Remember when Google launched and people scratched their heads, wondering how such a great search engine could afford to exist? How would they ever make money?
Google has figured out the monetization of Internet services and information, a challenge that even social media juggernaut Facebook is still struggling to make sense of. In the last few weeks, Facebook seems to be taking a hint from blogging platform Tumblr.
In early February, Tumblr (who have historically been against putting advertisements on their site) announced a new ‘Highlighted Post’ option, allowing users to invest $1 to help their musings reach a wider audience (http://staff.tumblr.com/post/16980189397/highlighted-posts).
“Every now and then, a post comes along that’s meant for big things,” wrote the Tumblr staff on their announcement. “It could be pulling the wraps off your new project, promoting your next show, raising awareness for a cause, or just sharing a truly incredible photo.”
The $1 charge makes the post ‘stickier,’ allowing it to stand out on the Tumblr Dashboard with a customizable ‘sticker,’ the images the site uses to distinguish between types of posts.
Tumblr’s decision received minimal backlash — most users recognize the company’s need to generate income and don’t want to see their favorite blogging platform fail or get bought out. On the other hand, paid posts reduce the importance of unpaid posts, pushing everyday blog entries farther down the totem.
Monetizing a user experience is always a tough situation, and no company faces more scrutiny than Facebook. In the weeks leading up to their Wall Street initial public offering (IPO), the social networking site faced a barrage of press and questions about its financial viability going forward.
Facebook’s biggest hit came when General Motors announced that they were discontinuing their $10 million ad campaign with the site, citing poor results. On the heels of that announcement came reports of a study that showed dismal click-through rates for ads on Facebook. Even what’s considered a ‘positive’ click-through rate on Facebook is a measly 0.5 percent (http://news.cnet.com/8301-1023_3-57436223-93/study-youre-not-clicking-on-facebook-ads-and-you-never-will/).
Under pressure to adapt and find new revenue streams, Facebook has begun a program similar to Tumblr’s, launching a paid post beta test in New Zealand. Users get the opportunity to pay between 40 cents and $2 to make their post extra sticky, meaning that it will jump to the top of friends’ News Feeds and stay there longer.
Facebook has allowed advertisers to promote their status updates with “Sponsored Stories” since 2011, but the addition of paid posts amongst regular pages and everyday users could have the potential to alter the way we navigate the site.
Statistics show that an average post reaches only about 12 percent of a person’s Facebook friends. Each post’s ‘stickiness’ is determined by the reaction it receives on the site. If it gets 100 ‘Likes’ and loads of comments, it will naturally remain high on the News Feed.
The new ‘Highlight’ feature could dramatically change that. Currently, users can ‘Unlike’ pages from advertisers whose content they decide they’re no longer interested in. With the new method, you would actually have to ‘Unfriend’ somebody whose paid posts began to feel like a nuisance.
Nevertheless, Facebook may not have another option. Advertisements only carry some of the load, and are virtually nonexistent on the site’s mobile platforms (iPad, iPhone, Android). With nearly a billion users, it’s understandable that the company would want to give that base an opportunity to help contribute to Facebook’s coffers, especially as those people rely more heavily on mobile connections than their computer desktops.
If Facebook launches paid posts to all users, will you keep using the site in the same way? Do you think it’s a smart business move or the start of a downward slide for Facebook?Christopher Wallace, Vice President of Sales and Marketing for Amsterdam Printing, has more than 20 years experience in sales and marketing. At Amsterdam Printing, a leading provider of custom pens and other promotional items such as imprinted apparel and customized calendars, Christopher is focused on providing quality marketing materials to small, mid-size and large businesses. He regularly contributes to Promo & Marketing Wall blog.