Friday, December 13, 2013

What Facebook's Recent Product Changes Tell Us About The Future Of Content


Facebook announced an algorithm change last week that has dramatically impacted the content consumed online and on mobile devices (disclosure: I own shares of Facebook). While 30% of Americans find news on Facebook, an astonishing 78% of those Americans discover stories while on the site for other reasons. The significance of a change in the algorithms that determine how 23% of Americans (78% x 30%) find news has had a dramatic impact on content consumption. The impact of these changes was published in BuzzFeed two weeks before Facebook announced its algorithm update. Facebook referral traffic to the BuzzFeed Partner Network, which includes over 200 media sites and 300 million users, was up from 100 million referrals in August to 151 million referrals in October – a 69% increase in 2 months.

Facebook will undoubtedly continue to modify its Newsfeed algorithms to promote content that keeps people coming back to Facebook to discover something new and then share it with their friends.  To understand the types of content that will be promoted in future algorithm changes, you need to examine why people visit Facebook and for what purposes they share content with others. Understanding this is the key to Facebook’s business model and will determine company’s product decisions.
The biggest reason people visit Facebook is to “see what friends and family are up to.”  While they’re discovering the latest updates from their friends and family, they’re exposed to the content that these friends and family shared and commented on. This is how 78% of Facebook users discover news on the platform. They aren’t seeking the content; they stumble upon it on their Facebook Newsfeed. Users engage most frequently with this content if it’s interesting, funny, or entertaining. According to the New York Times, they will then re-share the content if they believe their friends will find it valuable and entertaining.
The loop of engagement and sharing is the key to Facebook maintaining a vibrant community of more than 1.1 billion monthly active users. To keep its audience interested in visiting the network, Facebook will continually modify its algorithms to promote the valuable and entertaining content that users crave. In the last couple of months, websites have sprung up that take advantage of user preferences with headlines that bait users into believing the content is interesting and entertaining. ViralNova, Distractify, and Upworthyare three sites capitalizing on pattern recognition in Facebook content discovery. All three sites are claiming to be some of the fastest growing media companies in history. The CEO of Distractify recently told me that he had 30 million unique visitors during his second month of operation with a vast majority of his visitors coming from just three viral posts. That sounds more like hitting the lottery than building a sustainable media business.
A few years ago companies like Demand Media capitalized on the media discovery of choice, search engines, to build large audiences. These companies gamed the Google Search algorithm, but Google users quickly became annoyed with SEO content distracting them from finding the results they wanted. In turn, Google changed its algorithms when it began noticing user dissatisfaction with search results. Demand Media struggled financially for several quarters following the 2011 Google Panda Update, which penalized search engine optimized content. These algorithm changes have impacted Demand Media so profoundly that the company recently decided to spinoff its viable domain registrar business from its failing media sites.
Facebook users will eventually start to show distaste for content that is clearly made to bait users with headlines that seem interesting and entertaining. Once user behavior demonstrates this, Facebook will enhance its algorithms again to favor even more engaging and valuable content. Companies like Distractify and Upworthy will struggle in the same way Demand Media did. If other media companies start to follow the lead of Upworthy to bait Facebook audiences, they’ll soon realize that the short-term strategy to capture more readers today was not worth the long-term impact on their business models.
Facebook, Twitter, YouTube, Pinterest, and LinkedIn are more powerful versions of the early online portals and the television networks. These social media sites are capable of driving massive amounts of traffic around the web and can completely change content consumption behavior with algorithm changes. Media companies are at the mercy of the social media giants’ product decisions. To understand the content that Facebook and these other distribution channels will favor in future algorithm updates, media companies must focus on creating content that will help each social network maintain its audience share. If a media company is focused on Facebook distribution, it must create content that will be valuable and entertaining. But if the company is focused on a different distribution channel, like Pinterest for instance, it must create content that fits into the Pinterest product. The Pinterest distributed content must be visual and lifestyle-related. Editors need to spend a significant amount of time understanding the product decisions that each social network will make to predict future algorithm changes and the content those changes will promote.

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