Mark Ritson: Facebook news feed changes were needed to fix it before it breaks

It’s three weeks since Mark Zuckerberg announced his personal challenge for 2018 was to “fix” Facebook and two weeks since we saw the first tactical implication of that decision, with major changes to the Facebook news feed algorithms. Promoted posts from brands and publishers are being slashed to prioritise content from friends and family contacts.

In that time, we have seen a deluge of analysis examining what the move will mean for publishers (“devastating”); brands reliant on Facebook for their awareness and engagement with consumers (“devastating”); and the agencies who offer Facebook advertising (“nothing to worry about, we are totally on top of this, spend more”).

But what’s been curiously absent from the debate is what the move means for the company itself. While everyone and their digital dog has quickly run the rule over the implications of the Facebook news feed changes for their business, what about Facebook itself?

Hold my beer.

To understand what is going on at Facebook and what is driving this major shift in focus you have to rewind all the way back to the core topic of how brands work. Brands generate value. And value is a two-way street. One prong of the V points to shareholders and stakeholders who enjoy the fruits of a brand’s success, and the other points to the customers that use the product or service and create the value in the first place.

READ MORE: Mark Ritson: Facebook’s segmentation abilities are depressingly impressive

In a well-run brand the two prongs are in rough equilibrium and the V sits relatively upright: the brand generates value for target customers and thus creates value for stakeholders. You can even argue – as many at Harvard do – that marketing is the management of the value equilibrium.

It’s clear that value at Facebook has been leaning at an ever-greater angle towards stakeholders and away from users. The angle has grown ever more acute as users, who once used the site unencumbered by any commercial messages, now open a page over-saturated with advertising and commercial media. Facebook actually ran out of room for any more advertising in its  last year and it is starting to show. Clutter might be a 20th-century marketing word but it has no better current exemplar than the Facebook user experience.

Putting users before stakeholders

It’s an age-old marketing challenge. A medium attracts a big audience, it monetises the audience with commercial messages, those messages outweigh the original attractive content, the audience tunes out, commercial interest wanes.

Facebook continues to grow its incredible global user base past the 2 billion mark, albeit at a slower pace than the glory days of yore, but the big issue is whether these existing users are maintaining their usage. It’s impossible to gaze over the garden wall to accurately gauge what impact an ever more commercially cluttered Facebook news feed is having on usage rates. Facebook no longer regularly reports average user time, leaving third-party estimates varying wildly from 20 to 50 minutes per day per user.

That kind of variance makes it impossible to track Facebook’s audience data over time. But, with the caveat that this is all supposition and the appropriate rejoinder that without proper third-party data that is all we can rely upon, the likelihood is that Facebook is anticipating a major problem with one particular user metric: the number of sessions on Facebook per user per week.

While its user base grows and average user time remains roughly constant, it’s likely that user appetite for opening Facebook is in decline among some segments. Once a user opens their Facebook page the usual hypnotic flow retains the same approximate dwell time and the experience is certainly not negative enough to turn a user into a non-user. But the actual appetite for Facebook reflected in the number of visits among some users might be starting to trend downwards.

I remain a customer of McDonald’s and, once there, I gorge on the usual combination of a Big Mac and fries. But age, waistline and general disappointment with fast food means that my visits have declined dramatically over the past decade.

Several independent analyses suggest this is exactly the issue with Facebook’s user base. There has always been anecdotal evidence that kids are turning away from Facebook, however this appears to be more research-respondent bluster rather than empirical veracity. But Verto Analytics made headlines last year with its October data, published by eMarketer, showing that while average session duration on the site had remained constant, the number of average sessions per user on Facebook had decreased dramatically.

The company later retracted the research and claimed that a change in its methodology made year-to-year comparisons impossible, but it did not wind back its claim on the actual October 2017 numbers.

There was a similar finding Down Under last year from Sensis, which conducts an annual survey of social media usage from a representative sample of Australians. In its 2017 review, Sensis notes the continued, almost universal appeal of Facebook among Aussie social media users (97%) and that the amount of time spent per visit remained constant at around 23 minutes. But its report added that the number of times people access the site had fallen from 32 to 25 times per week, causing a significant reduction in total Facebook time per user in 2017.

Both sets of data are self-reported estimates of time, which, clearly, pale into insignificance compared to the big behavioural data that we do not have access to. But they are important numbers because, if they are borne out by actual user data, they would still remain effectively hidden in the current set of audience data that Facebook does report.

