Is Facebook hurting small businesses by stopping on page competitions

In December 2009 Facebook made a few adjustments to its formal policy on competitions and promotions which you no doubt will have heard about.

The net result was that promotions on Facebook can’t hold:

  • Photo contests which require profile photo manipulation
  • Status updates which require posting updates for entry
  • Only contest entries once a user has become a fan of your page

A couple of my clients have been liaising directly with Facebook over this and we have found out that you can actually hold a competition on your page if you support it will £5,000 worth of Facebook advertising. Facebook Promotions Policy

Now I have been involved in quite a few campaigns that have used Facebook advertising as a small element and if you are working for a global brand £5K is not that much. However, if you are a small business looking to run a promotion on your Facebook page you are going to have to be very careful because as Facebook states:

You may not administer any promotion through Facebook, except that you may administer a promotion through the Facebook Platform with our prior written approval. Such written approval may be obtained only through an account representative at Facebook. If you are already working with an account representative, please contact that representative to begin the approval process. If you do not work with an account representative, you can use this contact form to inquire about working with an account representative.

Recently, Facebook has really stepped up its policing of its pages by closing down competitions and promotions that breach its guidelines. So if you are running a competition for your business or your clients, please do be careful and try to be open and transparent with them.

My question is this – does this £5,000 investment in Facebook advertising hurt small businesses that use this network as a channel of communication or is it fair enough that it charges for this?

Competitions and promotions are one of the reasons Facebook grew so quickly because it encouraged fun and engagement and for me this doesn’t quite sit right. Surely as a business Facebook makes enough money from its advertising platform and it is likely to make even more following the launch of its most recent service, Search which it launched today.

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7 comments on “Is Facebook hurting small businesses by stopping on page competitions
  1. Hi Chris,
    Some good points raised in this. I’d say that Facebook doesn’t really think about small businesses at all when making these decisions. Much like the recent, aborted attempt to remove the ability for page administrators to create custom landing tabs for those who didn’t spend a certain amount on advertising, Facebook is being pretty ruthless in all its commercial decisions at the moment.

    I personally think that they are exploiting every possible revenue stream ahead of an initial public offering.

  2. Good article Chris – this was also my assumption, BUT I called an FB agent and they told me that that rules wasn’t literally in place. As far as they were concerned, you can run a competition purely via an application, without the media spend. OK, to get good access to an agent you need a media spend and to get an agent you need to be spending $10k+/ I’m not sure about you, but I’m generally a little confused about it all. If they want to charge you to do competitions, they should just come out and publish it online.

    Many media houses have a ‘minimum prize value’, which ensures that the prizes are attractive – perhaps they should do that for small business?

  3. Thanks for your comment Joel. I agree they Facebook seem to be steaming ahead with looking for any potential revenue it can get. Facebook is now the number one platform but it needs to remember its core customers and look after them, as there are several other social networks that would love to take its place at the top. If Mark Z gets too greedy he could end up with a social network in decline such as Friends Reunited, MySpace or even worse Bebo.

    Thanks for your comments Ruby, I quite like the idea of minimum prize value. I did know about the competition applications but I still think to build an application in Facebook you need a fair old budget and this doesn’t help the smaller businesses trying to make a living and using clever Facebook campaigns to keep their customers engaged. I think Facebook should revisit this strategy as its search revenues and advertising revenues are fair enough. When I spoke to them recently they were talking about shopping through Facebook, this is free, surely this is an area where nobody would begrudge them making money. Some kind of affiliate revenue generator is completely fine as far as I can tell after all if you buy through Facebook you are using their platform so it sits perfectly fine with me and the big retailers can benefit massively. It’s a win/win.

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  5. This isn’t quite correct – the terms have actually been updated since then, so a lot of those things can be done (e.g. you can require contestants to become a fan).

    Essentially, the Facebook rules are that to run a comp on Facebook, a) it must be in an application on the platform, not just ran in the page itself, so that you form a direct legal relationship (and contact via email) with the entrant, not using Facebook as an intermediary, and b) you must get written permission from Facebook to do this, before which one of their account managers actually check the app to ensure you’re following guidelines etc.

    Although this seems heavy, Facebook are concerned about being liable for dodgy competitions, so it makes sense from their point of view. They don’t of course prevent people PROMOTING competitions from their page – so if you’re a small business, you can have the entrance part of the competition on a website, and promote that through fan page updates. You can still use Facebook Connect to have invites, sharing etc, but because it’s off Facebook and on your own URL you don’t any permissions or approval from Facebook.

    The minimum spend thing is just them saying you need to be at a certain level before you can get an account manager who can approve comps – once a company has an account manager, they don’t need to spend the $5k for every competition.

  6. Thanks for your comments Joshua, I really apprecaite it and that was a nicely researched comment.

    I was aware that not all competitions needed $5,000 worth of backing (see earlier comments) and that a facebook application can be used instead. However, I still don’t think many small businesses can afford to have an application built with prices ranging from £3,000 – £45,000 depending on how complicated it is. I feel that smaller companies should be allowed to run their own promotions and once it gets to a certain bracked then Facebook should be involved. I am a firm believer in self-regulation of online communities and if it was nice and easy to report competitions that weren’t trustworthy it would work just as well I am sure. If someone is doing something dodgy why not let the users report them – it makes perfect sense to me.

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