Facebook believes that small businesses have a lot to offer and can even be a more lucrative source of ad revenues compared to large corporations such as Coca-Cola and Macy's.
The number of small businesses that use Facebook to have an online presence has reached a staggering number of 30 million. Most would use the social media site once a month. Out of this huge number, 1.5 million would use the site for posting their paid ads.
"There's untapped potential in the smaller businesses, and there's so many of them," said retail analyst Krista Garcia of the research firm eMarketer.
During the company's financial report last month, it was revealed that the average per ad price was increased to 123% compared to the same period a year ago. Ad impressions which deal with the number of displayed ads - went down by 25%.
There are several factors that set apart a small business that has paid ads from those businesses that don't spend anything at all. One of the things that should be noted is the fact that most businesses don't understand the value of advertising on the social media site. The sentiment is even stronger among small businesses that rely on little ad or limited marketing budgets.
This year, small businesses are gaining a higher ground on Facebook as the social media company expands effort to lure small businesses. The company even held training events in several cities where it tried to convince small entrepreneurs to try using Facebook ads.
"This is a long-term investment to help people see that we are here to help them grow their business," said Dan Levy, the social media company's director of small business.
Private individuals and business owners can benefit a lot from Facebook's customizable ad posting feature. The latter allows the user to reach select customer groups for their ad posts. Information is also filtered by location, age, and interests. After all, Facebook analyzes the profiles of its 1.3 billion users and study their online habits such as the types of business they regularly visit and their post's content.
According to Ad-ology Research, there are around 25% of small businesses that would increase their spending on social media advertising this year. However, it also revealed that at least 17% of these businesses don't even think about advertising in social media.
In general, ad revenue in Facebook is increasing rapidly. While the social networking site didn't disclose how much it's earning from the ad sales of small businesses, it should be noted that the company has indeed earned almost $2.7 billion from ads during the second quarter.