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POV: Facebook Search Advertising

Background:

Facebook has started to test ads in its search results and marketplace again. In 2012 the social giant offered ‘sponsored results’ in search but shut down the service in 2013. After a 5 years hiatus Facebook has decided to run another test to compete directly with Google Ads by relaunching its search advertising – with reports suggesting the reason is to offset slowing revenue.

Details and Implications:

Facebook revenue growth has been decelerating as it runs out of newsfeed ad space and it sees a slowdown in its user base growth, especially in the US/Canada and Europe markets where it saw zero growth and lost 1 million users respectively in the last quarter. The reintroduction of the search ad service, albeit in a trial format for a limited number of advertisers, is an attempt to see if there is scope to generate meaningful revenues from search ads on the platform. The trial is being held in the U.S. and Canada with a small set of automotive, retail and e-commerce industry advertisers.

“We’re running a small test to place ads in Facebook search results, and we’ll be evaluating whether these ads are beneficial for people and businesses before deciding whether to expand it,” said Zoheb Hajiyani, Facebook Product Manager.

Search continues to play a critical role in channel mix yet remains under-utilised on social platforms as search engines remain the most powerful and trackable medium for digital advertisers. eMarketer recently predicted net US search ad revenues to grow from $48bn in 2018 to nearly $71bn by 2020.

The ads in Marketplace are currently available to a limited number of advertisers but will be scaled to other markets and categories subject to the test results. Facebook Marketplace allows consumers to discover and buy items and most of the users here already have an intent to buy. So, it is not very likely to be jarring to see ads in a Marketplace search environment, which could work well for both Facebook as well as advertisers making it a win-win situation.

The ads offer advertisers the opportunity to remind consumers as they pass through the sales funnel and critically as they enter the last stages of the purchase journey - advertising a brand when a consumer is searching for a product in a market place with a shopping mindset.

Summary:

Google famously missed out on establishing a strong social offering and conversely, Facebook has never managed to launch a strong search business – so this trial is going to be interesting to keep an eye on. Facebook will use it to: explore potential ad revenue opportunities under its portfolio; enable advertisers to reach consumers during a critical phase of their purchase journey and help marketers with brand launches when consumers are trying to discover products via their search on Facebook.

Further Reading:

TheStreet  |  AdAge  |  Techcrunch