Is local the next big Facebook advertising market?

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It is well known that Facebook, as an advertising medium, is highly effective for big brands to get through to customers in a highly targeted and accountable way. Facebook partners offer some amazing technology and services catering to this customer group. Gaming companies have seen outstanding success using the Facebook platform for growing their user base and monetizing gamers. Facebook is the best proven sales Social channel for eCommerce merchants large and small.

A recent Business Insider report has analyzed the various well known social platforms and Facebook is ahead in terms of traffic, sales generated and engagement by a significant distance.

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The volume of online purchases being driven by social is growing and growing. One reason for this success is that eCommerce businesses are native to the Internet. They transact, communicate and sell online. This segment is “low hanging fruit” for Facebook and the other platforms. Integrating with them, connecting their workflow with the ads they use and integrating with how they measure and count success is more achievable because both the businesses and their ads are online. The shared platform of the Internet is what makes it all possible and work so well. Online retailers continue to invest significantly in Social as a sales channel as they see it as one that will grow and grow for many years to come.

While there are many tools in the Facebook arsenal for online retailers such as custom and lookalike audiences, conversion tracking and remarketing to name the basics there is a massive untapped market that needs its own tool set. But one that may be more difficult to implement because it requires in many cases significant changes to how this untapped market operates on a day-to-day basis.

In my opinion, Local small businesses are the great-untapped segment for Facebook and is one that has massive potential. Imagine if “Joe the Plumber” could count boiler maintenance calls the same way an online jeweler like Jens Hansen tracks their sales.

Many small businesses are already fully embracing Facebook’s free tools — 30 million or more SMBs are already active on Facebook, a substantial number of whom offer consultative services within a specific geography. Unlike an eCommerce store, many have limited technology embedded in to their day to day activities and have not traditionally used the Internet to generate sales and communicate with customers.

However with the advent of SaaS, the cloud and a new generation of business owners entering the fray most of these businesses are conducting at least some of their business functions online. Account software is now in the cloud — CRM is transferring from legacy paper based systems into the cloud as are invoicing, diary management and with companies like Square payments are being taken at the customers premises via credit card. Therefore, while we are still dealing with offline businesses there is an opportunity to enable the same tracking and performance marketing capabilities that have up to now been the reserve of eCommerce companies for “Joe the Plumber”.

Only 1.5 million of the 30 million SMBs on Facebook are advertising, therefore there is arguably the biggest pent up opportunity yet for Facebook and its partners within small businesses generally, however perhaps what is holding at least the Local businesses from this group of 28.5 million from advertising is the lack of specific local business ad products.

The Yellow Pages remains for many one of the first marketing expenses they will spend each year. Ads in the local newspaper, and direct mail are also part of their traditional marketing mix. Local law firms, opticians, book keepers, restaurants and trades could all be doing a lot more in terms of making their businesses more visible via Facebook and other digital channels but the right format doesn’t seem to have found mass adoption.

There are a number of local centric platforms most notably Yelp, Skillpages and others where people and businesses can get listed, rated and found.  Companies like Signpost and ReachLocal have already well established and growing businesses helping this segment with digital marketing solutions. However most digital advertising to date has centered on Search and ratings rather than Social advertising.  Another Business Insider report suggests that Local businesses continue to use traditional channels and Social has the smallest share of the local business ad spend (see chart below).  Whether mobile spend in the chart below does or should arguably include a component from Facebook and others is unclear. At face value, social looks like it has a lot of room to grow, especially given the large “Other” (assumed to be traditional ad spending)

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In order for this to happen the right ad format with the right targeting and tracking capability needs to be rolled out. This opportunity can’t have gone unnoticed by Facebook, and it doesn’t take an expert to point it out. There are a lot of challenges that come with the concept and at PropelAd we are already giving them some thought as are many other Facebook partners I’m sure. What is certain is that while segments like eCommerce are set to grow and grow, there is significant potential in Local and it will be really interesting to see what develops over time in this space. What are the other big untapped verticals for Facebook ads?

Charlie Ardagh is the CEO of PropelAd, a Facebook ads tool for online retailers, headquartered in Palo Alto with offices in Dublin, Ireland. 

Top image courtesy of Shutterstock.

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