Facebook Inc (NASDAQ:FB) Intends to Grow its Social Ad Business in Different Ways
Facebook Inc (NASDAQ:FB) generated about $992 million from ads on their website in the 2nd quarter, which is a significant increase when compared to the previous quarter and the same quarter the year before.
But there has been a decrease in the total number of ads delivered in the US in this quarter due to a users shifting to mobile devices. Added to that the economy in Europe is not stable nowadays, resulting in the price per ad coming down.
Facebook will make better ads in order to ensure better ROI to advertisers. Sponsored Stories is currently doing well but less than half of the ads on the site are social and it states that a user’s friend is using the service or product. Other traditional ads are placed on the side of the page and till date their performance has not been too good. But soon more ads will appear on the News Feed and thus be more effective due to better clickthrough rates.
Advertisers also want to find out if the clicks are helping them to reach out to the masses. COO, Sheryl Sandberg has stated that Facebook is working out a way to measure the effectiveness of ads in generating sales. Independent ROI data from 60+ campaigns show that about 49% ads have given 5x returns and 70% have resulted in about 3x or more.
A new way of post-click and post-impression conversion tracking is in its nascent stage but it could prove crucial in helping advertisers to analyze the performance of Facebook ad campaigns. Local business advertising is another area for churning out revenue, according to Sandberg. Facebook has launched Promoted Posts, which are ads that can be designed and launched directly from a business’ timeline. In this way, Facebook is helping small business owners to reach out to customers and create useful ads, and also get a plum source of revenue in the process.