Engagement and Usage Decline in Facebook
Synopsis: Time spent on Facebook has been in decline since well before their data privacy crisis began. This has implications for developers, publishers and advertisers. This article analyses this impacts of the Facebook changes announced 11th January 2018.
When Facebook announced it's
algorithm changes on 11th January 2018, they predicted a
5% reduction in user time, or 50 million hours per day (yes, day!)
in user engagement time. While good data has been hard to come by, it
appears the actual impact has been far worse. Neilsen Digital Content ratings
reports a massive 24% decline in average time spent on the platform. In the US,
the number of daily active users has reduced from 185 to 184 million
may seem like a small decline, but it is the first decline.
The declines began before the
Facebook data privacy crisis. In the aftermath of the "Fake News"
crisis which was highlighted most vividly in the dissemination of misinformation
during the UK Brexit and US Presidentatial campaigns in 2016,
Facebook came under enormouse pressure to change it's Newsfeed
algorithm - the bit of software that determines what you see and how
prominent it is. This may sound like a bit of geek stuff, but it
is having a profound effect on Facebook, the media industry, Internet
An Engagement Driven Business
98.5% of Facebook revenue is from advertising
As measured by
a full 18% of global ad spend goes to Facebook. Advertising is core to
Facebook, and Facebook is a key part of any online advertising strategy.
Against this background, Facebook's business model has always been
to increase the amount of time spent on it's platform. That
makes it more valuable to advertisers. It does
this by tuning your newsfeed so you see things likely to keep
you on it's platform. It's share price has always been roughly
a function of the number of hours users spend staring at the newsfeed -
and so being exposed to ads.
Facebook delivers value to it's advertisers by showing users
content that will keep them on the platform for more hours every day.
Who doesn't like watching the latest cat-that-can-dance
video? And for users that create content that people widely want
to see - meaning gets them to spend more time on Facebook - Facebook
will pay them through their
Content Monetization program. Yes, they will pay you for making
funny cat dancing videos.
So far, so good. But then malicious actors started feeding unsavoury
content into the platform. The most infamous of this has been the
politically charged "Fake News". That charged content, playing
to people's inner biases and emotional feedback loops, did
on it's surface exactly what Facebook wanted - generated rapidly
increasing time users spent on the platform. It was also
coorosive, so Facebook came
under unbearable pressure to make changes that go to the core
of it's business model.
Facebook's answer was to change it's algorithm to give what
it called more "meaningful engagement". That means
showing more things in your newsfeed about your friends and family,
and less commercial and public content. Public content would also
be prioritized by it's engagement, generally measured by things
like comments, shares, and conversations between friends occuring
in the context of the content. Media content that was being
shared would also start to be prioritized by the quality of the source,
not merely how many 'clicks' it garners.
To the average user, these changes sounded commonsense - and surely they
are - and as if the impact would be minimal. The impact has been far
from minimal on either publishers or advertisers.
Impacts of the Changes
Some of the most immediate and dramtic effects have been noticed
in the media business, as noted by online media analytics firm
With Facebook limiting the number of public content posts and
prioritizing sources generally more reputable, better
known and established outlets have gained and fringe content
has seen a marked decline. Examples of increases include
CNN, which saw a dramatic 31% increase, as well as the New York Times with
an even more dramatic 51% increase in interactions. Given overall
user time and engagement on Facebook has decreased in the same
period, if you guess these increases have come at the expense
of fringe and lower quality content, you'd be right. There are a
host of previously highly trafficed but lesser known properties that have seen
dramatic falls, such as Western Journalism and NPR.
On this topic of changes in traffic, there have been widespread online
conspiracy theories that Facebook is discriminating against politically
'conservative' content in favor of politically 'liberal'
content. I have no intention of doing political commentary, but given
I've done the research on the data for this article,
I'd feel remiss if I did not point out
that Fox News - known to be Conservative - has seen a marked increase
in engagements after the changes, where NPR - widely seen as Liberal -
has seen one of the most dramatic declines in engagements (around 40%)
of any major
sites. It's a fun parlor game to speculate on who, what and why
these major traffic changes are happening beyond what Facebook
says publicly, but the data at least suggests it isn't all politics.
Beyond media, advertisers have felt the pinch. As Facebook has prioritized
user generated content from our connected friends and family, less
'real estate' is available on the newsfeed for ads. Those
effects are already being noticed and are generating a lot of
industry press. I won't repeat what is already written, but
you can see an interesting article from
AdWeek on the topic back in January. From a commercial standpoint,
user's now see less ads, which may make the advertising space
on the newsfeed more valuable. However, there is also less overall
user engagement, tending to make advertising space less valuable.
How will it balance out? It is wait and see for now.
And remember those people making money from cat videos?
The final major area of adverse impact, which has been far less reported on in the media,
are the people that earn income by monetizing content.
There was a story of online commentators known as
Diamond & Silk. After the algorithm changes they suffered
a decline and traffic which very negatively effected their
income from monetization of content. While they started a
hoax conspiracy theory that they were being discriminated against that in the end was debunked,
their underlying observation was true: the algorithm changes did indeed
reduce their traffic, engagement numbers and consequently
ability to monetize their content. They are far from the only ones.
Reactions In the Market
The effects on online businesses, advertisers, publishers, and content
providers of the changes in Facebook's algorithm are
only now starting to be aparent, and obviously Facebook will
make adjustments. A sure beneficiary are digital marketing firms
as they help clients adjust. Other beneficiaries may be
other platforms able to more micro-target ads from certain
supplier or provider segments into very specific customer segments. Facebook
had a stumble in it's attempts at micro-targeting users
with the Cambridge Analytica scandal, but that in no way means
the increasing ability to micro-target ads and content will
become unattractive in the online industry.