Facebook Ads Could Overtake Google Adwords

Facebook Ads Could Overtake Google Adwords

August 14, 2013

For any marketer navigating the world of online advertising, two names should come to mind immediately: Google and Facebook. The search engine and social media service are indisputably the masters of their respective domains, and while it makes sense for businesses to consider both of these options for their online advertising campaigns, it is important to understand the fundamental ways in which their ad offerings differ.

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Currently, Google is far and away the most dominant player in the global online advertising market. In 2012, Google reported a global online ad revenue of $43 billion, compared to Facebook’s global online ad revenue of $4.28 billion. To put those numbers in context, Google owned 44.1% of the market share, while Facebook captured only 3.1% of the market.

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Google is dominant, not only because it’s been around longer, but because Google Adwords is generally perceived to be superior to Facebook ads. While Google Adwords does possess several key advantages, Facebook ads can be just as effective – they are simply meant to be used in a very specific way. Marketers are just beginning to understand this fact, and that Facebook ads have inherent advantages of their own.

One advantage of Google Adwords is Google’s massive user base. According to information compiled by e-intelligence, Google had 2.01 billion unique users in 2012 compared to Facebook’s approximately 1 billion unique users. However, it’s important to note that this difference is not nearly as significant in the United States. In the US, Google reported 225 million unique users compared to Facebook’s 185 million unique users.

Something else that marketers often point out is the large discrepancy in click-through rates (CTR) between Google and Facebook. Though Facebook does not officially release its CTR statistics, independent studies have shown CTR of 0.05% for Facebook versus 2.00% for Google. People who use Google are actively searching for something (a restaurant, new shoes, etcetera) and are thus more likely to click through an advertisement.

But Facebook has its own advantages over Google Adwords. For one, people tend to spend more time on Facebook. Users on the social media site logged on for an average of 414 hours a month, while Google users logged on for only 101.5 hours. The reason is straightforward: people go to Facebook to receive news and information about the people and brands they care about, while they use Google for quick searches. So what does this mean for marketers? More impressions! According to an infographic by WordStream, Facebook serves around 1 trillion page views per month compared  to 180 billion ad impressions from Google.

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Facebook’s advantages over Google expand beyond its impressive reach. Facebook can target audiences in a way that Google Adwords cannot. While Google has the advantage of being able to target based on specific keyword searches, ads on Facebook can target based on age, location, education, gender, relationship status, work, social connections, and more. This type of targeting allows businesses advertising with Facebook to better understand their audiences and engage users. Brands can create pages and post stories, and have potential customers like, comment on, and share their content. When these stories are shared, the message is much more powerful.

Finally, Facebook ads are cheaper than Google Adwords. The global average cost per thousand impressions (CPM) for Facebook ads is only $0.15, while Google Adwords has a global average CPM of $1.60. Even more importantly, every $1 spent on Adwords yields $2 on average in revenue for advertisers, while every $1 spent on Facebook ads returns $3 on average for advertisers!

Facebook is only just beginning to recognize the full potential of its own advertising platform. Recent moves like simplifying its ads options suggest that Facebook is starting to take its advertising business more seriously, and there is certainly room for Facebook ads to continue to improve in the future.

So what does this mean for online marketers? Certainly success can be achieved using both forms of advertising, and in fact, it would be prudent to consider both types depending on your specific advertising goals. Google Adwords may be the current dominant method of advertising online, but Facebook ads look like they may take the lead in the future!

Lawrence WangLawrence Wang, marketing intern at Ampush, is a rising senior at Harvard University studying applied math and international studies. In addition to his passion for start-ups and technology, Lawrence enjoys writing, reading, traveling, and exploring all parts of San Francisco.