Is Facebook Advertising Like Burning Money?

Advertising has evolved rapidly over the last century.

Before the advent of radio and television, all you had was the printed advertisement. Ads appeared in newspapers and magazines. Direct mail emerged and many companies leveraged their brand with brochures and leaflets dropped straight into the letterboxes of houses across cities and suburbs.

The madmen of Madison Avenue became more creative when television allowed them to beam ideas and images into millions of homes via a 30-second ad spot.

Today television advertising is still strong but print advertising is rapidly shrinking and has now been surpassed by digital. It is estimated that digital online advertising could reach 30-50% of all advertising spend in the next ten years.

With so much of our media consumption being conducted via computers, tablets and smartphones, that may even be a conservative number.

Pro tip: Click here to generate ad creatives that help you sell more. Fast.

Facebook Ads are the New Kid on the Block

Digital Advertising has for the past 15 years been dominated by the ever-present display banner ads. Flashing, twirling and in-your-face ads. It is estimated that several hundred billion of these appear every month on computer screens. The “Google Display Network” is one of the big kids on this global block.

In the last few years, the new kid on the block has arrived and their name is “Facebook”.

Facebook advertising started cheaply and low-key. In recent times the costs have increased significantly by 40% plus and the number of ads that crowd the page have increased significantly. Facebook is attempting to monetize its 1 billion users.

It now needs to keep its public shareholders happy.

Is the Google Ad Network More Effective?

Google earns 95% of its money from advertising. The Google Display Network” is 20% of this income mix. Facebook also generates most of its revenue from advertising, but does “new” mean “better”?

A recent study by Wordstream had a close look at the reach and effectiveness of each and the results were surprising.

Facebook has a huge reach of nearly 1 billion users with 1 trillion page views per month
Facebook reaches 51% of the world’s internet users
Google reaches 90% of all internet users with its online assets including YouTube, Blogger and Gmail
Google serves up 180 billion “Ad” impressions per month
Facebook revenues in Q1, 2012 were $1.06 billion
Google’s Display Network generated $2.9 billion

The study revealed though that there was huge difference in effectiveness.

Facebook ads receive a “Click Through Rate” (CTR) of 0.051% in the USA
CTR for Google ads is an average of 0.4%

This is almost 10 times higher than a Facebook ad!

Below in the infographic are many other measurements that look at key elements such as targeting options, formats, mobile and the life of an ad on Facebook.