2012 has been an interesting year for brand marketers active on Facebook. The world's social network went public and as a result, has more aggressively moved to monetize its massive audience. That in turn has introduced some new dynamics to the Facebook-brand relationship.
Recently, there has been a lot of buzz around changes Facebook has apparently made to its Edgerank algorithm. The theory: Facebook is making it more difficult for brands to reach their fans organically in an effort to promote use of its Promoted Posts ad product.
While some believe that this is little more than an unfounded conspiracy theory, Facebook is facing a growing chorus of criticism from the people and companies it needs on its side.
Count Mark Cuban as one of the social network's latest critics. A couple of weeks ago, the owner of the Dallas Mavericks basketball team tweeted that he was considering making Tumblr or MySpace the team's primary social channel -- a notable statement given that the Mavericks have more than 2.3m fans on Facebook.
In a follow-up interview with ReadWrite's Dan Lyons, the billionaire entrepreneur and investor who made his fortune selling Broadcast.com to Yahoo in the first .com boom, explained, "The big negative for Facebook is that we will no longer push for likes or subscribers because we can't reach them all. Why would we invest in extending our Facebook audience size if we have to pay to reach them? That's crazy."
That'll be $3,000, please
It's not hard not to agree with Cuban. If his team wants a single post to reach a million of its Facebook fans, Mark Zuckerberg and company are asking for $3,000. While that might seem like a reasonable proposition in absolute terms, the reality is that brands like the Dallas Mavericks have invested substantial time, money and owned media building up their Facebook followings. While Cuban acknowledges that Facebook never provided brands with full access to these followings, Facebook's recent power grab is very apparent, which is where the frustration comes in.
According to Cuban, "In many respects [this] has already blown up on Facebook. Their search for revenue has severely devalued every brand's following and completely changed the economics of consumer interaction."
So what should brands do? Cuban isn't abandoning Facebook altogether, but he says he's aggressively pushing Twitter, while also looking more closely at Instagram, Tumblr and the redesigned MySpace. And he's not just doing this for the Dallas Mavericks -- he's looking at alternatives for the dozens of companies that he has invested in and advises.
Does Facebook need a new model?
On the subject of advice, Cuban has some for Facebook: "The right price is to charge an upfront fee for brands. In the current system there is complete uncertainty on the cost. And even worse, at least for our size brands, you have to deal with the pricing for each posting, which is a time waster."
For smaller companies, the billionaire sees a benefit to an up-front model: less complexity. As Cuban points out, smaller companies "shouldn't have go to great lengths to figure out the nuances of Facebook audience reach" and if Facebook continues to forces them to, "that complexity...will come back to haunt" the social network.
Unfortunately for businesses unhappy with Facebook's direction, an overall change to the model seems unlikely. For Facebook to support its massive operational footprint, and prove that it deserves one of the richest valuations of any internet company, a fixed-price approach probably won't work. The big question is whether companies will tolerate the current model, and for how long.
If Mark Cuban's perspective is any indication, Facebook may have less leverage than it would like to think.