Google and Facebook together took away 64% of the total US online advertising spends. And Facebook had around 65% of the overall online display ad-spends. These are incredible levels of consolidation in the ad spends among the leaders.
Enough has been said and discussed about
- the challenges Google is facing and
- how mobile ad revenues are critical for Google in its journey ahead or
- why Facebook ad revenues would keep growing
While one cannot argue with the numbers and the line of reasoning, I somehow felt that this discussion has ignored the long tail of ad-revenues or the lead generation aspect of these platforms. These reports are focused on big co’s with big media budgets who may typically have brand-building as the key target.
Let me explain this in some more detail.
There is no doubt that for Google or Facebook, the big marketing dollars would come in from big spenders like Ford, Coca-Cola & Pepsis, Samsung, Levis, Red Bull, Wells Fargo, Amex etc.
But if we were to evaluate these platforms from a start-up point of view (small budgets and maybe need to do lead generation instead of brand building), the story is very different.
1. Social targeting is profile based, too many bidders
On Facebook, the same user may be targeted by multiple brands, because there is hardly any other context. E.g. a 35 yr old male who lives in a metro and has liked multiple lifestyle brands would be a good target for many.
We do NOT have additional context for the specific session on FB when the ad is being displayed. One FB session is hardly different from another in terms of the intent or maybe when mood based marketing algorithms evolve things would change.
This means, each of the target users FB session will appeal to all the brands. Multiple brands would be vying for that same ad-impression, which in turn means higher bid rates and CPMs etc etc.
And this means that small budget advertisers would be elbowed out of the platform by big budget cos.
While this article on Forbes also has the same conclusion, the logic used is very different.
2. Search has deep context, removes non-relevant advertisers
Search on the other hand has hugely relevant context. E.g. a user looking for Mortgage loan options on Google will be targeted by Financial Services brands vs someone searching for Fine Dining Options in India.
And this means, that as an advertiser you are just competing with other competitors or maybe some adjacent industry players.
Bid rates would be lower and even with small budgets one can get the message out to a relevant audience.
3. Lead qualification is efficient on search
If one is looking at online advertising for lead generation, chances are search may be a better platform.
Before the Facebook fans pounce on me, let me qualify my statement.
Many of us run “boring” ventures – we pitch services that consumers may not want to share. And/or we do not have the creative bench strength to get a funny/interesting message out. Our content strategy may still be a WIP. Realities of life.
If the message/ad we create has low viral coefficient (i.e. we do not expect people to share it much), Facebook may not be the best platform. Coz then we are burning marketing dollars to talk to a prospect who may not be primed for our services and who is also not helping spread the word.
Google, on the other hand is a very different story. If a consumer is online actively writing into the search box key words that resonate with your offerings, you may have a very interested customer. Intent is high.
Also, my guess would be that the long-tail ad-spends are stickier.
But all this is just my 2 cents on how small ventures, start-ups and SMEs should look at spending their advertising money online – across the broad theme of Search Vs Social Marketing for the long tail in particular.
What do you think?