay per post, costing about a penny per two Likes to reach your entire audience. We put together a simple calculator you can try to see what Facebook expects you to spend on a daily basis and how much you should allocate for the rest of the year:


(click here for a larger version of the calculator and a link you can share)

Note: due to exceptionally high demand, the calculator was returning blank results. We’ve fixed it!

If the numbers are a little shocking, we understand. To help combat the sticker shock, here are a few suggestions to help maintain engagement without completely breaking the bank.

First, stop chasing Likes. Every 2 Likes you get is essentially a penny more you have to pay per post. Let people Like your page if they truly do like your brand, but stop asking them for Likes, and certainly stop paying Facebook for more Likes unless you’re prepared to pay again to advertise to that audience. Based on the algorithm above, every Facebook Like will cost you $1.82 in Promoted Post payments (at one sponsored post a day) to ensure that your new Like can consistently see what you’re publishing.

Second, you don’t have to necessarily pay to promote every single post. If you can’t afford to sponsor a post a day, consider sponsoring one every couple of days, paying only for the posts that are likely to generate the down-funnel activities you are trying to achieve. For example, you may not want to pay to promote a daily blog post, but you might want to invest in a post promoting an eBook or app download.

Third, supplement your Facebook marketing with other forms of digital marketing. Put a roundup of your blog posts in your weekly email newsletter. Share your best stuff on other social networks to ensure that it gets seen. Hop on new networks as you have time and resources to do so; newer networks are focused on audience building rather than immediate monetization.

Fourth, make some room in your marketing budget for Facebook if it’s still important to you. The bottom line is that the free ride is over on Facebook. If you want to play, you have to pay, so allocate budget accordingly. If you use our calculator, you’ll see what Facebook expects you to pay per day for the rest of this year.

The surest sign that social media has achieved maturity is that the free ride has come to an end. Expect more social networks to follow Facebook’s path. If you’ve been overly reliant on Facebook for your business, it’s urgent that you diversify as quickly as possible to other networks and other digital marketing tools.

Found this useful? Share it and tag it with #PayBook!

Christopher S. Penn
Vice President, Marketing Technology

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7 comments
JenT in the D
JenT in the D

We're about to start paying to promote some posts for a new (non-profit) campaign.  Striking in its absence from your list of tips is the idea of targeting the promoted posts to specific demographics, geographic regions, etc.

annabelleblue
annabelleblue

I'm a little surprised to see you only talk about Promoted Posts, and not really touch upon promotion via Facebook Power Editor, which is both free and commonly much, much, less expensive when promoting than the Promoted Posts section.  


I've been working with many small businesses (including non-profits) since the major decline and even with the tiniest of budgets have still had success in promotion and conversions.  


I agree with the rest of your suggestions, but to imply that Promoted Posts is the only way to pay to play is a bit misleading. Many of us can and do get fantastic results with Power Editor - especially in the case where you're promoting for engagement, with a side benefit of getting extra "likes" as a result.

OpenAdilo
OpenAdilo

Of course, Facebook needs to make money, but how many users are aware that Facebook is using a revenue-mazimizing algorithm to decide if posts appear in their streams? And that the majority of posts that do appear are paid? Facebook is lying to its users, period.

chrisbacke
chrisbacke

(This is copied from a Facebook thread - oh the ironies!)


I'd suspect the mainstream would rejoice at seeing fewer posts that blur the lines between advertising and content. It may even begin a shift or backlash against paid content posing as a jab or right hook.


What the billion-plus will see will be explicitly known as advertising, be it a 'sponsored post', an auto-playing video, or a CTA along the lines of a Leadpage or that insipid 'Install Now' button. In short, advertising will be advertising and posts from friends will be posts from friends, and fewer shades of gray will be seen by the majority. The biggest question will be the ROI - with more advertisers paying than ever before, are you seeing the conversions you need for Facebook to be a viable strategy?


Were I Facebook, I'd keep organic growth at something around 1% or maybe a little under - cutting that off completely would open the door to (mostly frivolous) lawsuits, yet almost guarantees anyone looking to make money will feel the need to spend it first.


Unfortunately, too many companies will continue their Facebook 'strategy', unable or unwilling to give it up despite lower ROI's. It's still one of the largest places in the world to market one's offerings, and Facebook will be quick to mention the billions of eyeballs tuning in across the world. These will include Fortune 500 with professional - and expensive - social media consultants, entrepreneurs still hoping for a viral reach, and most everyone else buying advertising. When you recognize something as advertising, you tune it out without thinking - even when the frequency increases. The term 'banner blindness' comes to mind.


Yes, the time of using Facebook as a free source of advertising is over. Pay to play, and resign yourself to increasing competition and lower ROI's, or give up the reach you've built up over years.

howardgr
howardgr

This will be extremely painful for some of the small nonprofits I work with. 

cspenn
cspenn moderator

@chrisbacke  Chris - Agreed that some companies will still be there, even at exorbitant costs, because as you said, it's where the billion people are.

Latest blog post: Can you automate PR?

cspenn
cspenn moderator

@howardgr  Agreed. I have a couple of non-profit clients with very small budgets, and Facebook has been relegated to "yeah, post there, but don't expect much".

Latest blog post: Can you automate PR?