How Facebook Inc (FB) Is Looking To Monetize By Changing Rules And Forcing Entrepreneurs To Buy Ads

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Facebook Inc (NASDAQ:FB)‘s strategy to show consumers less unpaid marketing in their news feeds could lead to juiced profits as it forces brands, small business owners, and entrepreneurs to turn to Facebook ads to reach their customers. Facebook, who painted the move as a desire to give the customer more of what they want, has an alterior motive, driving more monetization. The company recently announced its intentions of cutting down unpaid advertisements earlier in November. The move will cut down the reach of small businesses, brands, and young entrepreneurs who are dependent on Facebook to reach their fans and users.

May Not Go Well With Business Owners

According to a survey conducted by Webs, Facebook Inc (NASDAQ:FB)’s decision will have tremendous impact. The survey shows that nearly 80% of small companies out of 2,292 participants use the social networking site. Dan Levy, Facebook’s Vice President of Small Business has said that paid advertising has become more effective and gives immense opportunity to entrepreneurs. Facebook is looking for businesses to take it more seriously as an organized advertising platform rather than; just as, any other social platform. The optimism of Levy, however, does not sit well with small business owners, who will now have to spend more in order to reach the Facebook fans they already have.

Third Model -Renting

Steven Jacobs of Street Fight adds that Facebook Inc (NASDAQ:FB)’s new methodology will hurt the relationship between entrepreneurs and social platforms. He said that Facebook has created a new ‘renting’ model for entrepreneurs, where they can reach consumers, but could not own them, unlike in the traditional form of marketing through email and in-house marketing channels. The company’s endeavor to shift from unpaid to paid advertising comes on the heels of its latest privacy policy updates that demands more personalized access to user’s data on mobile.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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  • Jean

    This will impact Facebooks bottom line in the long run. We have amassed 25,000 like over 4 months for our craft marketplace in South Africa to our expense of around $5000. When we post a status update about one of our sellers (a courtesy to our sellers) it only appears to be seen by 4% to 6% of our ‘likers’. It’s ludicrous that we have to pay more to boost our posts after spending a budget between $500-$1500 a month. The point of amassing and increasing our ‘Likes’ is so that we have constant contact with ALL our fans and not just 4%. Quite frankly, we have wasted our money on Facebook. We are now going to move to a Google adwords, Google+ and full SEO strategy. We have lost faith in Facebook as a benefit to our marketing strategy. We will keep our Facebook page as a place holder, but refuse to support Facebook’s new rules. Shape up or ship out Facebook.

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