Facebook has been losing hold of its most sought-after demographic, its younger users, over the past year, and is acting aggressively to do what they can to keep them close. This was evidenced by the shockingly expensive acquisition of the popular messaging smartphone app, WhatsApp, for a reported 16 billion dollars. It's also evidenced by their latest algorithm update for their news feed. Watch today's Daily Brown Bag to learn more about Facebook's latest news feed algorithm update, what it consists of, and it's implications for its users and small businesses. TRANSCRIPTION: Hello, and welcome to the Daily Brown Bag. Today we're going to be talking about some recent updates Facebook made in terms of their text-only posts on news feeds. I'm Chad Hill and I'm joined by Adam Stetzer. Good morning, Chad, welcome to the Brown Bag. We've been talking about Facebook for years, Chad, and this whole idea that the promise of the social information, the social graph, the relationship graph, whatever you want to call it, will help drive more contextually relevant information and, ultimately, advertising dollars for Facebook, and as a young company they've been struggling to get this right. There's some new news here on their journey to tweak their algorithm on what they show to different users. They've recently announced that they've made a pretty big update to their news feed algorithm, and one of the headlines is there will be fewer text-based updates from Facebook business pages, which is primarily where businesses and organizations are trying to get in front of people in the news feed.

Sorting through the Clutter

So again, Facebook's trying to figure out how to harness all the information they have, there's quite a bit they could show you, here's a few stats that are pretty interesting. Each time someone views his or her feed there are about 1,500 average stories that could appear from friends and pages they have liked or other people that they follow, and what Facebook is trying to do is figure out what's most relevant, of course, keep people coming back, keep their engagement really high, and ultimately, how to drive ad dollars. One of the things they're talking about in this new algorithmic update within Facebook is just wow factors, and we've got a list here, and then I want to talk about, Chad, what we think, if any, the implications of our internet marketing and resale of our community.

A Look Behind Facebook’s Algorithm

Some of the factors listed here are how often you interact with a person or a page, they also look at how your friends interact with a particular post. They also look at your behavior on what they deem to be similar posts that you've previously looked at, and whether a post has been reported or hidden by other people for you. The mathematics behind this, as you can imagine Chad, get really complex very fast, because they're trying to triangulate your social information, who you know, like, trust, what you look at, and this new information coming through a news feed and tailor something that's going to be very, very interesting for you, so what's our take on this, Chad? Yeah, as you said, Facebook really is trying to constantly figure out 'how do they get the right kinds of information in front of you,' and this most recent Facebook news feed algorithm update showed a couple things. Basically, it said that data and testing Facebook had done showed that people interacted more when they were shown lots of text-based items in their news feed, and they were more likely to add or contribute to that discussion, but the same did not hold for text messages coming from pages that businesses were creating, and so what Facebook is doing here is they've actually adjusted, and they read some data back in December that showed people preferred seeing articles and information, and so they've adjusted their algorithm so that, essentially, you see less text-based messages from business, whereas you might see more from individuals. So the other big change they made is they updated now, so as people are starting to see more articles, that when people do make comments in articles that will bump something back up into your feed as if it's a new item. So a few tweaks here, but again Adam, this really shows that Facebook is trying, it's not a one-size-fits-all, they're really trying to segment in and get into that intent behind different kinds of interactions on Facebook and getting you what you want to see so that they have the better chance of keeping their users engaged.

Facebook is Trying to Stay on Top

Yeah, I think this is really interesting, it really seems like Facebook is trying to compete with the other news discovery tools that are out there, which may be kind of a new angle for them; drifting a little bit away from just social information and keeping up with other people's lives into letting those relationships you have inform you about news items. Is it going to really work? I don't know, but Facebook is claiming some interesting stats on here. They said that referral traffic from Facebook to news media sites almost tripled last year, so that stat does imply that when you see a story from a trusted source you are much more likely to click through, so if that click through rate is growing because of who is telling you about it, and Facebook, of course, knows who you like and trust because they've got the social graph, they may be on to something. So this is one to stay tuned to, I think it's very interesting, I think they're definitely trying to compete, Chad, with Twitter making significant updates, which as we know from a lot of the statistics we've covered in our Brown Bag, is where people do a lot of news discovery today, they're pulling that traffic away from traditional media sites and here's Facebook trying to get a piece of the pie as well. So stay tuned, I'm sure there will be much more to talk about on this in 2014, but also like your feedback, do you get your news from Facebook, or is that not a place you go for it? Drop a comment or two, and we hope you'll subscribe to our YouTube channel. We'll see you back here tomorrow.