Facebook Inc. said the number of customers using its automated online-advertising system more than tripled in the past year, a sign more small- and medium- sized businesses are turning to the social-networking site.
The ads, which include text and photos, target users that might want to go to a local hair salon, hire a wedding photographer, or are close to buying other products, said Tim Kendall, Facebook’s director of product marketing for monetization. The service lets companies target users based on the information they put on their profiles, he said.
“You basically just have a greater diversity of people using our ad system — lots of businesses, lots of local businesses finding success,” Kendall, 32, said in an interview. “It’s really been a steady, successful growth pattern.” He declined to provide specific revenue data.
What it means: not surprised that early adopters in the small business community are creating ads on Facebook. You can do great local targeting because many users have disclosed their location or city network. For example, in Canada, you can target over 1.3M people living in the Toronto area. Additional targeting on age, sex, specific profile keywords, education, workplace, relationship status, and language allows for precise reach. For example, did you know 1,182,540 people have the keyword “travel” in their profile in the US? And you see your potential total “reach” in real-time in the targeting tool.
Because Facebook advertising is performance-based, you only pay for clicks to your web site or Facebook page. I suspect though the click-through rate must be low today and that it’s currently a number’s game, i.e. get the ad in front of as many targeted people as you can.
In my humble opinion, Facebook’s current ad product is not optimal. It still does not leverage the social connections (what are my friends buying or suggesting) or the social intentions (what were your recent status updates about? Are you signaling an unmet need?). When the Facebook product team pushes forward with improvements like those, expect ads to become very interesting from a ROI point of view.
To provide an actual example to my readers, I found this Facebook ad from a Montreal-area flower shop called [praized subtype=”small” pid=”b81dda5d4408d50353047977e86d1b2dc0″ type=”badge” dynamic=”true”].
They describe themselves on Facebook as “a full service floral shop with over 40 years of experience”. They created an ad that points to their Facebook page. I wonder what their experience with Facebook ads has been.