Facebook Ads: Small Businesses are Fans

Local businesses early on recognized the potential to market their products and services on Facebook. With a free Facebook page, businesses could offer special deals to customers, build an online fan base, and publish information and promotions – all for free. But local merchants are increasingly also early adopters of paid Facebook Ads.



According to our newest MerchantCircle survey of nearly 5,000 small businesses, some 94% of small business owners are aware of Facebooks Ads. Some 22% of small businesses are already using Facebook Ads, and nearly two-thirds of those who have used them would do so again. And while Facebook Ads have been lambasted for “abysmal” clickthrough rates, small businesses are finding value in the paid placements.



Why are small businesses satisfied adopters of Facebook Ads?



First, Facebook Ads are affordable – something very important to small business owners. While brands can afford to spend millions buying keywords on Google, cash-strapped small businesses must make every marketing dollar count. In a recent Inc. Magazine article, a New York-based small business owner said she gets great results buying Facebook Ads – at a cost a fraction of what it would cost to buy the same keywords on Google.



The below chart illustrates that cost-per-click of $0.67 for Facebook Ads in the “local services” category, and $0.53 in “restaurants” category. While that’s not cheap, it’s better than the $1-$2 per click small businesses can pay for competitive keywords on Google.

Secondly, small businesses are highly adept users of Facebook. They were avid early adopters of Facebook, with about 70% of local merchants using the platform to market their businesses, and may feel more comfortable taking the plunge to buy “experimental" ads than their larger business counterparts, whose marketing departments must justify every ad buy as part of a larger pre-defined budget.



Lastly, Facebook Ad are easy to use. Small business owners don’t have VPs to run their marketing programs for them. Most merchants run marketing as just one of the many hats they wear every day, and they don’t have weeks or months to master complicated advertising platforms. In the MerchantCircle survey, 67% of small business owners said that “ease of use” was the number one reason they’d use Facebook Ads again, with 65% saying they appreciated the ability to easily start and stop campaigns.



Of course, not every small business has seen successful with Facebook Ads. Of the 35% of merchants who said they would not advertise with Facebook again, nearly 70% said that the ads did not help them acquire new customers. While Facebook Ads may be easy to use and fairly affordable, if Facebook doesn’t introduce improved local targeting and other value-ads for small business advertisers that result in higher customer acquisition over the longer term, they will undoubtedly lose their luster with local merchants. After all, local business owners may be willing to experiment with different types of advertising, but, at the end of the day, they’ll only reinvest in methods that bring customers through the door.