Small businesses are about to get screwed

Beginning in mid-January 2015, Facebook is warning companies with fan pages that the social network will intensify its efforts to filter out unpaid promotional material in user news feeds that businesses have posted as status updates. This will hurt small businesses and entrepreneurs who currently use Facebook as a tool for free advertising. If these companies don’t pay to promote their posts, then hardly anyone will see the posts. In a recent WSJ article, one entrepreneur Chrisy Bossie estimates that nearly half of her $100K in annual sales comes from free Facebook posts. Well, that’s about to change.

Over 80% of small companies using social media to promote their businesses cited Facebook as their top marketing tool – followed by LinkedIn and Twitter. The top three reasons owners listed for creating a Facebook page were:

1. Customer acquisition
2. Building a network of followers
3. Increasing brand awareness

These stats come from a recent survey of 2,292 small businesses by Webs, a digital services division of Vistaprint.

Facebook’s VP of Small Business, Dan Levy, says that Facebook’s paid-advertising options have become more effective recently. He believes that small businesses should view Facebook as a tool to “help them grow their businesses, not a niche social solution to getting more reach or to make a post go viral.” He says he has “a lot of empathy” for businesses who “are feeling this evolution” in the reduction of organic reach. However, he says that there are many other reasons why small businesses benefit from being on Facebook – given that last month there were over 1 billion (yes, billion) visits to Facebook pages.

Back in the old days, businesses used to own their audience through email or other in-house marketing channels, or through other traditional advertising channels like newspapers and TV. However, the moves of Facebook and the like are attempting a third model: renting an audience. This is where businesses can build a community but never actually own an audience on their platform.

I don’t think many small businesses will be happy about this, but what choice do they really have? They either need to pay to stay in the game, or figure out something else.