Facebook ads: growing potential or burst bubble?

By Mark Voller

No doubt about it, Facebook’s seen its fair share of controversy lately. From questions around its ability to censor underage content to the next chapter in the on-going Oculus “rift”, things certainly seem stormy right now for the world’s biggest social network.

But what does this mean for marketers and particularly travel brands? Is Facebook doomed and we should all jump ship? No, far from it. Why? Because the growing strength of its advertising potential will allow Facebook to push past these troubles and continue to unlock new opportunities for brands. Let’s start from the beginning.

Where did it all begin?

Launched in 2004 as ‘The Facebook’ and dropping the ‘the’ shortly after, Facebook’s first revenue started trickling in via sponsored ad partners. Then, in 2007, Facebook began testing its own advertising and offering more refined targeting options in 2009. Following the high-profile acquisition of Instagram for a reported $1 billion US in 2012 and WhatsApp for an eye-popping $22 billion in 2014, ad revenue suddenly become vital.

Since 2014 Facebook has, at times, been ruthlessly striving to not only grow its advertising reach but also deeply integrate it into its platforms. Several high-profile captures of talented staff from Google (along with the occasional accusation of poaching) has radically started to see its service come of age.

The growing Facebook bubble

While networks such as Twitter have hit directional problems and Google+ remains lost in the woods, a growing part of Facebook’s success can be attributed to its ability to appeal across generations. Both Twitter and particularly SnapChat suffer from narrowly young audiences in their teens and twenties. In contrast, Facebook’s boldly managed to go where no social network has gone before – acquiring and keeping the over 50s.

The affluent baby boomer generation, although rarely classed as “early adopters” are rich in: time, money and a yearn to travel. Quite possibly the ideal ingredients for luxury travel brands.

It’s also the sheer scale and rate at which Facebook’s bubble continues to grow. At the time of writing, Facebook’s Q4 user base was published at 1.86 million – up 17% year-over-year. Couple that with an estimated 1.23 billion daily active users in nearly every country around the world and that’s an awful lot of potential reach.

But of all the metrics worth taking note of, it has to be ad revenue. Facebook clawed in more than $3 billion in ad revenue last year with an estimated 69% of that coming from mobile ads. Meaning brands are spending, and spending big.

The strength of Facebook advertising

Beyond the success of its continuous ability to grow its user base, another key reason Facebook’s advertising is so successful is its targeting.

The ability to not only reach users on their terms, the often unnoticable difference between organic and paid content and the granularity of targeting gives brands a great deal of power. Advertisers can hone in on specifics such as age, gender, location, likes, or interests to ensure they only target the most qualified guests.

Get the targeting formula just right and you’ll be rewarded with a high relevancy score – a measure on how well an advert is resonating with the target audience. This’ll yield a low cost-per-click (CPC) and here at Wallop we’ve seen clients easily achieve clicks of $0.33 or lower. Compare this to competitive non-branded clicks in AdWords of $0.80 – $1.10 and the investment’s certainly worth a second look.

Source: Facebook

Multiple ad formats is another superb aspect of Facebook Advertising – particularly the new Dynamic Ads (above). Built for mobile and great for retargeting, these allow highly visual ads to be quickly added and tested while keeping a close eye on which image delivers the lowest cost-per-click.

Controversy, and plenty of it

Looking beyond the impressive numbers Facebook would naturally “like” you to remember, its recent controversy extends beyond censorship and VR. A succession of recent blunders in its advertising figures have fuelled skepticism about its ability to accurately supply brands with reliable reporting data.

After growing pressure, Facebook has finally agreed to an audit of its metrics by a third party to find out what’s going on. I expect a few further annoyances with be unearthed – both for Facebook and brands – on conclusion of the audit. Either way, it’s the growing scale of these discoveries that can only fuel Facebook Advertising skeptics further.

With that said, and despite decreased levels of trust, spending doesn’t seem to be slowing. As Sir Marin Sorrell of WPP recently commented:
“I hear CMOs say they are very concerned about measurement and imply they are going to change their spending patterns. But to be frank we have not seen that. We are surprised at what has been said. But you should watch what [CMOs] do rather than what they say.”

In Conclusion

All in all, Facebook Advertising can by no means boast the numbers Google AdWords can reach. But its rise is undeniable and its targeting potential is huge.

Despite the controversy and the lingering skepticism, Facebook’s overall usage shows no sign of slowing either. That means more sharing of personal information, more precise targeting options and more highly desirable travel imagery.

With this in mind, I’m sure it won’t be long before the black clouds clear and Facebook floats to new heights. Let’s just hope the bubble doesn’t burst anytime soon.