Embrace Your Freeloaders
Facebook's ongoing quest to figure out how to make money offers a lesson for associations: Treat your freeloaders with care.
Last week, Ernie Smith rounded up some of the latest angst over Facebook’s ever-changing newsfeed algorithms (“Are Facebook Fan Pages Losing Their Marketing Reach?“).
This time, it looks to marketers like a classic bait and switch. For years, organizations have enjoyed virtually free exposure to fans on Facebook, but now their posts are reaching fewer and fewer fans’ newsfeeds—unless those organizations are willing to pay for a “Promoted” post, which will boost exposure, for a fee. Naturally, marketers who have long been using Facebook as a free engagement channel are frustrated.
I don’t think we should find any of this surprising, and there’s a lesson to be learned for associations here as they consider their membership and business models:
- Don’t follow the classic Silicon Valley business trajectory of “build a customer base and then figure out a business model later.”
- Or, if you do follow that model, treat your freeloaders with care.
Most associations have a mix of free and paid products. Commonly, they offer either content, events, or membership for free and then try to funnel people toward paying for the other two. Or they might offer two for free and make money off the third. And then there’s advertising and sponsorships, which can generate revenue if the association’s audience is large enough or highly desirable.
In any of these cases, there are freeloaders. People who come to free events or subscribe to free publications but almost never join. People who join for free but rarely, if ever, buy a book or attend a conference. There are a lot of these people; in fact, there are probably more freeloaders than buyers. And that’s OK, as long as you can generate adequate revenue from the buying portion, however small it might be compared to the freeloaders.
Facebook may have calculated that it can make money off its promoted posts even if only a small percentage of users pay up. But it’s also walking a fine line, because the promoted posts may quickly diminish the value of free posts, which could send its freeloaders elsewhere.
That might sound like a good thing (“Get off my lawn you lazy freeloaders!”), but in Facebook’s case—and for any association that uses free offerings to draw in potential customers—scaring off the freeloaders would mean its pool of potential buyers would dry up.
It’s a tricky balance to strike, one that’s different for every association. Know where you’re making your money, but don’t neglect your freeloaders. Freeloaders are unavoidable, so you might as well embrace them.
(Ernie Smith illustration)