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One of my concerns the last month has been a change Facebook made to their algorithm. They’re basically making it impossible to reach fans of business pages without paying to promote posts or get likes. They call it “declining organic reach.”
If you decide to pay for likes, the results may surprise you. I wrote in December about the problem of “promiscuous likers“. This is now getting more serious attention. One blogger created this viral anti-Facebook video in February. I like his approach and his larger dataset better than the work I did last summer. (Check it out if you’re thinking about advertising.)
Despite the twin pitfalls of declining organic reach and promiscuous likers, Facebook’s new algorithms still allow businesses with money to move into the neighborhood, set up shop, and get customers. Meanwhile, poor companies and startups vacate their properties. This process is nothing new. It’s called gentrification. Facebook is digitally gentrifying.
The same process is probably happening with Google AdWords. Years ago cost per click ads were an order of magnitude cheaper. Now you can easily pay $10 per click. For some keywords, it makes no sense. Then again, neither does overpaying for a brownstone in an up-and-coming neighborhood. But rich people do it, and the poor folks leave when they can’t pay the new rent.
There’s a serious issue being discussed right now that threatens to gentrify the whole Internet: net neutrality. In a nutshell, they’re talking about allowing Internet service providers to charge more for bandwidth needed to stream music and videos (mostly videos). Netflix and other established players will be able to afford these higher prices. Meanwhile, poor video startups may close up shop. If the current ruling stands, ISP’s could charge any company and kill any startup they pleased.
I’m not pessimistic about this. Facebook and Google aren’t the only ways startups can reach customers. ISP throttling will inspire creative work-arounds. But it does seem as if digital gentrification will take away the last of the low-hanging Internet fruit. The amount of capital already at work online will throw up barriers to entry, and in desirable neighborhoods like Facebook, startups and small businesses will need to pony up or move out.
It seems there ought to be implications for investors in startups, as well. If a company’s goal is just to “get eyeballs,” meanwhile deferring monetization and revenue in order to encourage fast growth, this strategy will probably require more capital than at any time in the past.
Fortunately, there are still two good ways to acquire customers for cheap: direct sales and search engine optimization. Each of these costs you nothing but your time. By working both in parallel, you can simultaneously interact with customers to find out what they want, and produce content that will attract future customers. Now, even SEO is gentrifying a bit, as it’s already impossible to catch up to behemoth, highly ranked sites for certain topics. But all you need to do is get started, and your niche is too tiny for the behemoths to fit into.
So if you’re upset that Facebook has undercut your online marketing, move to another neighborhood. Once you’re moving at a faster speed, you can set your eyes on that Facebook property you’ve been wanting.