Facebook is constantly changing the way in which it selects, curates and displays posts in users’ News Feeds. In January 2018, the social network made one of its biggest algorithm updates, which included prioritizing posts from friends and family while subsequently displaying fewer posts from businesses.
Upon hearing news of this update, many advertisers feared it would hurt their ability to create effective advertising campaigns on Facebook. And according to research cited by Recode, it appears those concerns were right.
While total ad impressions on Facebook increased in February, it was a relatively low growth rate compared to previous months. Research shows, for example, that ad impressions on the social network grew by just 18 percent in February 2018 compared to February 2017. In July 2017, ad impressions had increased by 149 percent compared to July 2016. An 18 percent growth of ad impressions signals a disturbing trend for Facebook advertisers.
So, why are Facebook advertisers seeing lower ad impression? In the article cited above, Recode explains that Facebook’s latest algorithm change has resulted in users spending less time on the social network. Facebook CEO Mark Zuckerberg predicted this would happen, saying its a side effect of displaying more posts from family and friends in users’ News Feeds. With users spending less time on Facebook, however, it also means fewer ad impressions for advertisers.
Because Facebook is generating fewer ad impressions, advertisers are experiencing higher costs. Going back to the basic principle of supply and demand, there’s a lower supply of ad impressions on Facebook, but the demand hasn’t changed. Therefore, advertisers are paying more for ad impressions and clicks.
Facebook has made similar changes to its News Feed algorithm in the past. In January 2015, for example, the social media giant began displaying fewer commercial posts in users’ News Feeds. When announcing this update, Facebook explained that users were seeing too many promotional posts from businesses and not enough posts from their friends and family. To combat this challenge, it updated its algorithm to display fewer posts with commercial intent in users’ News Feeds.
Even with fewer ad impressions and higher ad prices, however, Facebook Ads remains an invaluable tool for marketers and business owners. Statistics show that nearly three-quarters of the U.S. population has a Facebook profile. With its unparalleled reach and vast targeting options, business owners and marketers can still use Facebook Ads to drive sales.
Dil Bole Oberoi
