Facebook is becoming more like the Yellow Pages — but at an international level. More than 3 million businesses advertise on Facebook as of last month, which is a 50 percent increase over the past year, the company reported Wednesday.
Mobile is a big part of the boost in small-business growth on the social media platform. More than 1 million of these advertisers created an ad directly on a mobile device, where Facebook pulls in 80 percent of its ad revenue. Facebook’s revenue rose 52 percent in the fourth quarter of 2015 to $5.6 billion, up from $3.6 billion a year ago.
Pages are growing on Facebook as the network pitches the tool as the mobile presence for businesses. By itself, Pages are free to use. “There’s no question businesses are coming to Facebook for our Pages product. So many of them don’t have a mobile presence or don’t have an online presence whatsoever,” said Dan Levy, Facebook’s director of small business. “If you get a Facebook Page, you have a full mobile marketing solution.”
Indeed, 46 percent of small businesses in the U.S. do not have a website, according to a study by Wells Fargo and Gallup. Yet, according to that same study, 69 percent of business owners said they use social networks for advertising and 74 percent said one use is to build an online reputation.
More than 50 million small businesses use Facebook's free Pages product, but they are incentivized to start advertising in order to get better visibility on the massive Facebook network. “Facebook knows that if it can get businesses in the door with a free Page, then they might start to buy paid advertising on Facebook in the future,” Debbie Williamson, principal analyst at eMarketer, wrote in an email.
This year, Facebook is predicted to capture 12 percent of the $186.81 billion in global digital ad spending and 17.7 percent of $102.57 billion in mobile ad spending, according to eMarketer.
Facebook is seeing rapid growth in overseas markets. More than 70 percent of the 3 million active advertisers are outside of the United States. The fastest-growing region is Southeast Asia and fastest-growing countries are Vietnam, Egypt, Indonesia, Peru and Turkey. Still, the top countries of year-over-year growth are the U.S., Brazil, U.K., Italy and Australia.
One of the continued strengths of Facebook advertising is the network's ability to target users by interests and location. “If a small business wants to reach people who like chocolate, live in Chicago, and are iPhone users between the ages of 18 and 34, they can,” Williamson wrote. “There are few other media types outside of social media where they can target with that kind of specificity.”
Besides offering precision targeting, advertising on Facebook can come at low cost. Budgets can be set for as little as a $1 and campaigns can start and stop at will, noted Vincenzo Landino, founder and creative director of digital ad agency Fifty 2 Creative. “Basically, there’s virtually no risk to getting started. I’ve run $1-per-day awareness campaigns for clients with extremely specific targets all the way to $2,000-per-month ads for driving commerce sales,” Landino wrote in an email.
But Facebook isn't the only social network offering new low-cost options. Last week, Snapchat released on-demand geo-filters. Therefore, any business can create and pay for their own ads on the popular mobile app over a certain area and for a specific time period.
Landino said he is running a $58 Snapchat ad for his client Robert Mason Company, an office supply company based in Columbus, Ohio. “There isn’t much advertising you can get for that price, let alone one that makes you look like you’re hip, artistic and catering to the clientele you want in your store,” he said.
Facebook may not be as "hip" as Snapchat, but it is pitching itself as an alternative to TV by releasing video ads as low-cost options. More than 1.5 million small businesses have uploaded videos to their Facebook Pages. “Not all of them are ads, but it’s something that could be ads,” said Levy of Facebook.
Indeed, as part of Wednesday’s announcement, Facebook is releasing a new movie tool called “Your Business Story.” Facebook Page owners will be able to upload photos into a slideshow and overlay it with music.
Last week, Facebook released Canvas, a full-screen mobile ad product. The ads are free to create and sold on a cost-per-thousand basis as well as cost-per-click. Advertisers are “staying on Facebook because their ads work. They have the ability to measure results … every dollar, or euro or yen, that they spend,” Levy said.