Thursday, January 18, 2018

Will Facebook's algorithm change reduce advertising inventory?


Earlier this month, Facebook announced that it would be making significant changes to the algorithm it uses to generate your newsfeed. The changes will deprioritize public content from publishers and brands, and instead prioritize postings from friends and family. Facebook hopes that the change will bring about “more meaningful interactions” between people on the platform. Generally, this is Facebook’s reaction to the significant negative publicity it has received over the last year for distributing fake news to users and having a negative impact on users’ mental health.

While this may result in happier users and better experiences with Facebook, the company actually expects that users’ time spent and engagement on the platform will decline. So what does this mean for advertisers on the platform? According to Pivotal analyst Brian Wieser, “Less time spent on the platform presumably means less inventory for advertisers to work with, whether that’s paid or unpaid.” And of course, with less advertising inventory available, marketers can expect to see higher prices. Brands will simply have more competition for the available advertising inventory.

A potential positive for marketers is that more engaging content could lead to more engaged users who would be more receptive to advertising. Rather than quickly scrolling past article after article posted to the newsfeed, users might be more apt to slow down, read the content from friends and family, and perhaps engage with the ads too.

It’s also possible that this change brings some dormant users back to the platform, somewhat canceling the negative effect on inventory. I know that personally, over the last 6 months I have reduced my Facebook usage from a few times a day to about once a week or less because of the poor experience. I wanted to see friends and family and not articles and politics. This change sounds exactly like what I’d hoped for and might be enough to get me using the platform regularly again… and I can’t be the only one. 

No comments: