Facebook initially launched “brand pages” in 2007, and over the last ten years, a lot, has changed. Most noticeably, the way businesses and brands are able to use the platform to reach their desired audience. Over the last decade, the number of active Facebook users has increased from just under two million, to almost two billion, and right along with that, the number of businesses using the platform has increased as well. With this change came a new algorithm and the necessity for better content (and ad dollars) to ensure desirable placement in the Newsfeed. As the platform continues to evolve and prove to be more and more valuable to business owners, more changes are coming. So, let’s dive in and talk about the decline in non-paid (or organic) reach and what this means for business owners and social marketers.

The Great Organic Reach Decline of 2014, or as we like to call it, the “Reachapocolypse”

Before 2014, social media managers had it great. Content was king and when we wrote statuses, our fans saw them. (Or at least, we thought they did.) In 2014, business owners really began to notice the decline in their brand’s organic reach, and they demanded answers. (If you remember these days, you probably also remember the mass hysteria that came along with it.) The reason was pretty simple. There was just too much content, making visibility in the Newsfeed highly competitive. At the same time, Facebook wanted to keep its users on the platform, so it was important to show content that mattered most to the users. (Not just surface all of the available content.) This is when the algorithm made the major shift, and since 2014, it has not shown any signs of slowing down. In fact, in 2017 alone, Social Media Today cites that page reach has declined another 20% since 2016.

It’s Not JUST About Non-Paid…Paid is Becoming More Expensive Too

Let’s be honest, Facebook is simply running out of inventory. As mentioned earlier, now that more and more advertisers are utilizing a paid strategy, the supply for Newsfeed space is limited, and these businesses are willing to pay more for the same amount of impressions and clicks. If Facebook is running out of inventory for paid advertisers, the likelihood of distribution for non-paid content will be slim to none. In fact, Facebook is even beta-testing a separate Newsfeed SOLELY for non-paid content, (The “Explore Feed”) which will require the user to exit their regular Newsfeed and go to a different place to see content from brands.

Facebook’s costs to enter the Newsfeed are rising at an astounding rate, and really, the reason is pretty simple- Supply and demand. But, what does that mean for new advertisers looking to enter the world of Facebook advertising? It means you need to start now. (And let me tell you why.)

As Facebook continuously develops the platform with additional products and features to show a direct return on investment for businesses, more and more advertisers are joining the platform and realizing that Facebook is no longer an option, it’s a necessity. And if you want to do it right, you have to pay to play. In fact, in 2017 alone, Facebook’s CPMs have increased by 171% and CPCs by 136%. While the average CPM and CPC on Facebook are still much lower than traditional marketing efforts, it goes to show that the demand for coveted Newsfeed space is on the rise and because of Facebook’s ability to show a direct ROI, advertisers are now paying, and willing to pay, more to enter the auction.

Let’s take a look at why this is happening in more detail.

  1. More and More Businesses Are Advertising on Facebook: Since 2016, Facebook has gained TWO MILLION more advertisers, and in April of 2017, it reported a total of FIVE MILLION. It also important to note that these paid advertisers only make up 8% of the 65 million active businesses on the platform. (Which tells us the growth in advertisers is not going to slow down anytime soon.)
  2. Facebook Ad Budgets Are Growing: Not only are more advertisers flocking to the platform, but they are also increasing the amount they plan to spend. A recent survey from Hanapin Marketing found that 71% of Facebook advertisers plan to increase their spend within the next year. It also showed that of all the different social channels, 73% of marketers are investing the majority of their social spend on Facebook. Again, Facebook is constantly developing new ways for marketers to see a direct ROI, so businesses are simply willing to pay more for these results.
  3. Facebook’s Ad Load is Slowing Down: Ad load, or the amount of ads your Newsfeed can handle, is starting to get smaller and smaller. (Another reason for that “Explore Feed.”) This means it can’t continue to grow revenue by just increasing the number of ads in your Newsfeed. Really, it has two options; gain more users or create better performing ads that can sell for more money. (And it will likely do both.) So, the slower ad supply growth is going to naturally boost prices.


Facebook’s CPMs May Be Increasing, But They Are Still Well Below Traditional Advertising Costs

I know what you’re thinking. If the prices, specifically CPMs, for social ads are increasing, is it not beneficial for my business to go back to some of the more traditional forms of advertising? While the answer to that questions does depend on the channel, the short answer is no.

As you can see below, Facebook is still the most cost-effective advertising when looking at CPM alone.

There are other clear advantages to a digital strategy, including trackability, targeting, (and the list goes on) that is a story for a different day.

So, What Does This Mean for Business Owners and Social Marketers?

If you haven’t implemented a paid social strategy… Now is the time to start. More marketers are headed to the platform, and with good cause. And moving forward, the competition is only going to get stronger, so get in while the prices are still well below those of most traditional forms of advertising. My final question for you would be, do you think the internet is going to get more relevant, or less relevant? Advertisers are flocking to Facebook for a reason, and that reason is simple. If you have the right audience, and provide the value that audience needs to see in order to convert, it’s not if they convert, it’s when. Facebook is always on the verge of the next big thing, and over the last few years, it has been able to do what other advertising channels haven’t mastered, and that is show a direct return on investment.

Are you interested in learning more about how social media can take your business to the next level? If so, contact us for a free, no-obligation, social media evaluation!