Last week, Facebook launched a new ad targeting option that allows advertisers to show their ads to users in specific zip codes. Blinq Media, a major Facebook Ads API tool provider for ad agencies, now tells us its early tests show that zip code targeted ads have nearly twice as high a click through rate than city-targeted ads, and have a higher frequency per use cap.
These findings indicate that zip code targeting could make Facebook Ads significantly more valuable to local advertisers, which could draw in more local and small businesses and drive Facebook’s revenues.
Previously, Facebook advertisers could only geotarget ads as specifically as the city where a user lives, leading them to pay for less relevant clicks. In many cities, and especially major metropolitan areas, advertisers might be trying to drive foot traffic from users who lived several miles from their business. Advertisers couldn’t target specific neighborhoods which house their customer demographics.
Zip code targeting is now available in the Facebook self-serve ads tool and the recently publicly launched Ads API. A Facebook spokesperson tells us that “Facebook uses a variety of information to help us determine a person’s zip code.” We believe this might include a user’s IP address and internet service provider as well as the current city and address information users list in their profiles.
Zip Code Targeting Performance and Strategies
Blinq Media received early alpha access to the zip code targeting option about two weeks ago and has been testing it since. Its CTO Luis Caballero tells us that “Zip code targeting allows you to be much more refined and exact with targeting, and you can deliver a much more relevant message to a local audience.” This increased relevance led to a “click through rate that was nearly two times” that of ads targeted to a city.
Typically, the frequency of Facebook ads — the number of times a single user sees an ad — only reaches one or two in an average campaign. Caballero tells us zip code targeting appears to allow advertisers to surpass this cap and reach a frequency of three or four. This could significantly increase recall for these advertisers, and drive both clicks and foot traffic.
Caballero recommends that advertisers target their ads broadly at first, determine what cities clicks are coming from, then test to hone in on the optimal zip codes. He tells us that if advertisers “go through that approach and be methodical and scientific, they’ll probably get a much higher performance” than targeting cities.
The option opens up many new advertising strategies. Local restaurants or bars could advertise to those in walking distance. Non-local businesses could customize their ad creative to be especially relevant to individual zip codes by noting local landmarks. Similar to education history targeting, businesses with especially high-end or low-end products could target neighborhoods with the right socio-economic profile.
Blinq Media has already integrated zip code targeting into its licensable tool, and expect other Ads API tool and service providers to move quickly to add the option as well. If Facebook can raise awareness of this new tool for local advertisers and its performance potential, it could secure grow one of its core revenue sources.