2011: The Year in Facebook Advertising

Facebook made considerable progress with its new Sponsored Story ad units and implemented a number of changes that helped both small businesses and large agencies advertise on the platform this year.

Sponsored Stories

The company introduced Sponsored Stories in January. It eventually inserted them into the canvas app and News Feed tickers before announcing that next year this type of ad will be included in the main News Feed. We suspect this will be Facebook’s entry into mobile advertising, though the company has not confirmed this.

Ad Creation

Throughout the year, Facebook improved its self-serve ad tool, adding a creative library and new analytics in May. A redesigned ad analytics dashboard switched the focus from traditional metrics like CPM toward social actions, such as liking a page, RSVPing to an event or installing an app.

A month later, the Power Editor replaced the bulk uploader as a streamlined way to create and manage multiple Facebook ads simultaneously. In August, Facebook officially launched its ad API giving more developers an opportunity to build tools and services that programmatically create, buy and manage Facebook ad campaigns. With more competition, these third-parties could provide affordable solutions for smaller agencies and businesses.

Local Advertising

To introduce a new wave of advertisers to its platform, the company gave $50 in advertising credits to 200,000 small businesses. This announcement came a few weeks after the ad tool began providing targeting by ZIP code. Previously, advertisers could only geo-target ads to cities, states/provinces and countries.

User Support

In September, Facebook established partnerships with the U.S. Chamber of Commerce and National Federation of Independent Business to educate members on how best to promote themselves on the social network through its marketing and advertising products. The company also expanded its sales and client partner team.

From personal experience working at an ad agency, this reporter found the company to be far more accessible this year, providing timely answers to questions, sharing links and documents about new features and assisting with campaign planning. However, most advertisers are not operating on a scale that allows them regular access to human representatives at Facebook, and there is room for improvement in how the company explains best practices and responds to issues among small businesses.

A Look Ahead

Estimates from eMarketer suggest Facebook will earn $3.8 billion worldwide this year in advertising revenue, up 104% from $1.86 billion in 2010. Our sources previously projected the company was on course to make $4 billion in total revenue, but because Facebook doesn’t provide information on its finances, we cannot say for sure how the company’s ad business has grown.

Regardless, 2012 is likely to be the year of the Sponsored Story as more advertisers become familiar with the offering and possibly see increased performance versus traditional Facebook display ads. How these ads fare once they are put into the News Feed next year is to be determined.