Should Your Small Business Advertise on Facebook?

A lot has been made of the performance of Facebook ads in recent months. In particular, conflicting reports have shown the ads to be both an effective and ineffective means for businesses to target their advertising dollars. But despite those dueling findings, small businesses may not want to automatically write off advertising on Facebook, especially if it is done correctly and expectations are managed.

Those clashing reports include one conducted by Reuters/Ipsos which found that 80 percent of people said that comments and advertisements on Facebook had not led them to make a purchase. A comScore report, which was co-sponsored by Facebook, however, showed a different result, saying that Facebook ads did help purchases, sometimes as much as 38 percent over those not exposed to Facebook ads. Despite the different opinions in both those studies, they are both right … in a way.

BusinessNewsDaily spoke with several experts about what small business owners should know before deciding about whether or not to spend money on ads on Facebook.

[5 Ways to Not Lose Money on Facebook]

Are Facebook ads worth it for small businesses?

"It really depends: they definitely can be for some, but frequently aren’t for others," Tom Demers, co-founder and managing partner at Measured SEM, a search engine marketing firm, said. "One of the strongest uses for Facebook ads is to get people in a very specific demographic to like your Facebook page so that you can then message to them over time. For instance, if you’re a small local restaurant you can get people in the area to like your page, and then when you do things like offer coupons or promote events, you can incentivize them to share those promotions so that their friends see it, which provides a unique viral effect you can’t with many forms of advertising."

Viral ads, however, are not the only way that Facebook ads can help a small business, Demers said.

"Similarly, some small businesses can have success in promotion," Demers said. "The businesses that often get poor results with Facebook ads are those that treat them like other advertising mediums and try to push hard to a sale. Facebook tends to work much better at promoting softer offers such as free giveaways, discounts or simply getting users to become fans of your business so that you can convert them into leads and sales down the line."

What benefits do Facebook ads provide to small business owners?

"Facebook ads build a list, just like email or direct mail marketing, but with much more control and data," Jason Keath, CEO and founder of Social Fresh, a social media education company, said. "Compare this to the yellow pages, radio, TV, print where you get the ad, but you do not get the list. With Facebook ads, business owners can create a growing community of potential customers that will be with them for years potentially."

Simply put, Facebook ads, when used effectively, are able to benefit greatly from word-of-mouth advertising in a way that other ads cannot.

"On Facebook, you see other fans of a business or product. You see your friends like them. These things matter and make for more effective marketing," Keath said. "Lastly, Facebook offers more options and data than any other online marketing channel. Ever. I can target an ad to editors that work at BusinessNewsDaily. I can target an ad at hiring managers for the New York Times. I can target people in my ZIP code that love BBQ. The options are endless. That gives a business access to marketing gold and relevance."

How effective are Facebook ads and why are they effective?

"First with Facebook, there is less competition for keywords than there is on Google or other pay-per-click sites," said Tyler Barnett, founder and president of Tyler Barnett PR.  "One of the biggest benefits for Facebook advertising is that you are reaching your target demographic in their comfort zone.  When a person is logged into their Facebook page, they are comfortable. When they see your ad on their Facebook page there is a certain amount of trust that is inherent and that you don’t get when seeing a random link on a Google search."

That trust can be a particularly important factor in the effectiveness of advertisements on Facebook, Barnett said.

"Typically with Facebook ads, you can go to the person's Facebook page," Barnett said. "The main difference between a Facebook page and a traditional Web page is you can see customer feedback. If someone clicks on your Facebook ad and goes to your page, they can actually read what other people are saying about you. That helped build trust among your client base."

How much do Facebook ads cost?

"Facebook ads can vary wildly in cost depending on who you’re trying to target," Demers said. "Technically, the minimum bid for a click is a penny and according to a study done by WordStream the average cost-per click on Facebook’s platform is about 75 cents, but if you’re trying to advertise to a competitive demographic, you’ll be placed in an auction (similar to Google AdWords) with other advertisers and you’ll frequently have to pay significantly more per click. As an advertiser you can also control how much you spend by setting daily and 'lifetime' budgets for campaigns."

The price of Facebook ads is among their most appealing features, according to the experts.

"Facebook ads can cost as little as $10 a day and as much as you want," Keath said. "We recommend a starting budget of $500 to $1,000 to get your feet wet. Test several ad types, images, landing pages with small investments of $10 a day. When you get it dialed in, pick your best performing ad and put a larger budget behind it."

Barnett feels is that to test ads due to their low cost is major reason why small businesses should at least consider the option of Facebook ads.

Follow David Mielach on Twitter @D_M89 or BusinessNewsDaily @bndarticles. We're also on Facebook & Google+

Copyright 2012 BusinessNewsDaily, a TechMediaNetwork company. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.