The Power of Facebook's new Ad Engine and what it means for Small Business

• By Paul on 19 August 2009

Facebook recently updated the capabilities of their Ad network. Fan page admins can now target users with a very high level of granularity. Consequently, the ads are presented to users with the highest potential for interest in the product or service offered. I used to think that Google AdSense could read my mind, but Facebook's ad network is uncanny in its accuracy. The reason is, of course, that the platform knows a great deal about its end-users. This aggregate data is what it uses to push highly targeted ads and generate revenues (still soft perhaps due to the broader economic malaise and perceived lack of ROI from social media).

• Age,
• Gender,
• One or more countries,
• Birthday,
• Zip codes,
• Marital status and dating interests
• Keywords that users list on their Facebook profile such as activities, movies etc
• Fans or group members (to provide special discounts or promotions)
• Event attendees/ App users
• OR exclude Fans, group members and other connected with your page

The Ad engine calculates estimated people that the customized ad will reach. Page owners can specify a date range for which the ad run, CPM (Pay for views) or CPC (Pay for Clicks). Additionally, Page owners can specify how much they are willing to pay for 1000 views (CPM model) or per click (CPC model) and the max amount they are willing to spend per day.

We think this improvement is huge, particularly for small businesses that want to advertise to a very selective group of potential customers or to improve loyalty amongst existing customers. Most small businesses advertise in the Yellow Pages assuming that users will look up their listing when in need for services. However, Yellow Page ads/ hoardings/ clipper coupon books/ newspaper ads are static. Small businesses are wasting money on eyeballs that may not be interested in their service, or at a time when they are unable to consume that service.

A social media ad network, on the other hand is very dynamic. Small businesses can target users within their ideal demographic whether its those in the same zip code or any other criteria mentioned above. Additionally, the viral nature of social networks, ensures that a new Fan's friends (likely to also be target customers) will see any activity by Fan. We have seen the efficacy of Facebook ads with iGo iWrite.

On a separate note, its very interesting to observe which data Facebook chooses to expose via its API. We have been trying to figure out a way to look up Fan listing for Fan pages and have scoured through the Tables and API, but have given up for now. Facebook is keeping that information to itself - no prizes for guessing why. It's Facebook's ticket to profitability!

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