This is the latest in Localogy’s Skate To Where the Puck is Going series. Running semi-weekly, it examines the moves and motivations of tech giants as leading indicators for where markets are moving. Check out the entire series here, and its origin here


One under-discussed story in local advertising is how Facebook grew to become a market share leader — at least in terms of SMB advertisers. Putting aside aggregate SMB spend, Facebook has 140 million business pages, 8 million of which are paid advertisers and most of those are SMBs, it claims.

We’ve theorized in the past that this is due to a few factors. The simplicity of its onboarding and ad creation/targeting process is relatively SMB-friendly. SMBs also traditionally gravitate to paid media in the same channels they use as consumers, due to familiarity. Facebook obviously has an edge there.

Whatever the reason, the number grows as simple ad creation and affordable performance-based pricing lets SMBs hyper-target interest groups and geographies. And Facebook continues to cultivate this revenue stream. The latest comes from explicit comments from Facebook Chief Creative Officer Mark D’Arcy to AdExchanger.

D’Arcy contends that the above ad dynamics level the playing field and let SMBs compete for visibility in their locales. Moreover, SMBs can hold lessons for larger mulit-location brands on local marketing. That’s because SMBs operate with hyper-efficiency and cost constraints, which breeds best practices.

Lastly, Facebook is dealing with broader privacy issues just like everyone else. That includes diminished ability to target users based on location or behavior, as well as the death of the browser cookie. These factors could cause a return to contextual advertising and more emphasis on quality creative.

Here are a few choice quotes from the interview that we’ve assembled for Localogy Insider readers.

On onboarding businesses with a free offer, then upselling a share of those to paid advertising:

The vast majority of businesses, around 140 million, use our free services every month, and only a small percentage invest in our advertising products. We work very hard to make businesses a natural part of the experience. In terms of monetization, we’ve always had the very simple goal of making sure that the advertising is as relevant and rewarding as the other things you see.

The idea of advertising being tangential to the experience – that is not how we look at it. And when we get it right, it works really well.

On SMB focus, and how their needs align with Facebook’s ad pricing and dynamics:  

Small and medium-sized businesses are doing really interesting things with creative on our platform, and that’s because they’re deeply focused making sure that every dollar they spend with us works. Large marketers can learn a lot from them about the need for relentless iteration. […] At their best, Facebook and Instagram have the ability to make all businesses feel like big businesses because the surface is the same for everyone. You show up in the same context, whether you’ve got $20 or a lot of money. We like leveling the playing field.

On the privacy environment and how restrictions on targeting (behavioral and location) could play out.

In general, there will be a higher burden to develop something that will engage a more diverse audience, to develop creative with more universal appeal.

But no matter what happens, creativity remains an integral part of unlocking the value of technology. We don’t have the right to market to people – we have the opportunity – and people have the power to dismiss you with a flick of their thumb or a turn of their head. Marketers need to remember that.

 

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