Facebook’s Expanding Search Advertising

The social media company started testing ads in search results last December and is now expanding the tests to more marketers, according to a report. Some selected dealers, car retailers, and (now) electronic retailers may choose to show ads on Facebook search results, as well as on Facebook Marketplace search results.

Search-related ads are one of the few parts of the leading Facebook app that makes money. The second-largest source of revenue, the Instagram feed, is also saturated with ads. Search ads can become a valuable source of ad inventory for Facebook, as it seeks to add more inventory in addition to major food items.

This is not your typical search ad

Facebook’s 1.6 billion daily users perform billions of searches every day. The company’s last update to investors on the benchmark was in 2016 and noted that users are conducting 2 billion searches per day. That number only increases as Facebook adds users and gives more reasons to search, including products like the Marketplace and the growing number of pages and groups on the platform.

But unlike Amazon or Google search ads, Facebook doesn’t allow advertisers to target specific search terms. Instead, the company automatically inserts ads in search results that they think will produce the best results for advertisers (at least for now). 

An affordable alternative?

Since Facebook limits search ad targeting, they may not receive the same price per impression as tested and approved news feed ads. As the cost-per-impression of top news feed ads continues to rise as demand outstrips supply, Search Ads can provide a cost-effective alternative for advertisers looking to reach a broader Facebook audience.

For the same reason, advertisers have switched to Facebook Stories products. “Being a pioneer now has a great advantage; the price is very attractive,” said COO Sheryl Sandberg of the announcements in Stories during the company’s second-quarter earnings.

No threats to Amazon or Google yet

The Facebook search remains very different from a Google or Amazon search. Google or Amazon searches generally buy before Facebook. Someone can search Facebook to get product recommendations from friends. If someone is looking for a product on Amazon, they probably want to buy it.

And without focusing on keywords, marketers are unlikely to shift their ad budgets from Amazon or Google to Facebook.

But as Facebook continues to expand its presence in online commerce, the research could become a more important part of its business. Personalized search ads can be very useful for advertisers, especially if Facebook allows multiple targeting options, such as keywords. For now, however, the amount and value of Facebook searches don’t pose a threat to stealing business from either of its two biggest competitors. That doesn’t mean it isn’t a major way for social media to grow as more advertising money flows online.