How can Facebook utilize its News Feed to increase profits?
Login into Facebook and look at your News Feed. As you scroll down you see posts upon posts from friends, fan pages, etc. But how does Facebook choose, out of the enormous quantity of posts every minute, which are published in your News Feed? This question brings up a discussion of networks and ties—who is friends with who, which are strong ties and which are weak—but goes much more in depth. Much like Google’s page sorting algorithm, Facebook has an algorithm for this purpose that is probably more complex than we can possibly imagine. Rather than strong versus weak ties, Facebook’s algorithm has a complex weighting system that takes into account almost every click, every comment, every view, and every post among friends. It also is more likely to publish more popular posts, so even posts by friends who do not interact with you much will be posted if a lot of your friends have interacted with it. The likelihood of this post being published in your News Feed may also be affected by the weights of the ties you have with those friends who had interacted with it as well. So more triadic closures and neighborhood overlap means a post is more likely to be shown in your News Feed.
With Facebook’s commanding lead in possessing the greatest proportion of your time online, this means that it is in control of a large proportion of what you see on the web (http://adage.com/article/digital/facebook-s-chagrin-time-spent-online-equal-money/235138/). However, the algorithm makes it so that yours and your friends’ actions determine what you see, so how can Facebook make a profit off of this? With its recent, and disappointing, IPO, this is become a major problem for Facebook. The ads on the sides of the page do not generate a lot of clicks, and consequently not much revenue, as attention is focused on the News Feed that the complicated networks of friends produces. So one of the ways Facebook has tried to increase revenue is to include paid ads in this News Feed (http://newmediarockstars.com/2012/10/facebooks-new-algorithm-change-decreases-reach-by-5-40-on-your-fan-pages/). They do this via fan pages, and charge per post based on how many viewers the fan page wants to reach. This post would reach friends of friends, not just fans of the page, giving the page access to the individual networks of its fans. The News Feed is an incredibly attention consumer, so figuring out how to make a profit it from it is one of Facebook’s greatest challenges and opportunities. This new feature of charging Fan Pages for more extensive posts allows these pages to take advantage of the connectivity that Facebook provides, while increasing revenue for the social networking giant.
Thank you for this informative post. I have always wondered how facebook choose which posts are published in the news feed. This could help me add helpful tips to small businesses on how to effectively use facebook for their marketing purposes.
Thank you again.