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Is Facebook Advertising Worthwhile for Small Businesses?

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Written by Aaron Charlie– Mon 11 Mar 2013

With last week's announcement of a redesign for Facebook's news feed (which we discussed in detail in our post on Friday - Getting to Grips with Facebook's Redesign) comes renewed questions about the advertising policies of the social giant.

Despite no mention of ads whatsoever in that announcement (although post-announcement Q&As revealed some detail), the media and public alike are intrigued as to what a revised news feed with more focus on images, but also choice in what is seen, will mean for advertisers - with many suggesting that it will only increase their prominence.

If Facebook ads aren't your thing, why not try Google AdWords Training to give you an advantage on the biggest online advertising platform.

However, concern over Facebook ads is no new thing. Many users have become entirely disenchanted with the site's ad policy, especially since the advent of sponsoredand promoted posts in the news feed.

Add to this the need to make Facebook more profitable after its largely unsuccessful IPO and big advertisers like GM not seeing advertising on the site as a useful spend, and it's obvious from a Facebook perspective why the redesign was as necessary from an ad point of view as it was from a usability and design one.

Prior to the revised news feed announcement, we here at Silicon Beach ran a survey to determine the public mood surrounding Facebook ads and thereby their effectiveness, particularly when it comes to small businesses.

Let's take a look at what all this data means for those without the ad budget of McDonald's or Coca-Cola!

Background

After engaging in an ad campaign to promote some of our blog posts, we received some negative feedback from an individual who happened to be a member of the anti-sponsored posts group "Say No to "Suggested Posts"".

At this point we felt that it was appropriate to suspend our ad campaign in order to first determine whether they were ineffective or even worse, actively putting people off our brand.

As such we decided to conduct a survey in which we asked respondents a variety of questions with the sole aim of discovering the general public feeling towards ads on the site.

Survey Results

User Experience

This was our first question and the results:

As you can see, the majority of people who responded find advertising on Facebook to interfere with their experience on the site - in fact if you include those who think it interferes 'sometimes' then you hit an amazing 82% of people who think that ads are disruptive.

That's not a good start in terms of convincing small businesses that using Facebook ads will be worthwhile.

We then asked:

The overwhelming response was that news feed ads are the most intrusive although for 1 in 5 respondents, any sort of advert on the site makes for a less pleasant experience.

It would appear then that any ads, but particularly those that appear in the news feed, are viewed as interfering with the UX of the site. With advertisers unable to control where the ad shows up, we're left with a bit of a conundrum when deciding how to best use ads on the platform or whether to even bother at all!

Sponsored Stories

As the negative feedback we received came from a member of the aforementioned group "Say No to "Suggested Posts"" we thought it would be worth digging deeper into that area to find out the impact of suggested posts and sponsored stories.

We asked:

The response is pretty clear: a huge 87% of people we asked find sponsored stories in the news feed either a little or very annoying. Only 2% of people are not annoyed by them in the slightest.

This is perhaps the most damning evidence against sponsored stories and an issue that could cause major problems for both advertisers and Facebook itself, especially as with the redesign these particularly ads are likely to be much more prominent.

We also wanted to find out how people respond (with tangible actions) to sponsored stories in particular, so we asked:

Interestingly, a slight majority (55%) of people would actively report or comment on a sponsored story in their feed. For someone like McDonalds, 1 comment out 200 on a post or a few spam reports isn't even worth batting an eye-lid over but for a small business, a single negative comment can be very bad PR and being reported for spamming can even lead to the suspension or deletion of your account.

Now, if advertisers were able to choose where an ad was seen, this may not be such an issue as you could simply choose to only have a sidebar ad (which as the previous question shows, only annoys about 1 in 5 people - still not good but significantly better than news feed ads)

We also wanted to know exactly what type of sponsored stories cause the most irritation (as there are different types) so we asked:

Nearly 9 out of 10 people are disrupted most by sponsored stories that appear to have no connection to them - which seems reasonable based on the results of previous questions but begs the question, should Facebook expand the options for targeted advertising?

