What small business owners need to understand about social media.

With the release of the Netflix film The Social Dilemma, appropriate outrage is growing towards some of the most nefarious companies in human history. The film does a good job highlighting how unethical the business model of surveillance capitalism truly is, and they do so by bringing on people who helped build the platforms. While it still has the lingering feeling of being a shock and awe documentary, they lay bare how the algorithm is personalized to each individual and manipulates your behavior. While that is urgent and depressing, we are going to discuss how Facebook, Google, Twitter, etc. are killing small business everywhere by running a massive marketing “Ponzi” scheme. We are going to focus on Facebook primarily.

For those who do not know, if you run a Facebook business page, you have the ability to post to your followers like a normal account or you can purchase ads. Let’s start with normal posting, sometime after Facebook purchased Instagram they changed the way you would interact with followers. Essentially the message was, hey if you don’t make content that followers like, we won’t show it to them even if they followed or liked your page. The reality was they were no longer letting your followers see your content for free. If you have 1000 followers, you’d be lucky to get 50 impressions or views from followers. Of course there will always be extremely rare exceptions where a business makes a viral video. This leaves all businesses using Facebook for revenue with no other option than to start spending money to boost their post or start running ads.

This is where it really gets hairy. In the Social Dilemma they highlight one of the main inspirations for social media – Slot Machines. The way you pull the wheel or open the device never knowing what you might get is a deep, chemical, scientific addiction. Now imagine being on the business end of this, you are constantly encouraged to boost a post for just $20 more it will reach 2,000 more people! Once boosted your phone notifications are going crazy with likes! It is exhilarating, your business is growing! Right? ……. WRONG. Facebook advertising is a certified gambling platform. Except when you are losing they give you a million irrelevant information points that say your winning. Did your revenue increase? Did you get any qualified leads? No, you got more likes, who can’t even see your post unless you pay more money.

Perhaps the most unethical aspect of Facebook is the complete lack of transparency with advertisers. First is the fact that advertisers can remain completely anonymous(foreign countries, billionaires, radicals), the second fact that is never mentioned is the complete lack of transparency for the businesses that purchase ads. First, every business receives a different dashboard with different tools depending on the size of their spend. Personally I’ve seen and used Facebook ad manager accounts that belong to 4 businesses from with budgets at the top of $40,000/month down to $300/month. The larger the budget the sooner new features would release. Some tools and features were never available to the smaller business. Unfortunately it is difficult to compile much evidence on this alone, we welcome any screenshots from other business owners.

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While this should startle any small local business, the way they use your spend is what is truly startling. Try to take note of this next time you are about to purchase a consumer good like sunglasses or shoes. If you visit a website to purchase sunglasses, we’ve all seen the retargeting ads that follow you around Instagram. Any business can have these no matter how small, hoorah! Let’s move on and see how this plays out, please try to see this for yourself next time you use social media. Small local glasses brand has someone visit their site, the person adds glasses to the cart but has something else to do and does not make the purchase. Because the savvy small business owner has the Facebook Pixel(this is how they watch you on websites) on his site, he retargets you with an ad on social saying “hey come on back and snag these glasses”. This is where it gets dicey, the small businesses budget runs out on Monday, but Oakley Sunglasses(hypothetical) budget is $1000/day. You have now paid to give Facebook a customer who they are certain wants sunglasses and is going to purchase very soon. They then serve that person’s attention to the highest bidder. Think about it, every business is paying to give Facebook info on exactly when, where, and what you are going to purchase. They are then matching consumers with the product of the highest bidder.

Look around, have you ever purchased something from an Instagram ad? That item was picked by a computer algorithm.

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