Despite all of the negative press about the myriad mistakes Facebook is conceivably committing daily, they now rank as a $100+ billion dollar company. While stock prices were unstable at best at the start of the year, Facebook’s efforts in the advertising arena have especially proven profitable this year, with mobile leading the charge. Should Google be afraid? Oh yes, very.
The Google versus Facebook advertising war is far from nearing the finish line, but the playing field has been significantly leveled in recent weeks. Facebook has grown mobile advertising over 76% in the last quarter, bringing in over $656 million. Google, on the other hand, had second-quarter results that fell shy of expectations, and they’re watching their ad prices weaken each quarter.
Why Facebook is Gaining Ground
All the big guns have found adapting to a mobile world more than a little challenging, but Facebook has finally gained some ground, and that has made all the difference. New mobile formats like newsfeed ads, which provide direct marketing messages smack dab in the middle of a user’s feed, have shown massive ROIs and success rates for advertisers.
Google Helps Funnel Advertising Dollars to Facebook
Earlier in the summer, Google launched a revamped version of Gmail, adding a tabbing system that places promotional emails in a separate category. Their intended results, on one level, appear to be working – marketers sending unsolicited messages (read: spam) are watching open and click-through rates plummet.
The result: many are spending more advertising dollars on rivals like Facebook. So while Gmail is providing a great service to users by weeding out the unwanted solicitations, they are encouraging thwarted marketers to fund their biggest competitors. With no end in sight to this trend, this could prove extremely costly long term.
Facebook is Still on Shaky Ground
Despite the stellar recent earnings results, and huge ROI rates on items like the newsfeed ads, Facebook is still walking a tightrope poised above a pit of rabid users. Their most successful advertising ploy, those pesky newsfeed ads, require a tremendous balance; they could so easily turn-off the masses, rendering results into a veritable nosedive, that it’s hard to bank on long-term success.
There’s plenty of speculation that the initial boon of the ads centered around the newness, and lack of awareness from users. Many have reported that now that they’re on to ads in feeds, they will no longer be duped into clicking.
Chief Operating Officer Sheryl Sandberg recently stated that the company had increased the variations and quantities of newsfeed ads, despite worries that doing so might alienate more users. CEO Mark Zuckerberg stated that, “Right now, ads on average make up about 5 percent, or one in 20 stories on the newsfeed. In recent studies, people have told us they notice the ads more. So we’re going to invest in improving the quality.”
This is a danger zone. Zuckerberg clearly states that users are getting wise to their newsfeed ways, so rather than scale back the quantity, they are looking at quality – i.e., how to continue to trick users into clicking advertisements. This wreaks of a strategy that won’t end well.
What It All Means to Marketers and Business Owners
Now that you know the lay of the land, let’s talk practicality – where should you be spending your marketing dollars?
Facebook’s newsfeed ads are a definite consideration, but only if the expense makes sense for your efforts. Shaky or not, they are still garnering impressive returns, and you’d be wise to get in on the game early in case this turns sour and ceases to yield impressive results.
Of course, don’t even think about counting Google out. Their advertising prices have softened, and that’s great news to advertisers on a budget. If SEM (paid search buys) are part of your short term strategy, nothing beats Google AdWords for creating excellent results, as long as your AdWords profile is intelligently optimized.
If you’re engaging in online ads without considering your mobile audience, that alone could be a dicey decision. If you happen to run a business that’s solely, or predominantly, seeing web-based traffic, there’s obviously no need to branch out to mobile. For most of us, however, mobile is fast becoming king of the platforms. If that’s the case for your traffic and sales, advertising via mobile outlets is a must.
Don’t just consider Google and Facebook as your only options, either. One of the main reasons they have struggled to see decent profits in this space is the fierce amount of competition. Apps like Instagram, WhatsApp, and Path are seeing fantastic growth. It’s very possible that mobile will be a space dominated by lots of key players, not the 2-3 behemoths that get the market share online. Be sure and research the most prominent mobile players in your industry, and if there are some that make sense for your advertising buys, take a chance and see how it fairs.
Ultimately, your efforts should focus on organic search and website conversions – those give you longevity and protection from the volatile world of online advertising. Within your marketing hybrid module, however, are many viable advertising options – with Google and Facebook continuing to take top billing.
Who do you think will win the advertising war – Google, Facebook, or some other entity? Where are you spending your advertising dollars?