Facebook Plans to Downsize for 2018: Investors & Marketers Weigh in

Facebook’s Strategy to Shrink is to Ultimately Grow

Facebook announced on January 11th that they will be making changes to their news feed that will dramatically reduce the amount of time users spend on its network. Facebook will favor content that is most attractive to you and keep those towards the top while weeding out the less popular posts. This announcement was made after Facebook determined that passively scrolling through your timeline reduces happiness while having a more focused engagement on trending content can boost personal fulfillment. The social network believes that the more users engage with meaningful content, i.e. interesting posts with a lot of user engagement, the more they will feel better about themselves.

How will these Changes Affect Facebook’s User Experience?

The most obvious side effect to these changes is that people will be spending less time on Facebook. However this is something the company is not only aware of but embraces.

Now, I want to be clear: by making these changes, I expect the time people spend on Facebook and some measures of engagement will go down. But I also expect the time you do spend on Facebook will be more valuable. And if we do the right thing, I believe that will be good for our community and our business over the long term too.

-Facebook CEO Mark Zuckerberg

Words such as “meaningful” and “valuable” are commonly thrown around as Facebook executives discuss the changes. Facebook is aiming to promote socializing with a purpose rather than users being bombarded by sometimes useless and/or inappropriate information. This new focus could’ve been inspired after having to defend themselves from interfering with the 2016 presidential election or allegedly discriminating against the elderly in their ad campaigns. Still, these measures seem drastic for economists that view these changes through a quantitative lens.

Facebook’s Value Continues to Plummet

Facebook’s stock fell by more than 4% following the announced changes now valued at an estimated $179 per share. It’s fair to say that Wall Street doesn’t quite know what to make of the changes as of yet but speculate that it’s not going to be a good thing for investors. Stifel analyst, Scott Devitt, has changed Facebook’s stock to “hold” status and told Bloomberg News that:

There is too much uncertainty relating to the economic impact of Facebook’s pending News Feed changes for us to be comfortable retaining a Buy rating on the stock.

Facebook's pending News Feed
photo credit Yahoo Finance!

Facebook’s Impact on Marketers & Small Businesses

Facebook’s announcement caused the most concern for smaller businesses and social media influencers. Zuckerberg initially said that, “As we roll this out [newsfeed changes], you’ll see less public content like posts from businesses, brands, and media.” This is believed to cause major problems for entities with a smaller presence. Michael Stelzner from the Social Media Examiner posted a video on Facebook calling these adjustments the “end of days” for Facebook marketers.

However, these doomsday theories may be seriously misled as Mark Schaefer from Schaefer Marketing Solutions said these changes are merely an extension of policies implemented in 2015 regarding business pages and organic reach. The amount of exposure businesses receive organically has taken a nose dive since than and corporations have to invest if they expect the best ROIs. Agora Pulse said the top 3 receivers of organic reach are news personalities, sports teams and government officials; those with a lot of clout and capital.  Therefore, these changes will have the most negative impact on spammers that attempt to bog down the news feed with borderline meaningless content.

Facebook Organic reach

Facebook Isn’t Going Anywhere

These announcements caused anxious feelings for business experts and social media moguls but the truth is that everyone fears change and this is interpreted as a change that will make a big difference. However, all one can do is try to make the changes work in their best interest rather than fearing the unknown. Besides Facebook cannot afford to lose too much engagement or else it will ultimately go under. Regardless of Facebook’s reasoning for the changes, I think most would agree that social networks have lost their social “touch” over the years so having a more focused strategy could become a long-term tactic of immense value.

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