Facebook to Excel in the Small Advertiser Market

In the euphoria surrounding the shiny new thing Facebook has become, investors have bid up the firm’s valuation to the astronomically high level of nearly $70 billion. The latest data on Facebook advertisers suggests that the social networking site is increasingly popular for small merchants in the local market. But large companies, who were expected to spend big on social media, are still finding other ways to allocate their digital budgets.

Some analysts argue that marketers are not allocating enough funds to Facebook. The social network site commands 15% of online time but has so far only managed to grab about 6% of total online advertising. Currently, the social networking site is a favorite for small businesses. In the past few months, 62% of marketers on the site were small businesses while 38% were top 1000 companies. By comparison, 21% of advertisers at Microsoft sites and 23% at Yahoo sites are small while the vast majority are top 1000 companies, presumably spending large sums.

Facebook is rapidly growing its ad revenue but eMarketer analyst Debra Aho Williamson told the Wall Street Journal, the global revenues so far this year are “not as robust as I would have expected.” Here’s a snapshot of 2012 expected revenue for Facebook and several of its competitors:

  • Twitter $234 million
  • Facebook $2.89 billion
  • AOL $858 million
  • Microsoft $2.655 billion
  • Yahoo $3.570 billion
  • Google $16.53 billion

Putting Google in the same list as Facebook is like comparing apples and oranges. But the analysis does underscore the difficulty faced by social media networks in generating revenue. Marketers are accustomed to paying for search. So far, they are also accustomed to the free space that Facebook provides. And their social media costs largely come from the staff time it takes to engage with users who ‘like’ brands.

A recent Wall Street Journal article outlined how large advertisers such as Ford are rolling out less-​expensive campaigns on Facebook and then enjoy “at a steep discount” the “word-​of-​mouth campaigns that spring from free Facebook pages.” The company is said to be closing larger ad deals with big companies. But for now, Facebook is seen as a very affordable media format and one that’s particularly attractive to small, local marketers.

[Source: Steel, Emily. Big Brands Like Facebook, But They Don’t Like to Pay. Wall Street Journal. 3 Nov. 2011. Web. 4 Nov. 2011] 
Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-​owner of several small businesses in the health care services sector.