Revenue from Facebook

16:00, Apr 03 2014

Don't think the popular social media platform is just for friends - it can be a powerful business tool.

It may be called social media, but Facebook is as many parts social as it is advertising.

Small businesses are flocking to Facebook for its budget advertising costs and wide reach. Latest figures from the Australian Communication and Media Authority show 26 per cent of SMEs use social networking channels such as Facebook and Twitter to market their goods.

So how can your business tap into Facebook's deep well of potential customers?

With a background in magazine journalism, the first place online women's fashion retailer Carla Efstratiou researched for advertising was print media.

“It was extremely expensive, $5000 for a half page ad in a magazine,” she says.


“I had to stick to the cheapest form of advertising, so I began using Facebook.”

Efstratiou's site Stylehub has a $10 daily Facebook advertising budget.

“It's been pretty good so far, we've seen a lot more user engagement,” she says.

“As soon as new products come online, people email us wanting to know more... It definitely brings more people to the website.”

Stylehub had 4000 followers, but since using Facebook advertising four months ago that figure has shot up to 10,780.

The biggest advantage of Facebook marketing is, of course, its huge reservoir of users. Facebook has 12 million total monthly active users across Australia and New Zealand. And the past two years has seen a 29 per cent increase in Aussies and Kiwis using Facebook on their smartphones.

Facebook's manager of small business Australia and New Zealand Nick Bowditch says there are two models of Facebook advertising – impressions known as Cost Per 100 Impressions or clicks, also called cost per click.

“The majority of people would test one or the other,” he says.

“But the general rule of thumb is clicks are for when you want customers to perform a task such as signing up or buying something.

“If you want to build brand awareness without necessarily wanting a direct outcome, impressions are better.”

Bowditch says businesses can chose their advertising budgets, starting at $1 per day.

“Having come from a small-business background I would advise advertisers to spend what they can, but they should think about their return on advertising,” he says.

It's been a matter of practice makes perfect for Yashas Alur, from online custom tailored men's clothing line Buttons 'n' Threads.

Alur began advertising using Facebook and Google AdWords, and though its analytics are not as comprehensive as Google's, Facebook is more affordable. Having only launched his business last September, Alur says he has spent a lot of time experimenting with which ads work best on Facebook.

“There are various types of ads that can be set up through the Facebook ad manager,” he says.

“The top three we find of use are Ads for Page Likes, Ads for Post Promotion and Ads for Website Clicks.”

While developing any ad, Alur says an eye-catching picture and title are essential.

“As the target audience finds the ads more relevant, click through rates increase and ad bids reduce,” he says.

“This ensures that we pay the least amount per click.

“An engaged fan for our business is worth at least the price of one product, which is quite high given that our products are of high value. It's important for us to have posts that are engaging and also build an audience that would find our product relevant to them.”

Spending between $10 and $20 per day on advertising, Alur says the return of investment has been worthwhile – up to 150- 160 on the company's ad spends.

Tim Krotiris, co-founder of Social Media Servants digital agency, says the most valuable aspect of Facebook advertising is getting people involved - otherwise known as “building engagement”.

Ads that encourage people to visit a website, enter a competition, sign-up as a user or comment on a post are all effective ways of engaging with potential customers.

Krotiris says SMEs can no longer afford to ignore social media as an advertising avenue.

“We've got to a stage where they've got no choice but to use social media,” he says.

“Social media is a lot like what we had in the 1950s when there was small communities, towns where people used to have word of mouth.

“That's what's happening now with digital media and it's an incredible opportunity.”

The Age