Features

Facebook Ads: Overhyped, or Key to E-Commerce Growth?

Written on
May 29, 2012 
Author
Nii A. Ahene  |

ADOTAS – Coming off the heels of a widely discussed initial public offering, Facebook seems to be a consistent top headline these days. It is really the premier social network for companies. Most social networks gear toward individual communication, while Facebook offers a way for companies to really engage with their consumers effectively. Every successful startup business seems to be using it, or should if it wants to grow. Even traditional businesses specializing in tangible good distribution should be using it to draw attention to their products and overall message. Facebook is often used to promote products and ideas of a business — however, it also has a very sophisticated and effective online marketing aspect.

This marketing aspect that is now a big part of enterprise Facebook usage is for companies to use ads. The Facebook Ads platform is a great way to generate additional business from consumers browsing on Facebook. The Facebook ad program is very intuitive and flexible when compared to Google’s AdWords combination. You can use the pay-per-click (PPC) model that is similar to Google’s AdWords, or you can use a cost-per-impression (CPM) model.

Advertisers pay Facebook to publish these ads on various areas of the social network, including the homepage or users’ profiles. They are shown on areas of the social network with relevant information to the target audience or keywords in the ad’s description. Facebook Ads opens up a potential for new audiences that may be hard to reach through ad services such as Google AdSense, Amazon Product Ads, Yahoo Search Marketing or Microsoft AdCenter. Facebook offers many places they can be spotted.

According to Facebook’s description, “Ads can appear in the right-hand column of pages throughout Facebook. Adsare eligible to appear on many types of pages, including apps, photos, groups, pages, profiles (timelines) and the home page.”
Keep in mind we will be focusing on Facebook’s model for distributors and advertisers,and not on a model based on publishers being able to generate revenue from ads that were created by other parties. This is why we are not mentioning Google AdSense or Amazon Associates as the comparison programs, for instance, but using Google AdWords instead.

Advantages

The great thing about Facebook Ads is that it allows you a lot of freedom in who you can target with ads and what you are promoting. You don’t just have to rely on selling an individual product per ad click — you can promote an entire event, for example. On Facebook’s website dedicated to this platform, Facebook lists websites, events, pages and apps as services you can promote.

Another advantage is how you can target your consumers with this platform. There are just too many targeting options to list here. Some examples include location, language, education, work, age and even relationship status. The more specific the target audience is for the ad you create, the greater the likelihood will be for you to gain new customers.

Other advantages of the Facebook Ads platform include the customization options you have in creating your ads as well as the way you can monitor your budget. You can design multiple ads from scratch for Facebook to use in this program, and you can monitor the amount of money you want to spend in running them per day. The way you create your ad will also determine your success rate. Besides an eye-catching image, Facebook allows you to include your page name, question or key information in the title of the ad.

The ease-of-use and quick setup that Facebook’s program offers should really be noted among advantages. Facebook outlines the process in five easy steps in succeeding with the platform. Here are the steps involved:

Step 1: Identify Your Goals
Step 2: Target the Right People
Step 3: Design an Engaging Ad
Step 4: Manage Your Budget
Step 5: Review and Improve

The flexibility of the ability to choose either a CPC or CPM model also cannot be underestimated. Competing ad platforms often only offer one or the other, but not the freedom of choosing either one (Google AdWords does, but Amazon Product Ads doesn’t).

Lastly, the service is relatively inexpensive when compared to the competition and is growing rapidly. According to a Wall Street Journal piece that cited numbers from eMarketer, Facebook actually overtook Yahoo in display ads during 2011. It is even climbing onto Google’s revenue figures — eMarketer’s stats, published in February, predicted $2.58 billion in U.S. display ad revenue this year for Facebook’s U.S., and $3.29 billion next year, while predicting $2.54 billion in U.S. display ad revenue for Google this year, and $3.68 billion in 2013.

Disadvantages

The Facebook Ads platform is relatively new when compared to rivals so there is still some uncertainty involved in what ads will remain to be supported and the methods that will thrive with the platform. It is also an ad venue that targets only Facebook users and not web users as a whole. Not everyone uses Facebook that can be a potential customer. Many people only use Facebook sparingly to check messages, for instance, but don’t really engage in all aspects of the social network.

Another disadvantage with using Facebook Ads is that you can only target each Facebook ad for users located in up to 25 countries. On the other hand, some competing ad platforms automatically target a world audience. This can be seen as a disadvantage, particularly for those of you who sell products overseas. You will have to create multiple ads to target different countries rather than an individual ad. Also, if you select more than one country, you won’t be able to refine it in a way you would if you just target one country. For instance, you won’t be able to refine specific cities to betargeted by the ad — this is called geographic radius targeting.

Conclusion

At the end of the day, Facebook offers another method for e-commerce to find clients and generate revenue from products. It isn’t just a social network geared for individuals and companies simply interested in communicating a particular message. There are opportunities present that e-commerce outlets should explore in addition to Google’s and Amazon’s offerings (among others). A successful eCommerce outlet should explore all options and expand Facebook offers a great opportunity right now because the ad cost is still relatively inexpensive when compared to the bigger rivals in this department.





Nii is COO of CPC Strategy, a shopping feed management agency and is responsible for day-to-day business operations and long-term financial, tactical and strategic planning for the company. He has been with CPC Strategy since January of 2007. Prior to working with CPC Strategy, Nii was a product manager at eBay working on algorithmic merchandising and reviews and guides.

Reader Comments.

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FOR EXAMPLE.
Suggestion for better and more effective advertising.

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EXAMPLE.

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Posted by Darryl Smith | 5:54 pm on May 29, 2012.

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