Not for the first time, there is concern that social networks are not attracting ad revenues. This is clearly not ideal for social networks, but it does perhaps point to an opportunity for some businesses too. How?Well let's take Facebook as an example. An independent sports shop in Brighton can target their ads at the appropriate age group, by those that like sport, and those that live in Brighton. So if our example sports shop placed an ad on Facebook, and targeted those that live in Brighton, 18 or over, and who had the words "sport", "sports", "cricket", "rugby" or "football" in their interests, how many people would the owner be targeting? 40,240. (If you're interested, there are 603,600 people from Brighton on Facebook, so less than 7% have added the sports related terms listed in their interests.)
So, in this example, the sports shop owner can place an ad that's highly targeted. Facebook suggests that she should pay $0.30 to achieve suitable views of the ad (so let's call that 20p for the sake of simple arithmetic), and let's assume that each person sees the ad once and she gets a phenomenal 5% click through and that. That means that our sports shop owner pays just a fraction over £400 for the Facebook campaign. Not expensive, but certainly not peanuts for our sports shop owner.
Now consider this - use the same criteria as above but set up an advert that says something like:
Sporty Sports Discount
20% off at Sporty Sports sports shop until Xmas, 7 High Street, Brighton. Cricket bats, rugby boots and footballs, 2 mins from Brighton station.
Yes, you have to offer a link for the user to click through to, but your ad doesn't have to use strong call to actions, even if Facebook might encourage it for obvious reasons. What sort of click through might be expected for an ad like the one above? From my experience, 0.05% CTR would be a lot - if you're actively trying to avoid click through 0.02% is possible, even to highly targeted audiences. So let's assume that our sports shop owner wants everyone over 18 in Brighton and with the sporting interests listed above to see the message 3 times - 120,720 impressions. That's 60 clicks at a 0.05% CTR. A massive £12 spent* for awareness from a potentially lucrative market.
So for someone like our sports shop owner, with very little expenditure you can increase awareness of your little known business amongst a highly targeted audience.
What should Facebook be doing about this?
They need to learn the lessons of the early 2000s when it was finally realised that click throughs are not the be all and end all, and instead focus on selling the fact that online ads increase qual metrics like brand awareness or purchase intent. And they need to find a way of working with small businesses to gain a lot of relatively small chunks of revenue (for ads that are potentially more relevant to users), rather than a smaller number of large chunks of revenue from big advertisers. Of course, both would be ideal, but target the smaller advertisers who offer more highly targeted ads first so as to build credibility with users and to use the word-of-mounth effect amongst small business owners.
What should big brands do about this?
They should consider using Facebook ads not to advertise products, but to publicise information that they want their potential buyers to know. If you're Lloyds TSB and you're looking to increase take up of personal bank accounts, you can tell people about the fact that you've been the most trusted bank in the UK for the last 8 years (according to a Readers Digest survey anyway), but not have a strong call to action. And you can target every over 18 on Facebook (13,165,240 people), or you can experiment first and target the 67,480 over 18s in the UK who say they are interested in "money". When the time is right for them, or when a friend talks about switching accounts, they may well remember the bank that didn't overtly try to interrupt their social networking but who has been the most trusted in the UK for 8 years running....
*£12 is worked out from the number of clicks multiplied by 20 pence as in the earlier example. In fact, when clicks are low Facebook doesn't show your ad as much unless you pay more, so in this example the sports shop owner might want to increase the cost per click she's willing to pay during the campaign to 40p, 60p or even 80p to ensure prominence, but the price of the campaign is still rediculously low.