Targeting

From a business perspective, targeted advertising is often a good idea as it allows for the pinpointing of more suitable potential clients and for less waste and Facebook has a reasonably well-equipped toolbox for such a campaign. But is it enough? And is targeting really all it's cracked up to be?

Here are the results from our question:

Clearly, ads which appear relevant to the user are more popular and are therefore certainly going to be better placed for SMEs. However, it's worth noting that in the comments section we had a lot of people say things like:

"I prefer zero ads",

"I dislike them all. I understand FB raises revenue on ads, but they are rarely targeted to me anyway" and

"Lesser of 2 evils, I prefer no ads"

So despite targeted ads being more popular, they are often viewed as the quote above says as the 'lesser of two evils' - they are still not going to gain much traction with the average user.

Damage

So it seems, based on the results of our survey so far, that far from being a brilliant way to connect with users of every variety, Facebook ads are pretty ineffective.

However, could it even be worse than that? Could Facebook ads be actively damaging the reputation of both individuals and businesses alike?

We asked:

54% of people would be put off a brand, either a little or a lot, if one of their ads came up in their news feed. This is a particularly worrying stat, especially for small businesses because it means that far from tapping into an open market, you could well be alienating over half of your potential clients.

We asked a similar question but this time with the onus on friends (whose liking of a page can cause sponsored stories to appear in a news feed):

The majority of people (61%) wouldn't delete a friend after seeing sponsored stories based on their 'likes'. This would imply then that the user places the blame on the advertiser or Facebook themselves. So should Facebook, rather than giving ads more prominence in their redesign, actually reign them in instead?

Ad Removal

It's not just Facebook that has ads though, so why such a vitriolic response in this case? We wondered whether it was the total lack of a choice in how the user is subjected to ads that causes frustration - perhaps the model used by services such as Spotify (a free version with ads or a paid version without) would give more flexibility, so we asked:

Perhaps unsurprisingly, given the frequency of 'Facebook's going to become a paid service'hoax posts and the response to them, people are overwhelmingly against paying for Facebook - just 2% of people asked would definitely pay if it meant no ads.

Interestingly, Facebook filed this patent in 2011:

"In one embodiment, a system includes one or more computing systems that implement a social networking environment and are operable to provide paid profile personalization functions to users. In particular embodiments, the user may select one or more social networking objects to replace advertisements or other elements that are normally displayed to visitors of the user’s profile page that are otherwise controlled by the social networking system."

This is a preliminary design:

Notice the 'favourite memories' bar on the right instead of ads. Whilst the application is by now quite old, it's pretty clear that Facebook are toying with the idea of paid ad removal service. Considering the overwhelmingly negative response we received to this question, perhaps it's not the best idea for Facebook to adopt it.

One alternative to a paid service is in fact currently available - ad blocking software. We wanted to know whether this is a more viable option for most people:

59% of people either already use this type of software or plan to start using it and only 7% of people wouldn't at all. This might suggest that the problem with ads can be resolved on an individual basis but then the general sentiment of groups like 'Say No to "Suggested Posts"' would imply that such an act shouldn't be necessary in the first place.

What we can safely say is that were it a choice between paying to remove ads and downloading a piece of free software, most people will choose the latter!

Final Word

While every company should maintain an active social media presence, for small businesses, Facebook advertising might not be the way forward.

Clearly, in many cases they actually harm the reputation of a company.

From and SME perspective then, it may instead be worth pursuing other avenues such as LinkedIn or the relatively new Twitter ads.

Perhaps the better choice overall then for small businesses is to skip the social advertising all together and endeavour to simply engage well with the followers you do have, whilst focusing on building that following organically, which is something you can learn on our Social Media Course.

For Facebook, prior to announcing the redesigned news feed it was at a crossroads as to whether to push more/bigger ads into the site to increase revenue or listen to the pleas of its users and reign them in. It looks like it's chosen the former option - only time will tell if that was the right choice.

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