It is no secret that social media marketing is a huge business. I can’t think of a single thriving company that you cannot find, engage with, or even purchase from, online.
Everybody Is Competing Online
As more and more companies flood the online marketplace, they pour more and more money into their online spend to try and outperform their competitors. And the more people who do it, the less effective Facebook will become as an advertising platform.
Facebook has just posted a record $3.9 billion profit for the second quarter this year, thanks to soaring mobile video advertising, and they’re expected to bring in at least $36.29 billion in worldwide ad revenue in 2017, which is up 35% from 2016.
This means more ads served to more people, and the real genius behind Facebook, and subsequently how its advertising works, is that it’s a personal space designed around who you are.
This is the factor that makes Facebook surfing that much more addictive. Thanks to the way you use it, Facebook gathers data that lets them identify your interests, your location, your demographics, etc. And they use that information to exploit your interests in order to serve you content in the hopes you’ll ‘like’ it.
Pro’s & Con’s
This isn’t necessarily a bad thing on its own, as I don’t see a problem with viewing content based around my interests. The problem comes in when the same algorithm that is sorting and serving you the relevant content is also serving you ads based on the content you engage with.
Facebook themselves have already reported that the news feed will run out of advertising space this year, which has forced Facebook to create new ways to deliver ads to its browsers.
There are only two options I can see that Facebook has in this situation:
They can create more and more ad formats that slide in between, or even in the middle of, the content that you’re viewing. This will keep the reach of ads and posts up, at the very real risk of creating banner blindness and ad fatigue.
Banner and ad fatigue is a real term used by agencies to explain the drop in data once an ad has been serving for a long period of time. By this logic, the more ads you’re served on these social platforms, the fewer ads you’ll actually see.
Eventually, your brain will end up fine tuning its recognition of what content looks like, and what ads look like, and you’ll subconsciously block out ads. This will lead to ads being less effective, making companies look elsewhere for their advertising solutions.
More Expensive Ads
The second option would be to filter out the less rewarding (valuable) companies advertising on the platform by raising the price of ads. Currently you can show 1000 people your ads for around R15. If these prices rise, the return on investment will drop.
Only the companies investing large amounts of money will be able to extract a promising return of investment. This will force companies to have a social media presence but not actually spend any money on Facebook.
The Future Of Social Advertising
The next step Facebook takes will be an interesting one, one way or another. No matter what happens, Facebook needs to (and will) change in order to accommodate either more ads or more investment in ads.
And one of the problems with that is when you change something too much, you often break it before you fix it again.
Facebook was built around people, but when people stop seeing other people on Facebook and only see ads, there’s a good chance that they’ll leave. It’s not that I think that Facebook has taken its eye off the ball, but rather that they’re paying more attention to the bat and less to the ball.
Could this be a gap for the next Mark Zuckerberg to exploit and create another platform that is all about the browsers and true content served on interest, rather than on the dollar value of advertising? Only time will tell.