Why Small Business Ads on Facebook Flop

Should small business owners advertise on Facebook?  While some who’ve tried it seem satisfied, others are convinced it’s a bust for most local businesses. When USA Today ran an article recently on Facebook’s effort to attract small biz advertisers, many business owners responded to say their experience with such ads was negative.

The point is this: While online marketing is something all businesses should consider, using social media channels for paid advertising simply doesn’t work well for some types of businesses. Dry cleaners, for example, might be better off focusing on getting people through the door with targeted emails and direct mail offers rather than spending a ton of time tweeting.

Raed Malhas, who is CEO of a small online business called MiNeeds (www.mineeds.com), was disappointed (to say the least) with his experience placing ads on Facebook. Malhas breaks down Facebook’s failings as a small biz advertising platform into three categories:

1. Demographic Dilemma: Facebook’s approach to advertising is largely based on targeting certain demographics. And while that works well for some businesses and especially national brands, it’s far less effective for local businesses. By contrast, Google Adwords and various local search sites such as DexKnows, YP.com and SuperPages let you target specific keywords.  Thus, local business ads will show up for specific searches for an attorney in Atlanta, for example, or a plumber or pet store in Portland.

As Malhas points out, targeting demographics is tricky for small business advertisers because it means you are trolling for customers on Facebook based on such things as gender, age, location, marital status, schools attended or other details. For local advertisers that’s a big problem because of what you DON”T know – i.e. the prospect’s “intent” or “needs” at a given time. Advertisers are left to guess at those needs, hoping they catch a few prospects at the right time with their offer.

That’s usually much less efficient that using “intent based” search ads that have a much better chance of capturing customers at the point they are ready to make a purchase.

When Facebook first started taking ads, Malhas jumped right in. He was experienced using other online platforms but says he found Facebook “extremely challenging.”  He launched an ad campaign targeting Facebook users who might be interested in remodeling their homes, and already knew the demographics he was interested in.

He tried several approaches, but all of them flopped. “The realty tricky part about Facebook,” he says, “is that no matter if you are a restaurant, plumber, attorney or accountant, you won’t know which users are searching for your type of services.”

2. Ad Fatigue: Even if you do manage to create a successful Facebook ad, it could be difficult to sustain your momentum. “Let’s say I’m targeting males in Seattle between 28 and 40,” says Malhas. “Even if my ad is extremely appealing to that target audience, the same audience will soon get bored with seeing the same ad again and again. They’ll ignore it and my conversions will drop to almost nothing.”

This fatigue factor is especially troubling for small businesses with a limited local target audience.  On the other hand, search ads tend to attract mostly fresh eyes. I might search for a locksmith this week, but not next. And you might need one a month from now. So the locksmith advertising on search platforms will catch both of us and there’s no fatigue factor.

3. Competition from Deep Pocket Brands: When Facebook first launched its ad platform, smaller businesses were paying only a few cents for clicks on their ads. But then big national brands starting competing for the same demographics and drove up the price. Malhas claims that the rates he was paying rose ten-fold in a matter of months. “Suddenly it made our cost per lead too high and we had to kill many of our Facebook ads,” he says. “Today’s small business with only a few hundred dollars to spend per month stands no chance on Facebook against those titans.”

While most local businesses can benefit by establishing a social media presence for free, paid advertising on the likes of Facebook and Twitter can be another matter. If you give it a try, be sure to test a variety of offers and approaches to see what works best.

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About the Author: Daniel Kehrer, Founder and Chief Content Officer of BizBest Media, is a senior-level leader in digital media, content development and online marketing with special expertise in startups, SMB, social media and generating traffic, engagement and leads. He holds an MBA from UCLA/Anderson and is a passionate entrepreneur (started 4 businesses), syndicated columnist, blogger, thought leader and author of 7 business and financial books.

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