Practical Ecommerce

Comparing Facebook Ads to Search-Based Advertising

Could Facebook Ads become a viable alternative to traditional search-based pay-per-click advertising? Facebook’s investors seem to think so, given its reported $50 billion valuation. So far, however, Facebook Ads have not proven to be a scalable, controllable, or profitable source of advertising for most online merchants.

Still, it’s useful to watch the evolution of Facebook Ads, and to constantly benchmark Facebook’s advertising offerings against those of traditional search-based pay-per-click advertising platforms, such as Google and Bing.

4 Benefits to Paid Search Ads

For most online merchants, search-based PPC offers much more value than any other online advertising venue, for four primary reasons.

  1. Targets Direct Intent.

    Search-based PPC advertising — through Google, Bing and Yahoo! — gives retailers the advantage of targeting potential customers based on their needs for a particular product or service. In good search-based PPC advertising, the actual marketing is done by marrying the most qualified traffic with the most relevant advertisements. Both search engines and advertisers continue to adapt to the needs of individual users, which increases the value of every ad impression and click that is generated.

    Rather than casting a broad net and hoping to pull in some qualified traffic using demographic and interest targeting, which Facebook Ads allows you to do, search targeting can be much more focused and specific. Search targeting is all about “pulling” in users who demand your product, while the types of ads that Facebook serves enables you to “push” your brand messaging or offers to users who are not likely to be in the buying mood.

  2. Easy to Calculate Return on Investment.

    Determining the efficiency of a search-based PPC campaign using AdWords or adCenter is straightforward due to the vast amount of data that Google and Microsoft, respectively, make available.

    By making a few tweaks, it is possible to track actual revenue generated by a specific keyword or ad within your advertising control panel. Benchmarks other than revenue can be measured, too. This makes it very easy to determine if the spending levels on a specific keyword, ad group, or campaign is justified. This data allows the advertiser to make informed adjustments to improve profitability.

    While you may use an analytics program to track the specific return on investment that Facebook Ads generates for you, that process is not as straightforward as tracking PPC ads. In addition, while the ROI from search-based PPC is usually immediate, the ROI from Facebook Ads will usually be longer term.

  3. More Control.

    With search-based PPC advertising, you can see what search terms are triggering your keywords and how different messages perform on the keywords that are searched. You have the control you need to divest from or improve upon poor-performing aspects of your campaign quickly and easily, while increasing your ad spend levels where appropriate. The ability to constantly tweak and iterate your campaigns is often the difference between profit and loss.

  4. Reach Most of the Internet.

    Traditional PPC advertising through Google AdWords and Microsoft adCenter not only gives you the ability to advertise on the largest search engines (Google.com, Bing.com and Yahoo.com), it also gives you the ability to advertise to their wide network of partners, which include large and small websites. If you consider their networks of partners that serve their ads through both search and content, your ads can follow users throughout the entire Internet.

    This reach has recently become the foundation of Google’s remarketing ads, which allow you to target past visitors as they browse the web through Google’s partner network (roughly 70 to 75 percent of all advertising space). With search-based PPC, you can drive traffic to your landing pages, and then use remarketing to reach them again and again.

    That leaves Facebook as a walled-off community, albeit a very large one.

4 Benefits to Facebook Ads

The value that Facebook Ads offers to most online retailers is very small, in my view. But Facebook Ads do offer some value currently, and they will almost certainly evolve.

While Facebook is much younger than Google, Yahoo!, and Microsoft, it is quickly building a powerful platform that promises to help retailers connect with and build their customer bases in a natural, organic way. The comments in this article are specific to Facebook Ads, not to participating on Facebook in general.

As such, I see four benefits to merchants from advertising on Facebook.

  1. Targets Human Beings Based on Volunteered Data.

    Anyone can stumble upon a search box, but to enjoy the benefits of Facebook you have to actively create and sign into your profile. Facebook Ads enables you to target your advertisements to individuals based on reliable information that they provide to describe themselves and their interests.

    However, while Facebook Ads are useful for online merchants who want to create demand among potential customers, or brand themselves to individuals who might need their products in the future, these forms of advertising tend to be less profitable than serving ads to searchers who are actively searching for products that meet their needs.

  2. Increases Trust.

    The Facebook environment, as a social network, is automatically more personal to its users than the “directory” type setting of a search engine. Seeing an ad that a friend “Liked” or that is very specific to the user’s demographic information can lend a degree of trust to the advertiser that may not be present in a search-based ad. Thus, if your ad happens to target an individual who is in the market to buy a product that you are advertising, it will be easier to overcome the “trust” hurdle that lowers PPC conversion rates.

  3. Calculate Your Ad’s Reach in Real Time.

    When you are building your ad targets, you can see how various targeting constraints will change the reach of your ad in real-time. This is a benefit of working within such a controlled network.

    I advise that you keep note of this total target size to compare your results as your campaigns progress. For example, you may find that it is better to have many ads that target very small interest groups. Also, go back into the ad builder periodically and check your targets to see if their size has fluctuated significantly.

  4. Build Awareness.

    The reality of advertising on Facebook is that the audience doesn’t want to leave the site they are on. Motivating shoppers to leave Facebook to make a purchase immediately is rare; but you do have the opportunity to create brand awareness. That can help you later when shoppers begin researching a purchase.

    You may also adopt a Facebook Ads strategy that focuses on “recall,” rather than “awareness.” The difference is that people who recall your brand will actively search for it when they are ready to make a buying decision. Thus, the aim of your Facebook Ads may be to connect and engage with potential customers, rather than promoting products or special offers.

    It’s the ability to connect and engage with your customers that makes Facebook a unique choice for advertisers.

Summary

If you are trying to accelerate your revenue in a controllable and profitable way, I recommend you continue using search-based PPC to drive direct sales. If you feel you have hit a plateau in search advertising, or want to develop brand exposure through social campaigns, then Facebook Ads make sense.

If you implement an advertising campaign on Facebook Ads, don’t just measure its performance using the same metrics that you use to judge the profitability of your search-based PPC campaigns. It will be very hard to drive direct ROI or return-on-ad-spend through Facebook Ads. Instead, look at your social marketing as a longer-term investment in your business and experiment with new metrics that help you to effectively measure its impact.

Just because Facebook Ads may not be a good fit for your business today doesn’t mean it won’t be a viable option in the future. Facebook has to answer to its investors, which means that advertising opportunities are likely to improve significantly in the future.

Scott Smigler
Scott Smigler
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