Small Business Owners Turning Away From Facebook Advertising

kim kardashian

Though your Facebook news feed is probably littered with more ads than you can shake a stick at, they’re not from small time business owners. Advertising with the social media giant has become so expensive that only those with millions to burn can really afford to take advantage of what Facebook claims it can offer. Think that’s a joke? Take a look at Little Passports, Inc. which told The Wall Street Journal that they spend $250,000 a month, or a mind boggling $3 million dollars a year, on Facebook advertising.

Amy Norman, owner and operator, explained that she’s been advertising with Facebook for about 14-months, and had originally started an $30,000 advertising level. She claims that thanks to Facebook’s advertising, her company’s membership has climbed to 30,000 members and that the revenue run rate have increased 263%. Norman reasoned that her company had to test out a variety of advertising options on Facebook before they decided that the “lookalike” feature worked best for them.

Ms. Norman’s experience with Facebook advertising seems to be the exception though, rather than the rule. The Wall Street Journal reported that 69% of 1,008 small business interviewed for one survey had not planned on increasing their Facebook or other social media advertising budgets for the next 12 months. Only 28% of the businesses interviewed planned on increasing their budgets and 3% had already planned to decrease the amount of money spent on social media advertising.

Instead of investing tens of thousands of dollars in Facebook advertising, experts suggest compiling email addresses from current Facebook fans as a free way to inform customers of new offers. As time marches on paid advertising has become more expensive and has reached fewer viewers due to limited ad-space as well as an increase in businesses looking to get their brand out there. That’s why it’s important to really do some research before committing to what is sure to be a very expensive way of creating customer awareness. Larry Chiagouris, a marketing professor at Pace University elaborated,

“That way you don’t waste a lot of time and money before you find the right formula for you.”

He also suggested small business owners run their own advertisements through their news feed as a way to test the advertising waters. This however might not be an accurate way to gauge feedback, as personal news feeds to not have a reach as far as paid advertising. In the end though, small business owners will have to decide for themselves whether they feel the cost is worth the outcome. It seems that for many, the growing trend is that it’s not.


Image Credit: flickr/Master OSM 2011


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