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Facebook has undergone massive change in its brief 11-year history. What started as a closed platform to connect university classmates is now a global company with 1.4 billion active monthly users and market capitalization of $212B.

Brands have long coveted Facebook’s captive audience – particularly because the cost of engagement was extremely low (if not free). But with organic reach all but gone for the majority of brand pages, we’ve undoubtedly entered into the new era Facebook: one in which you must pay for your content to be visible to your fans, and where that space comes at a premium.

Yes, I am on Facebook right now. It’s for work.

Facebook-Sign

Back in 2008, I had a little sign I used to keep on my desk. Every so often, I would grab it and hang it on the back of my chair as I worked. What did the sign say? It said: “Yes, I am on Facebook right now. It’s for work.” Even at an advertising agency, just 6 or 7 years ago, seeing the newsfeed over a coworker’s shoulder almost certainly meant they were socializing instead of working. But at that same time, my client – who owned 100+ shopping malls – saw the social network as the perfect medium to reach young people to tell them about their summer concert series. The client was dead on – and we drove thousands of users to the brands’ profiles. Later that year, Mark Z. & Co. introduced “Pages” for businesses, and the rest… well, it brought us here.

Over the years, brands worked hard to build bigger and bigger fan bases on Facebook – because they figured that once they had fans, communicating with them would be (nearly) free. Some brands used contests and hidden “like-gated” coupons to get users to like their pages. Others just came out and directly asked for likes in other media. And brands’ agencies bought in, too – the more likes we pulled in, the more people would see all of our lovely status updates and pictures… anytime we wanted, forever and ever! Or so we thought.

Flash forward to 2015. Facebook is a whopping part of our agency’s day-to-day operations and our clients’ businesses. Over time, the once-deemed “cousin of MySpace” turned out to be way more than a passing fad. Not just for college kids, or even kids in general. It had real, moneyed audiences, who were deeply engaged. In fact, the 55+ demographic has become the fastest growing segment on the platform over the last few years1.

We’ve got your ROI right here.

Nielsen Catalina ROI by Category

What’s more, studies have now proven that posting on Facebook can increase brand awareness, brand favorability, and even drive consumers to go out and buy. This fact has not been lost on CPG companies – today, four of the top 20 advertisers on Facebook are CPG brands. Nielsen, in conjunction with Catalina, has reported an average return of 2.36x across 300+ CPG Food campaigns2. At Smith Brothers, this is hardly a surprise. After all, we represent a few of these brands! One of our CPG clients recently realized a 3:1 ROI on an advertised product, and a 6:1 lift on awareness of the master brand.

Real results, for sure – but not the way we thought we would get them when we started. Nearly all the impressions and users came because we paid for them. In the past two years alone, Facebook organic reach has declined significantly – small brands have tumbled from 15% to 5%, and big brands have fallen to as low as <1%3.

What happened to our free lunch?

Facebook Average Organic Reach Chart

 

We built up these huge fan bases with acquisition campaigns, so why can’t we reach them with our content anymore? It’s easy to assume that Facebook got greedy – or, that as a public company, they now have to prioritize earnings for their shareholders. But what it really boils down to is this: competition.

The value of a social presence is well documented nowadays. When there were fewer brands playing in the space, there was room for the brave early adopters to reach their engaged fans more easily. Now with explosive growth in the number of organizations vying for the attention of the masses, the platform would be almost unusable without some filtering proxy. We would each be wading through hundreds of brand posts to find the entertainment, news, and social content we are most interested in consuming. The same way it behooves Google to consider only relevant ads to match their search queries, it behooves Facebook to be far more selective with their Newsfeed algorithms (and it also happens to be pretty lucrative for them!)

It’s not all bad news, though. Today the Newsfeed has many strengths on its side. Because of that same algorithm, it’s relatively uncluttered. The content is displayed in a format the user is very accustomed to consuming – and one that encourages engagement. In this environment, good creative can really shine. High engagement rates are rewarded, as they inform the algorithm that the content is something users care about. And that’s what Facebook wants to demonstrate – that they are out to improve the overall user experience. As Mark Zuckerberg has said, “Simply put: we don’t build services to make money; we make money to build better services.”

Keep on keepin’ on.

So, what advice do we have for CPG marketers when it comes to Facebook? Stay the course. Just know that where Facebook’s concerned, if you are investing in quality content you now need to make an equal investment to ensure that same content is visible.

We are all familiar with the designations of Paid, Owned and Earned Media. We now have a medium that blends all three together. So invite your friendly media buyers into those social content meetings early and often – because they can still help bring that beautiful work of yours to the masses.

Sources:

1. iStrategy Labs – 2014 Facebook Demographic Report
2. Nielsen – CPG Study: Online Ad Campaigns Using Purchaser Data Nearly Triples ROI
3. Ad Age – Average Organic Reach of Content Published on Brand Facebook Pages (Feb. 2014)

Alex Davis
Alex Davis
Associate Director of Engagement