How Facebook Inc. is Forcing Businesses to Spend More

By Markets Fool.com

Facebook has become skilled in making moves that benefit the company and selling them as being good for its users.

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LikeMcDonald's putting fewer fries into its Happy Meals while charging the same price and selling it to parents as being good for children's health, the social media site has consistently found ways to deliver less for its business users while charging more. Its latest change to the Facebook News Feed is being sold as a way to put more content from your most-trusted friends into your feed. That, however, is only a byproduct of what the company is doing and not the reason for the move (though Facebook denies that charge).

Yes, the change will make content from your friends more prominent in your News Feed. But, more importantly for Facebook's bottom line, the changes will minimize how often your see content from businesses you follow. Some people might like that, but you're not really getting a choice.

By minimizing the reach of posts by businesses, celebrities, and other nonindividual pages, Facebook forces those companies to pay to enhance their posts. If they don't pay up their Facebook following, no matter how large, won't matter because organic (read: nonpaid) reach will be nonexistent.

WIth these changes, businesses. including the sports teams you follow, will receive less priority in your feed. Source: Screenshot.

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What Facebook is doing
The company wants its users to accept at face value that its changes are intended to improve user experience. It released a blog post explaining that it is changing the functionality of News Feeds to ensure people with active feeds don't miss "important updates from the friends they care about."The company spelled it out fully in the blog.

The second update tries to ensure that content posted directly by the friends you care about, such as photos, videos, status updates or links, will be higher up in News Feed so you are less likely to miss it. If you like to read news or interact with posts from pages you care about, you will still see that content in News Feed. This update tries to make the balance of content the right one for each individual person.

What's important here is the word "friends." In Facebook parlance, a friend is an individual. It's not a business like a sports team, brand, or band that you might engage with as much as or (in my case during the NHL playoffs) more as with any person. By prioritizing friends over businesses Facebook has made it so companies must pay to ensure their posts are actually seen.

While the social media giant says it wants to deliver "the content that matters to you" in your feed, it's willing to compromise that when businesses pay to boost their posts.

Facebook denies money is its motivation
While the cynic like myself might see Facebook using flowery language to cover up a profit grab, it's worth noting that the company has a Web page explaining why organic reach for business has declined.The company explicitly denies that the drop in reach is tied to Facebook's desire to make more money. In fact, it posted an answer to the question "Is organic reach dropping because Facebook is trying to make more money?"

No. Our goal is always to provide the best experience for the people that use Facebook. We believe that delivering the best experiences for people also benefits the businesses that use Facebook. If people are more active and engaged with stories that appear in News Feed, they are also more likely to be active and engaged with content from businesses.

Take that for what it's worth, but Facebook has held that party line even as it has slowly reduced the value of having a business page with many fans.

What does this mean?
Until another social media platform attains a user base comparable to Facebook's. the company has free reign to do whatever it wants. That's good news for investors because these changes will force companies that rely on Facebook marketing to spend more money.

Many users will also likely appreciate these changes. But they beg this question: If the social media leader wants people to have the News Feed they want, why not let them customize that feed and weigh content as they see fit?

Perhaps I value my relationship with my favorite soft drink and the brand of underwear I wear more than many of the "friends" in my feed. Maybe I want to see every single post from the New York Rangers during this time of year to the exclusion of actual people I value heavily when it's not playoff season.

Facebook has done a good job in unlocking dollars from its corporate clients, but it should probably stop selling the changes that allowed that as being all about user experience.

The article How Facebook Inc. is Forcing Businesses to Spend More originally appeared on Fool.com.

Daniel Kline owns shares of Facebook. Let's go Rangers! The Motley Fool recommends Facebook and McDonald's. The Motley Fool owns shares of Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.