Facebook recently launched an update to its News Feed algorithm aimed at promoting higher quality content. It’s being billed as Facebook’s version of the Google Panda update, mostly because that was also aimed at promoting higher quality content, and also has the ability to hurt businesses by eliminating their visibility.

Have you been affected by Facebook’s update? Let us know in the comments.

So far, it looks like brands are suffering pretty hard from the update. Ignite Social Media has put out a report after analyzing 689 posts across 21 brand pages of a variety of sizes and industries, finding that since December 1st, organic reach and organic reach percentage have each declined by 44% on average. Some, it says, have seen declines of up to 88%. One page out of the bunch saw an increase (5.6%).

“As reach declined, the raw number of engaged users plunged as well, falling on average by 35%,” writes Jim Tobin on the Ignite blog. “Some pages saw engaged users fall as much as 76%. Only one page in the data set had an increase in the number of engaged users, coming in at 0.7%.”

“Facebook once said that brand posts reach approximately 16% of their fans,” he writes. “That number is no longer achievable for many brands, and our analysis shows that roughly 2.5% is now more likely for standard posts on large pages. So, a year ago a brand could expect to reach 16 out of 100 fans and now that brand is lucky if they get 3 out of 100. Chilling news for brand pages who have invested resources to ‘build’ a large following of fans.”

In the past, plenty of brands (and plenty of users, for that matter) have complained about Facebook not showing their posts to all of their fans, let alone more than 3%. After all, doesn’t one “like” a page because they want to see updates from that page? Isn’t that the whole point?

A lot of people have wanted Facebook to give them a “pure” News Feed, giving them all updates from friends and pages they like. The closest thing resembling that – the ticker – isn’t even in the “new” News Feed design, though it turns out that might not be fully rolling out anyway.

As the Ignite report points out, research from Forrester and Wildfire shows that engaged customers are most likely to purchase and recommend brands, and engagement is falling because of the new update. Chilling indeed.

Nicholas Carlson at Business Insider suggests that the Facebook change has “screwed an entire profession”. He’s talking, of course, about social media marketers or “an industry of people who run Facebook pages for big brands.”

Facebook seems to be going for the “pay to play” approach. Imagine if Google tried that in its general web search (they already are in Google Shopping). The News Feed isn’t search, so it may seem like apples and oranges, but like Google search, the Facebook News Feed is one of the biggest gateways to content discovery on the Internet. This is a big deal. Plus, Facebook does have Graph Search, which recently introduced status updates and other posts in results, though it’s been a slow roll-out. You have to wonder if the News Feed update will affect rankings here.

AdAge reported last week that many would see their organic reach drop off, and that Facebook is acknowledging it with a sales deck that was sent out to partners, which said, “We expect organic distribution of an individual page’s posts to gradually decline over time as we continually work to make sure people have a meaningful experience on the site.”

There you have it.

Interestingly this all comes after Facebook was telling publishers that upping their post frequency increases referral traffic. In October, Facebook said that with a group of media sites it tested, referral traffic grew by over 80% when they posted more frequently. There were 29 partner media sites, and one of them was BuzzFeed. All Things D reports that Vice President of Product Chris Cox, one of the main guys behind the changes, “especially has a problem with BuzzFeed and sites similar to it”. The report cites multiple sources on that.

We have no idea if BuzzFeed is actually suffering from the changes, though the site did run an article saying that publishers are nervous about the changes. Here’s a snippet from that:

“We’re starting to get very nervous,” one staffer at a major paper told BuzzFeed. “It’s scary that they can get everyone hooked on such high referral traffic then take it away so quickly with a quick flip of their algorithm.”

What’s disturbing is that right now, the changes are mainly based on source rather than content itself. Facebook News Feed manager Lars Backstrom gave an interview to All Things D last week, and said as much. He said Facebook will start “distinguishing more and more” between different types of content as it refines its approaches, so it might not all be based upon source in the future, but for now, it’s all about the source.

It just so happens that BuzzFeed is a prime example of why this strategy is no good. Sure, BuzzFeed has many articles along the lines of “15 Signs You’re Eating Dinner,” but they also have real, in-depth articles. Good content is good content regardless of where it appears, and to penalize an entire site – the good and the bad – based on the bad, seems detrimental to the whole point of the changes. It would be like penalizing all YouTube content because there are a lot of shitty videos on YouTube.

Why do you think Google has authorship? Facebook sure doesn’t know anything about the actual people putting out the content do they?

Do you think Facebook’s News Feed changes will benefit the user experience? Can brands overcome the apparent blow? Tell us what you think.