In an unfortunate turn of events Little Things has decided to close their doors and lay off 100 plus employees. They claim Facebook’s new timeline algorithm is the reason they’ve gone under.
At Little Thing’s height, the female focused media company boasted 50 million visitors viewing 275 million videos a month across their social presence and website. Their singular business model was focused on creating content designed to go viral across social media. Once one of their videos entered a viral loop, the views and advertising dollars would start piling up exponentially. Like many brands before them, Little Things had calculated an equation to develop content that maximized impressions on Facebook, the mother of all social platforms. What they didn’t anticipate is that unlike a mathematical equation, with universal constants, the science of Facebook was subject to change.
In Q4 of 2017 Facebook’s American and Canadian user-ship fell for the first time ever, by over a million users; the Zuck wasn’t going to have it. Many attribute the drop to Russia’s reported influence gained by utilizing Facebook during the 2016 U.S. election. This story has brought increasingly negative attention to the platform. Many users and Press have become critical of the way the “timeline,” Facebook’s personalized feed of information, could be altered by subversive agents to present a false narrative, creating an echo chamber that subconsciously influences one’s perception of prevailing public opinion. In the case of the 2016 Election, Russians, posing as American, were able to create pages and accounts that offered up blatantly false statements about adversaries to Putin’s political interests. Take most Facebook users, who are strictly tuned into friends and pages that share their political positions, add ‘too good to be true’ stories offered up by the Russian accounts, then sprinkle in confirmation bias for good measure, and what resulted was massive groups of Americans buying into narratives pitched to them by the Kremlin. Whether this happened or not, Facebook was under immense pressure to make a change.
In response to increased negative press and a growing number of users seeking to rid themselves of the platform’s influence and time-suck, Facebook adjusted their algorithm. The new system significantly weighs content generated by friends over brands, meaning content created by a third party, like Little Things, now gets buried. Even if you like Little Thing’s page, or a friend has shared one of their videos, your are more likely to first see dozens of posts sharing thoughts and photos from your FB buddies as you scroll down your timeline.
For a content producer whose strategy relies heavily on Facebook for revenue and growth, these changes have spelled disaster. Little Things reported they’ve seen a drop in traffic by over 75%. Such a rapid decrease in revenue for a company at the scale of Little Things would have been disastrous on its own. The fact that the studio had no backup plan or significant audience off Facebook meant that shutting down was inevitable.
About a year ago our sales team reached out to Little Things to pitch Unreel, receiving an underwhelming response. Our proposal was simple; launch your own network of streaming services on OTT, develop and own an audience on your own properties, and monetize content away from the strict walled gardens of social media. With their massive and constantly growing library of content, huge following on social media for marketing and brand recognition, Little Things was in a prime position to succeed on OTT. Not only would they then have their own platform to sell advertisements, and communicate with fans directly, but they also would no longer be at the mercy of social platforms that constantly change their rules and operations. Platforms, that at the end of the day, value what is best for their users, not brands.
Instead, Little Things simply stuck their toe in the OTT waters, with a ‘me too’ ROKU channel and tvOS app as well as distribution to Amazon Direct. This was a halfhearted effort that failed to serve as a life raft when their Facebook ship sunk. Going all in on OTT would have been a transformative decision for the studio. It would have influenced the type of content they produced, how they used their social accounts, and how they monetized content. Understandably, the aversion to change and barriers to do so ultimately proved insurmountable for them. Facebook was how Little Things grew to reach 50 million visitors a month. Altering strategy and success there to improve viewership on OTT would be a risk to their core business. Little Things also viewed themselves as a content producer and distributer, not a tech company, and was not prepared to pivot to building and supporting their own apps.
What Little Things failed to realize was that the true risk was not choosing to maximize OTT success; it was relying on a platform that was out of their control. Although cannibalizing success on Facebook to move their audience to owned and operated properties on OTT may have meant a hit to their audience size and revenue to start, it would have been a move that mitigated the influence Mark Zuckerberg and gang could have on their business. Living and dying by another company’s decisions is never a recipe for long-term success. Media-companies that become their own platform by focusing on owned and operated OTT streaming services play by their own rules and control their destiny.
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