Facebook Test Turns Users Into Advertisers
Facebook is testing a new product in the US that allows ordinary users to pay to promote their own status updates, marking a shift in the social network’s willingness to charge its users for a core service.
The product has potential to generate revenues, analysts said, but could also threaten the organic feel of the site as people pay to market their own social lives.
“This is consumers becoming advertisers,” said Rebecca Lieb, an analyst with the Altimeter Group. “It’s also an interesting way for Facebook to get more data out of their users, because anybody who pays to promote a post will supply their credit card information.”
Facebook began testing the feature in New Zealand in May, then rolled it out to more than 20 other countries with prices ranging from $1 to $12 per post. On Wednesday, it began offering the feature in the US, where most of Facebook’s revenues are generated, to users with less than 5,000 friends for $7 per post.
“When you promote a post — whether it’s wedding photos, a garage sale, or big news — you bump it higher in news feed so your friends and subscribers are more likely to notice it,” Facebook said in a blog post.
Facebook’s existing algorithm places ordinary unpaid posts from friends at the top of newsfeeds based on the number of Likes and comments they have generated from other friends.
Paid posts will override that merit-based system.
Some Facebook users have taken to the social media site to complain, setting up opposition groups like “End Promoted Posts” and “Against paying money to announce/promote posts” and grumbling that Facebook is turning directly to users to ease the pressure it faces from investors.
Others laud the new feature as a way to promote their rock bands or charitable causes and reach more people. In one example Facebook provided, a paid post was viewed 3.8 times more than an unpaid post.
“There is an airtight battle for space and attention on Facebook,” said Jed Williams, analyst with BIA/Kelsey. “Something like this is almost inevitable when you have this much inescapable noise in the news feed.”
If people do use the new paid feature, Facebook could garner more from the experiment than just income: data.
Credit card information, in combination with other data, like postcodes, provides valuable clues about user demographics that can be applied to advertising, Ms Lieb said.
“Possible political affiliations, and cultural, socioeconomic hypotheses can be drawn from that type of data,” she said.
Facebook shares, which listed in May at $38, closed 2 per cent lower at $21.83 on Wednesday.