Small business ad spending fuels Facebook growth

January 26, 2011

The growing use of small business advertising on Facebook is a trend worth watching.

As much as 60 percent of the social media network’s estimated worldwide revenue of $1.86 billion in 2010 was gleaned from self-service ads, according to a new study from eMarketer, which specializes in digital market research.

The low risk associated with this type of promotional activity is increasingly attractive to small companies across the board, according to Debra Aho Williamson, the firm’s principal analyst.

“The self-serve systems make it easier for small advertisers with more limited budgets to get in and advertise on Facebook without engaging with Facebook’s direct sales team and spending a lot more money,” she said. “You can set a budget and a price cap. You only pay for ads if they’re clicked on. The other thing that makes it attractive is the targeting capabilities.”

Such self-serve ads, which typically appear stacked in fours on the right-hand side of a Facebook user’s profile page, have grown from roughly 50 percent of the ad revenue pie in mid-2010, Williamson said.

“They’re definitely focusing a lot of their attention on really fine-tuning this self-service system,” she said of Facebook’s advertising staff.

Williamson notes that self-service ads are not strictly limited to small companies, but they likely represent the bulk of users. Meanwhile, overall worldwide ad spending on Facebook will likely reach more than $4 billion this year and $5.74 billion by 2012.

EMarketer’s forthcoming report, “Worldwide Social Network Ad Spending: 2011 Outlook”, is due to be released before the end of the month.

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[...] a good deal to small businesses that advertise on the social network. Reuters blogger Deborah Cohen dug into an upcoming report by research firm eMarketer and found that the lion’s share — up to 60 percent — of [...]