Why Facebook's news feed shake-up may be a smart move to squeeze more money from publishers

Business Insider | Jan 12, 2018, 07.58PM IST

Mark Zuckerberg


Mark Zuckerberg.

  • Facebook will change its news feed so that people will see more updates from friends and family, and fewer organic posts from news publishers and brands.
  • It's a drastic change for Facebook, which thinks that "passive" news consumption is bad for people's mental health.
  • But it's also a canny commercial move, analysts told Business Insider, because now Facebook can squeeze money out of publishers to appear in the news feed.
  • Many publishers get huge amounts of referral traffic from Facebook and might turn instead to Google as a more reliable platform partner.

Facebook has once again proven itself a massively unreliable partner to news publishers who need the site for referral traffic.

The company announced on Thursday that it would reduce the amount of posts from businesses and media in the news feed, and instead prioritise updates from friends and family.

CEO Mark Zuckerberg said "passively" consuming updates from media and brands wasn't good for people's mental health, and that the firm wanted to encourage people to post updates, comment on friends' status, and share photos.

The thinking is that you don't get much emotional nourishment from glancing through a stream of headlines, but you do feel happier when you're interacting with your friends. That balance is currently skewed the wrong way in the news feed.

While Facebook's stated goal of making people feel happier while using social media is commendable, it's left publishers in the dark about what to expect.

Big media brands such as BuzzFeed, The Huffington Post, and - yes - Business Insider get huge amounts of referral traffic by publishing stories to people's news feed from their brand pages.

According to December data from Parse.ly, Facebook accounted for 26% of news organisations' traffic. More traffic makes these publications more appealing to advertisers, so anything that threatens those numbers is a big deal.

If Facebook alters the news feed so people are seeing and clicking on fewer news posts, it follows that publishers will see a significant dropoff in readership.

"For publishers, Facebook is frustratingly Mum about all of this," Enders media analyst Matti Littunen told Business Insider. "There's often very little warning before something like this happens or, when something happens, it's hard to figure out what's going on."

He added: "A key question is whether this will affect all publications in the same way."

According to Littunen, one reason Facebook is having to make changes is because it has rewarded spam publishers as much as quality publishers. "Quality has not paid off on Facebook," he said.

Facebook has only recently made efforts to fix that, for example using artificial intelligence to downrank posts that ask you for shares or likes. But the damage may already be done and, thanks to low-quality posts from spammy publishers, big media brands may have to pay the price in traffic.

Facebook tested a split news feed - and publishers saw a massive traffic drop

Littunen and Ian Maude, group director of digital marketing firm Be Heard Group, both pointed to Facebook's experiments in Slovakia, Sri Lanka, Bolivia, and other emerging markets, where the firm split the news feed in two.

One news feed was for friends-and-family posts only, while the secondary "Explore" feed was for organic posts from businesses and publishers.


Thomson Reuters

According to a joint report from the Reuters Institute for the Study of Journalism and Oxford University, Slovakian news media saw a 400% drop in interactions and a two-thirds drop in reach.

For Maude, Facebook could roll out the split news feed feature more widely. "It's clearly driven by a desire not to alienate their users, and to keep people using platform."

Littunen described the experiment as "radical," and thinks Facebook will use the data from those tests to inform how to restructure the news feed in other countries. But it may not be as drastic as splitting the news feed in two and Facebook's head of news feed, Adam Mosseri, said in October that there was no plan to roll the feature out more widely.

Publishers have long been suspicious Facebook wants more money

Even if Facebook doesn't do anything as drastic as relegating publishers to a secondary news feed, any kind of change will look suspicious to media brands which have long been battling declining organic reach.

"The suspicion has always been that cutting organic reach of commercial publishers on Facebook forces them to spend more on advertising to promote their posts," said Maude.

It's noticeable, added Maude, that Facebook didn't talk about cutting the number of paid-for ads in the news feed, suggesting advertisers who cough up will see as much reach as ever.

"If anything this could encourage publications to spend more on Facebook ads to try and maintain or increase their traffic," he concluded.

The media's biggest frenemy, Google, suddenly looks like a good bet

Given Facebook's continued importance to publishers, it's unlikely they will abandon such a strong traffic source, even if that traffic becomes incrementally harder to obtain, said Maude.

"You're likely to see more publications talking about how it's important for them not to be so reliant on Facebook," he said. "But when Facebook is such a huge platform, with such a huge audience, it's difficult to walk away from it."

Google, which both benefits publishers through search referral traffic and hinders them by eating up digital advertising spend, has been making serious efforts to improve its relationships with news brands.

Google CEO Sundar Pichai

Justin Sullivan / Getty Images

Google CEO Sundar Pichai.

Chief executive Sundar Pichai met with news publishers to discuss how Google could help attract more paying customers. The firm also rejigged its search engine to drop its unpopular "first-click free" feature, which ranked some publishers higher if they offer some stories for free.

"Google is moving in the direction of trying to make the economics of news work," said Littunen. "Facebook seems to be taking the attitude that news is a problem."

Google still has some difficulties, he added, like having a coherent approach to news publishers across its advertising, content, and search arms. "If Google is serious about courting publishers, they will need to figure out how to make different parts of their business work together," he said.

And finally, publishers might turn to a service that's always been more friend than enemy: Twitter.

One reason Facebook prioritised news in the news feed was to compete with Twitter, which is still popular as a way of sharing real-time information. If Facebook scales those efforts back, there's room for Twitter to capitalise, said Littunen.

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