Both global user base and monthly/weekly active user numbers would continue to look positive. It’s only with the added data point of number of visits per week from a representative sample of users across time that any potential downturn in Facebook’s audience performance might be glimpsed.

Any such downturn in user frequency would be particularly troubling for Facebook because of the ephemeral nature of its brand loyalty. The dirty secret of many brands is that their so-called brand-loyal customers remain with them because of a very small dose of brand equity and a much bigger sack of other, less sexy stuff.

The likelihood is that Facebook is anticipating a major problem with one particular user metric: the number of sessions on Facebook per user per week.

Ask a room of one hundred strangers if any of them love their bank and six people (who all work in banking) will put their hands up. Ask the remaining 94 people how many will change banks this year and three people will raise their hands. Switching costs mean that, while most of us are neutral to negative in our sentiments for our bank, we will all end the year with the same cards in our wallets as when we started.

But Facebook is different. There are no switching costs, no payments to turn off, no barriers to exit, no subscriptions to end and start elsewhere, nothing to prevent consumers from reducing their patronage and moving their eyeballs elsewhere.

It would be a mistake to think of a user simply stopping their use of Facebook overnight, like a customer closing a bank account or a smoker changing brands. Instead, if the limited data is to be believed, they simply reduce their interest over time. It is not a fiery break up that Facebook must fear from its user-base; it is a gradual, long-term cooling of affection that leads to gradually less physical interaction and fewer and fewer dates, until one day, out there in the dim and distant future, your lover simply forgets to call you again.

It was customers rapidly falling in love with Facebook – and quickly and interactively connecting with other customers who also came on board at astonishing, logarithmic rates – that built Facebook into the behemoth it has become. But what goes up can just as easily go down.

That startled look that occasionally takes hold of Mark Zuckerberg’s face is not just one of surprise at being hurtled from a Harvard dorm room to the boardroom of the biggest digital business in the world in less than a decade. It is also the look of a very intelligent man who knows that his whole empire is built on a brand that is peculiarly vulnerable to the one thing it has so far benefited egregiously from: customer sentiment.

A smart brand revitalisation

We should see the Facebook news feed changes as a significant attempt by the company to fix something before it breaks. If my guesswork (and I accept that is all it is and all it can be from this side of the garden wall) is correct, then the company deserves plaudits for recognising an issue in its customer data before it becomes a financial issue.

It also deserves credit for understanding the difference between marketing and sales. If Facebook were a purely sales-driven operation, it would push on regardless because profits and advertising sales remaining ridiculously healthy at Facebook. For now.

What Facebook is really doing has been lost in all the hullabaloo of what the move means for advertisers, publishers and agencies. This is a brand revitalisation.

Zuckerberg has realised that Facebook has lost its way. Somewhere among the golden eggs of billion-dollar profits and advertising income, Facebook forgot about the golden goose of connecting people together. At first it was people at Harvard, then at other universities and finally the world. At a time when we felt more separated than ever from those we love, Facebook offered us the emotional proximity we desired. It’s hard to feel that emotion when Facebook is filled with garbage about celebrities and ads for products you purchased and disposed of three weeks ago.

READ MORE: Google and Facebook commit to ‘gold standard’ to clean up digital advertising

In a brand revitalisation you do not change your brand position; you go back in time to remember what it once was, explicate it, and then jump back to the present and use that explication to guide your actions in the present. Fixing the Facebook news feed might mean massive, potentially fatal changes for everyone else in marketing; but for Facebook itself it means getting back to their core and returning the brand to long term, sustainable health. Fast.

And it won’t stop there. Brand revitalisation is a strategy; the news feed fixes are merely a tactic. Expect more tactical changes from Facebook in 2018 as they restore their social credentials and downplay the commercial implications and opportunities of the world’s biggest social media platform, and focus instead on connecting people to other people.

For all those still complaining about the move or citing the fact that the decision has cost Zuckerberg billions in his own personal fortune from the subsequent drop in Facebook’s share price, I would pose one final question. Would you rather have $20bn in EBIT and a CAGR of 40% for the next five years? Or would you prefer and extra $5bn of EBIT this year but a subsequent CAGR of 20%?

This is good brand management, great marketing and very smart business. Just not for anyone else.

Professor Mark Ritson will be teaching the next Marketing Week Mini MBA course from 24 April 2018. To book your place, sign up at marketingweek.com/mini-mba.