Fleeing Facebook: Why the free lunch is over

One of the mystifying things about the ways businesses use social media is the willingness of companies – big and small – to give their customer lists away to social media sites.

The best example of this is Facebook; when your customers like you or comment on a post they are added to the service’s database. Facebook gets to ‘own’ your customers and generally gets to know your customers better than you do.

With the arrival of Sponsored Stories on Facebook we see the next step which is monetizing their business functions. Now when a business posts on Facebook, it only appears in 15% of their followers’ feeds. To get to the rest of them a business has to buy a sponsored story.

Not only has Facebook taken ownership of thousands of businesses’ customers, it now charges those business to talk to their own clients.

Should the business decide not to pay for sponsored stories then they find traffic from Facebook drops off. Some businesses report traffic dropping from 30,000 views a day to 5,000.

To counter this, one website stumped up the money for a sponsored story that advises their Facebook fans to follow them on Twitter and Google+ instead.

Facebook’s move on this isn’t surprising as they desperately search for revenue streams to justify their huge stock market valuation.

What also isn’t surprising is that the free ride for businesses on social media platforms is over.

All too often we’ve heard marketing gurus tell us Facebook and other social media services were free advertising channels.

That view overlooked the time and patience required for executing an effective social media campaign along with the reality that social media services were only free for as long as the investors underwriting the enterprise were prepared to accept losses.

We understand that advertising on TV, radio or print costs money and now we’re having to accept that social media marketing costs as well.

How well Facebook goes with sponsored stories remains to be seen, but the message for businesses is clear – the social media free lunch is well and truly over.

Paul Wallbank is one of Australia’s leading experts on how industries and societies are changing in this connected, globalised era. When he isn’t explaining technology issues, he helps businesses and community organisations find opportunities in the new economy.