Media companies have been waiting for the other shoe to drop since Facebook announced changes to its all-important newsfeed algorithm that (at least on paper) were designed to stop posts from businesses, brands and media from “crowding out” personalized content.
Now, barely six weeks after the changes were first announced, Facebook’s decision to deprive publishers from a crucial stream of user traffic has claimed its first casualty: A four-year-old publisher called LittleThings.
The change, according to LittleThings’ COO Gretchen Tibbits, had a “material” impact on the site’s traffic, killing 75% of its organic reach, according to DigiDay.
LittleThings’ comScore traffic declined to 40 million this month from 58 million last May. The closure will leave the company’s 100 employees without jobs.
Facebook CEO Mark Zuckerberg unveiled the changes in a blog post published early last month, claiming that Facebook’s internal research had determined that its users are happier when their feeds are filled with personalized content – like photos from their neice’s graduation – while news and paid advertising typically lead to feelings of malaise.
Of course, anybody who’s been following the monthslong battle between Facebook and Democratic lawmakers over its “failure” to stop a Russian troll farm that has since been indicted by Special Counsel Robert Mueller from distributing $100,000 worth of paid political content on Facebook’s platform.
Unfortunately for the media industry, the fallout from this decision has only just begun to be felt.
Facebook’s algorithm change will probably do lasting harm to dozens – if not hundreds – of publishers who depend on the company’s algorithm to drive traffic to their content. But LittleThings’ aversion to taking outside money (the site was self-funded) meant there was little in the bank to tide the company over during a downturn. The site was in the middle of a pivot away from programmatic advertising toward more lucrative direct sales, as giant American consumer brands felt LittleThings’ inspirational content would be an important counterpoint to the often dreary news cycle.
Because it will also de-prioritize paid ads, the decision is expected to harm the company’s bottom line. Unsurprisingly, its shares tanked after Zuckerberg announced the changes.
LittleThings had other factors working against it. Unlike a lot of distributed media upstarts that chased audiences on platforms using VC money, LittleThings was self-funded, which meant there wasn’t a big cushion when things went south. It largely built its business on programmatic advertising, but then pivoted to more lucrative direct sales.
LittleThings’ inspirational stories were a safe haven for advertisers that were increasingly getting spooked by the contentious news climate, but there was a downside there, too. “The brand safety was a huge selling point for us, but the flip is, our audience is women over 30 in middle America, and they’re not sexy,” Tibbits said. The company made some inroads, getting buys from blue-chip advertisers including Procter & Gamble and eBay, but it wasn’t enough, and the first quarter of the year is typically slow for advertising.
Other publishers are looking to Google and Twitter to make up for what they’re losing from Facebook, but for LittleThings, there was nowhere else to go. LittleThings’ comScore traffic had declined to 40 million from 58 million last May, according to Tibbits.
“For our audience, there’s not another platform right now,” she said. “There are 100 great, talented people who were here and doing content that resonated with an audience that’s just harder to find right now.”
As LittleThings crumbles, other publishers are hoping Google and Twitter will help them compensate for Facebook’s retrenchment.
But whether these strategies will ultimately pan out remains to be seen.
Though perhaps an even more important question would be: Is this also Putin’s fault?
via Zero Hedge http://ift.tt/2CQ84L6 Tyler Durden