Consider Facebook’s economic power.

The new rules of the game.

Should Facebook drive the small business economy?

I was reading an article tonight on Wired by AND  about Facebook’s struggles during and after the election to deal with the responsibility found in presenting various viewpoints equally while also suppressing fake news. Their epically long, but must-read article is titled “Inside the Two Years that Shook Facebook – And the World”.

I was particularly taken by the implications of a couple of sentences, quoted in my thoughts below.

Power.

A few years ago, I would post a message on my business’ Facebook page and hundreds of fans would talk back to me. It was overwhelming, so we spoke sparingly and carefully. We could post a new product and within a few hours, it would be sold out because so many people knew about it right away.

When the platforms began introducing algorithm changes, everything began to change. At first, we felt just a little squeeze. Then, a big squeeze. Do ads, they said. So we did ads. Do analytics, they said. So we did analytics. Then I started wondering if the pixel had a budget that it wanted me to spend of every sale before it would send me new traffic. Last year, I managed to get an appointment with someone on Google’s advanced sales team and, during the conversation, I was able to get one the sales rep to tell me as much. They wanted me to spend 20% of my revenue to see real growth in incoming traffic. Taking 20% off my top line would have meant that we couldn’t make payroll, so we cut our Google budget.

Then Facebook did the same thing. Experts told me to “game” the algorithm, but I don’t write click bait.

I manufacture a niche product in the baby industry. I have a community of moms who talk to each other. For years, we have primarily sold our product to small, independent retailers who also depended on Facebook for their customer communications. Many of those retailers have closed their doors due to declining sales.

Unfortunately, like many retailers facing a crisis right now, their fingers are pointed towards Amazon. While Amazon changed the retail game, one conversation we don’t seem to be having very often is how different the marketing game is today too.Family-owned businesses are closing. I see small bloggers who have faithfully generated content for their audiences over the years quietly shuttering their blogs. They could afford to talk to an audience they could reach, but they can’t afford the new rules.

What are the new rules? Platform marketing requires using a hidden tracking pixel on my site. That pixel knows everything about the customer browsing the site. It tells the platform what sites the customer browses, how long they are there, what products they look at, and even allows the platform to guess whether or not the customer might fall into certain categories. For instance, Facebook allows advertisers to market to people with babies categorized by the age of their child. They know if someone is likely to be pregnant. They also know if you might have just brought home a new baby.

Those pixels also track the same details about my company. It tells the platform my gross revenues (daily, weekly, monthly, annually) and exactly which products are selling. It knows what products sold to which customer and what that customer spent. On a more macro level, it knows which areas of the country are shopping, and even what income categories might shop with me. I can easily find out what affinity categories my customers belong to. For instance, if I want to know if my customers are interested in redecorating their home or are shopaholics, that information is a few clicks away.

According to Business Insider, Facebook generated $27B in ad revenue in 2016 compared to Google’s $80B.

Source: Business Insider (http://www.businessinsider.com/facebook-adds-a-million-advertisers-in-7-months-2017-4)

That information is extraordinarily powerful. It’s certainly valuable to a marketer on a micro scale, but imagine what it does for the company who owns that information for businesses globally. The pixel gives a platform information that allows them to set their revenue goals by leveraging a percentage of balance sheets worldwide. Because platforms are now the largest source of incoming traffic for many websites, they can now also “turn off” companies or countries by simply shutting down incoming traffic.

Scale that power out over every single company who is doing online marketing using platforms like Facebook or Google, and now you have a few public companies able to pull levers of economic growth on a macro and micro level in every single economy all over the world.

What is Facebook doing with their power?

If they didn’t know that they could be manipulated to influence the outcome of an election, are they also unaware that they are in control of a global economy too?

The Wired article goes on to discuss the conflict between Facebook and large media organizations. Media only generates about 5% of Facebook’s traffic, yet Facebook drives most of their traffic.

Recently, Facebook downgraded stories shared by businesses, celebrities, and publishers, and prioritize stories shared by friends and family. This is fantastic information on one hand. We all want to see stories shared by our friends and family, ideally shared in date order. On the other hand, it’s also disappointing. We don’t want to miss out on things that are important to us. I’ve gone through the Pages that I love and marked them all as “See First” in my settings so I know that they will show up in my feed. I don’t even see most of the posts from my own business pages in my personal Facebook feed.

Facebook,

I know you’re a public company and driven to grow shareholder value. Perhaps, with the furor over the election, you’ve momentarily overlooked your own economic power. I wanted to take a moment and remind you that, in your hands, you hold the futures of small businesses.

We aren’t just another page to be downgraded. We put our futures in your hands years ago when you invited us to your platform. That’s when Facebook exploded. It’s also when magazines and newspapers died. We could go back to what we were doing before, but most of us weren’t doing something else.

Most of us just had a dream. You gave us the opportunity to make our dreams come true because suddenly, we had access to talk to our customers, just like big companies. Big media budgets didn’t determine which dreams could come true. Suddenly, my dream could come true too. Our customers believed in those dreams and wanted to hear from us. They started helping our businesses to grow. You can look at your pixels and see the dream come true. You can also see the changes in our businesses over the years as you’ve turned off our voices.

No, it’s not just Amazon.

Not only does Facebook have enormous social power, you also have economic power. With that power comes the responsibility to be aware of the impact of your decisions. As small businesses, we’d ask that you consider allowing our customers to hear us again. If we have customers, we have revenue. If we have revenue, we can grow together. You get to win no matter what. Please “turn the lever” and let us win too.

That’s real power.

Signed,

One Small Business

“Companies should not have a singular view of profitability. There needs to be a balance between commerce and social responsibility… The companies that are authentic about it will wind up as the companies that make more money.” – Howard Schultz

Jenn is the Founder and CEO of Cotton Babies. She holds an Executive MBA from Washington University. She was awarded Ernst & Young’s Entrepreneur of the Year award in the Emerging Category for the Central Midwest Region in 2011. Among many other awards, she recently received a 2017 YWCA Leader of Distinction Award for Entrepreneurship. Jenn holds many patents on various inventions in a number of different countries and is listed as one of 50 Missourians You Should Know. She is particularly fascinated by languages, chickens, and children (she has four) when she’s not reading economics journals.

Do you have thoughts to add?