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Some people go into a store knowing what they want, see it, buy it, and leave.
Others, however, consider shopping a more social experience. These people may shop with friends, get opinions before buying, and spend time browsing before making a purchase.
Those shopping patterns, although not absolute, also illuminate the key difference between pay-per-click (PPC) ads on a search engine, such as Google, or a social network, such as Facebook (FB).
Users performing a Google search have a specific goal in mind – they need a haircut or a lawn mower, for example. The ads are placed alongside search results that address the query. They find what they’re looking for, then point, click, and shop.
People coming across an ad on Facebook are engaged in a social experience. Seeing the ad is more incidental than intentional.
So, which is more effective? That depends… on what you sell, how it’s sold, and perhaps most important, what your online advertising goals are.
Billion, Shmillion: Don’t Let the Numbers Blind You
Facebook now touts more than 1 billion users worldwide, an impressive number to be sure. But how many companies can realistically say their offerings are well-suited to 1 billion people across the globe? Very few. Very, very few.
If you’re Coca-Cola, there’s a reasonable chance many of those 2 billion eyes are a good candidate for your products. From root beer to rum mixers, Evian water to energy drinks, Coke has something someone somewhere wants to drink.
But if you’re Pascuale’s Pizza in Parsippany, NJ, your customer base is limited to the roughly 50,000 people near your shop. The other 999,950,000 don’t matter. So, don’t let that 1 billion number razzle-dazzle you. What matters is the click-through rate and, more important, how many of those click-throughs result in sales.
While Facebook delivers more than 1 trillion page views monthly, that still translates to only about a 55 percent audience reach on the Internet, compared to Google’s 90 percent penetration.
Views are nice, click-throughs are nicer still, but ROI still rules the day
In May 2012, just before Facebook became a publicly traded company, General Motors pulled their ads – $10 million worth – from the world’s largest social network, citing click-through rates that had fallen by 8 percent. GM still believed FB’s pages were “effective and important,” but their faith in Facebook’s PPC ads was shattered.
Just a few months later, in September, some companies claimed that Facebook had turned a corner and its PPC ads were now more effective than Google’s.
Triggit, which makes software tools that help FB deliver ads, said its analysis showed that the return on investment (ROI) from PPC ads on the social network were up to four times those placed on search engines. AdRoll, another Facebook partner, said its studies showed that Google ads returned a 10:1 payback while FB ads delivered a 16:1 return.
While the numbers may be valid, consider the sources. For their parts, Facebook and Google declined to comment when BusinessWeek inquired about ROI for their PPC products.
Objective, apples-to-apples figures are hard to come by, but a VentureBeat survey showed FB ads with CTRs of about 0.051% compared to Google CTRs of about 0.4%.
Given the specific motivations behind Google searches – users are deliberately searching for answers to their shopping questions – compared to the more casual nature of Facebook, it makes sense that Google ads would have a higher CTR than FB.
Data: Yours, mine, and ours
Google’s search engine lets advertisers target users by topics of interest, keywords, and data Google gleans from your Web browsing habits when you use one of their proprietary browsers or visit one of their Web properties.
Facebook brings its own data-set to the party by helping advertisers place ads based on users’ profile data, including which brands they Like and what groups are of interest to them.
The ability to share your FB Likes with those in your social network makes it easy for users to share promotions, potentially multiplying an ad’s effectiveness geometrically, something Google PPC ads cannot do.
Facebook and Google both let advertisers target specific demographics and locations.
Hedge your bets
Google’s ads are ads. That may sound redundant until you realize that Facebook ads are sometimes ads and sometimes Sponsored Stories, ads thinly disguised as content.
On the plus side, Facebook users can see which of their friends or family members acted on the Sponsored Story and how popular it is overall on Facebook.
There are advantages and disadvantages to both models:
– Facebook, perhaps because its PPC program is relatively new, generally has a lower CTR than Google.
– Because Facebook is itself social media, PPC ads there may have greater potential for companies already highly active in social media.
– On the negative side, Facebook ads only appear on Facebook.
– Facebook’s lower CTR also means less traffic driven to your website.
– Google, with its more established ad network, offers advertisers broader reach. It’s hard, maybe impossible to beat its 90 percent penetration rate.
– Google’s ads appear on a variety of online media channels.
– Google’s penetration into mobile and tablet devices is deeper than Facebook’s.
– Google offers extensions – click-to-call and sitelinks, to name a couple. These extend your messaging and click-through opportunities.
– The popularity of Google ads with advertisers and users means your ad is one of many in a crowded field vying for users’ attention. It also means the cost of PPC advertising rises with every newcomer to the ad marketplace.
Perhaps the best way to think about how to approach your PPC spend – Google or Facebook – is less like a battle and more like a political campaign: Contribute to both candidates, give money to both parties. That way, no matter who wins, no matter how the people vote, they will see your ads.
– Dan Slagen