Facebook to cut unpaid posts by marketers on news feeds

By Vindu Goel

SAN FRANCISCO - Facebook's executives are not terribly worried about upsetting people these days.

Flush with profits and a high stock price, Facebook recently shocked investors by saying that it planned to spend billions of dollars on projects that might never generate any profits.

And on Friday, the company told marketers that if they really wanted to reach their customers on Facebook, they needed to buy an ad.

Even for big names

The social network announced that starting in January, it would reduce the number of posts made by brand pages, such as pitches to install a new mobile app or tune into a TV show, that appear in the news feeds of its 1.35 billion global users.

That is likely to mean that fewer fans of a retailer will see its notice about a big sale and fewer fans of a video game company will see a post promoting its latest app.

Unpaid posts will drop out of the news feed even for big advertisers that spend millions of dollars on Facebook ads. But Facebook, which dominates social media advertising the way Google dominates search, has so much power that they don't have much choice but to switch to paid ads.

"It's a clear message to brands: If you want to sound like an advertiser, buy an ad," said Rebecca Lieb, a digital advertising and media analyst at the Altimeter Group, who was briefed ahead of the announcement.

The change to the news feed is the latest blow to businesses that try to reach customers through their Facebook pages.

Over the past two years, the social network has repeatedly tweaked the system that decides what people see in the news feed to cut way back on the number of unpaid posts from businesses.

The company argues that people would rather see videos, photos, news stories and updates from their friends and family.

At the same time, Facebook has aggressively promoted its advertising products, such as ads that pop up on its users' mobile phones urging them to install a new app. In the third quarter, Facebook reported a 64 percent increase in advertising revenue to $2.96 billion and said ad prices rose 274 percent compared with the previous year.

Response to complaints

Brian Boland, a Facebook vice president who oversees marketing of ad products, said the latest changes were not motivated by a desire to increase ad revenue but to make Facebook users happier, which helps everyone, including advertisers.

He said Facebook surveyed several hundred thousand users, who complained that they were seeing too many junky promotional posts in their news feeds. While some of those annoying promotions were paid ads, about two-thirds were posts from brand pages, so Facebook decided to downgrade their chances of bubbling up in the news feed.

Boland said Facebook's ads, which can target users by a range of factors, are a better way to reach the customers most likely to be interested in a particular pitch. "An ad maker doesn't want to serve content to people who don't want to see those posts."