For many years, Facebook was not profitable. Mark Zuckerberg made a lot of money when Facebook went public. But the stock valuation was based on speculation. Speculation that the product company would find a market and become profitable. The stock price has not been justified.
But 2014 was the first year that Facebook started to become a marking powerhouse – a powerhouse that could rival Google in terms of ad sales.
A few things are pushing that trend. First, Facebook has a much lower ad cost structure than Google (Ad words).
Second, Facebook and Google ads appear at a different stage of the buying cycle. Google ads tend to be served when someone is searching for a product (known as Pull Marketing or Directed Ads or the Middle of the Sales Funnel – once someone is searching for a solution). Facebook as are more traditional ads that interrupt the viewer (known as Push Marketing or Intrusive Ads or the Top of the Sale Funnel – where a person may not even be aware of a product or promotion).
Until now, there has not been a good way to serve intrusive ads. Banner ads were popular for a while, until people stated developing something called “Banner Blindness.” A term that refers to the behaviour of people not clicking on banner ads because their mind blocks them out. And banner ads were had weak targeting.
Facebook, on the other hand, offers ads with a powerful targeting platform. Thus, while the ads are intrusive, they seem more relevant to Facebook users.
The third factor is that, many Facebook marketers became frustrated with Facebook. This seems counter-intuitive. As more and more marketers started using Facebook, there was less traffic to go around. Facebook limits posts from marketing companies that people see in their news feed. So “space” is limited. As more marketers tried to get free engagement, they were facing more competition for their message. And so marketers realised less engagement, likes and comments. The exception was marketers that were running Facebook ads. Companies that ran ads, saw good returns. This is a real advantage, both to Facebook’s sales and, to marketers willing to pay-to-play.
Marketers who refuse to spend on ads, are being drowned out by all the other marketers that want “free.” So the ones that are willing to spend, are realising healthy returns. Which only benefits Facebook’s sales.
The fourth factor was the surprise of late 2014. Videos are being used in Facebook posts at almost the same rate as YouTube posts. While YouTube still gets more uploads, the difference has been cut to a small advantage. The year saw Facebook video posts accelerate to close the gap between the two sites at an astonishing rate. Partly do to video being available on mobile, Facebook may at least have parity with YouTube for new video content.
Speaking of mobile, we round out our list with mobile search. It’s still hard for many marketers to close the sale on mobile. Yet mobile ads are doing well as Facebook users tend to use the site from a mobile device. This trend takes thunder from Google Adwords. Google is still the search king on the desktop, but Facebook is the site that many people use on their mobile device.
So Google is loosing revenue to Facebook in YouTube videos being view on Facebook, and on mobile because some users are never visiting a Google property. These mobile users are content to stay on Facebook – all day in some cases.
These trends started in 2014, and reached the Zeitgeist of marketers by late 2014. Expect to see this trend develop It’s unlikely that Google can do anything about this. Facebook may have found it’s niche – and one it can capitalise on.