Facebook for business: the low-cost marketing strategy?

With a growing range of paid-for services created to reach some of its billion customers, Facebook may finally have cracked its business offering. Startups takes a closer look

“Fish where the fish are.” It’s one of the mantras of marketing. If you have a product to sell, focus your energy, imagination and marketing collateral on those places where your target customers spend their time.

So it’s hardly surprising that Facebook has emerged as an important marketing platform for business of all sizes. For one thing, with more than a billion people using it at least once a month and 31 million of those in the UK alone, it’s teeming with fish.

But perhaps more importantly, Facebook delivers users across the whole spectrum of age and gender. Yes, it’s a medium still dominated by the young and relatively youthful, with the 18-24 and 25-34 age group respectively making up 24.5% and 25.5% of the total, according to Facebook ‘fan page’ analytics site Fanalyzer. However, older age groups are well represented too, with the around 33% of users falling between 35 and 64. In terms of gender, women are in very small majority, accounting for around 51% of users.

In this feature we look in more detail at Facebook’s new filtering algorithm, known as EdgeRank, which is designed to limit the number of commercial posts appearing in individual users’ feeds. And we answer the key questions about the free and paid-for services at your disposal.

Facebook: a grown-up marketing option?

So, is Facebook more than a distraction? In theory at least, the social media behemoth provides a hugely cost-effective means to talk to your target audience. Most people who’ve used the log-in page will be familiar with the corporate catchphrase: “It’s free and always will be”. This is not only reassuring to the millions of general users but also businesses who can set up ‘fan’ or ‘community’ pages at zero cost.

As with a personal Facebook account, these ‘pages’ allow you to post updates and talk to a community, but they also enable you to present yourself as business.

“What we see is a lot of people setting up Facebook Pages before they start their own websites,” says Felicity McCarthy, Facebook’s SMB marketing manager for Europe and the Middle East. “It’s free and it allows people to experiment online – to see what works and what doesn’t.” According to the social network’s own figures there are now 12.8 million Facebook ‘local business’ pages globally – that’s how the network defines businesses like yours.

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So what can they achieve by being there. “You can raise awareness of the business and that feeds through to sales,” says Felicity McCarthy. “If you run a shop the starting point might be getting people through the door and then driving online sales.”

Does Facebook deliver sales for small businesses?

The question is, of course, can Facebook deliver? Well according to Seamus Fahy, founder of Dublin-based jeweller Voltaire Diamonds (see case study), it can certainly make a significant contribution to the bottom line. With offices in both Dublin and London, Voltaire has passed on the traditional approach of a prominently positioned walk-in shop in favour of selling to customers face-to-face, by appointment in a private space.

While that approach cuts down considerably on overheads (with a knock-on effect on price) the lack of a shop front means that Fahy has to use other channels to attract customers. Facebook plays a key role in driving sales.

“It’s our number two driver,” he says. “Around 25% of our sales can be directly attributed to Facebook. It’s a very important channel for us.”

And Fahy’s experience illustrates, a lot can be achieve simply by using the functionality that Facebook provides free of charge. Using a Facebook page as a base, you can post product information to people who’ve liked your page. This in turn can generate sales within your community.

Equally important, if you genuinely engage your audience you also create what marketing gurus like to call ambassadors. These are the people who will comment on your marketing posts or click the ‘like’ or ‘share’ buttons, thus spreading the message virally to their own communities of friends. And if you’re very lucky, they’ll actively and enthusiastically endorse you. Fahy has achieved this by regularly posting high quality images of his products.

Graph Search and why engagement matters

Endorsement is set to become an ever more important marketing tool. Starting in the US, Facebook is rolling out a new service called Graph Search. Essentially it’s a search engine that enables users to seek out local businesses such as restaurants or shops through the filter of recommendations by friends on Facebook. Any business with a Facebook page can potentially benefit from this.

With Graph Search and Facebook’s Nearby – a free geo-location mobile search app released in December 2012 – the social network has moved to respond to what Dan Levy, its global director of small business, told Startups only days before the Nearby announcement. “So far we’ve failed certain small businesses,” he said. “If a plumber created a Page, created content, and was asking questions they’d find Facebook is not the place for talking about wrapping pipes in winter.”

Levy would have known about the impending launches, but Facebook has a policy of not speculating about what it might do. And its ability to deliver for plumbers that do create a Page remains to be seen. But all this means it’s always worth researching whether the company’s small business offering has expanded as Levy and his colleagues at HQ realise much of Facebook’s future value may come from business engagement.

Facebook filtering and the arrival of EdgeRank

But there is a limit to what you can achieve on Facebook simply by using the free services, so a thorough understanding of how the system works is helpful. For one thing, Facebook filters commercially-motivated posts using an algorithm that has become known as EdgeRank (covered in detail here). In effect that means if you create a status update it won’t necessarily be seen by your whole community of followers. In fact it’s likely to be seen by less than 20%.

Because this coincided with launches of services businesses have to pay for, the marketing community in particular, cried foul, suggesting companies were being forced into lining Facebook’s pockets. It’s something Facebook has refuted and produced independent data to corroborate its assertion.

So to maximise the impact of your marketing you must either create genuinely engaging content that is also Facebook-filter friendly. Increasingly companies are using a mixture of the ‘free’ and ‘paid for’. Each has a part to play in successful Facebook marketing. Alternatively you can pay to guarantee that your messages are seen.

Advertising provides a means to extend your reach and mobile is becoming ever more prominent. Illustrative of the increasing importance of mobile to Facebook’s business model, the company’s revenues from advertising on the channel leapt from 0% to 14% in a matter of months recently.

The social network offers very targeted advertising through which messages can be served to the whole Facebook community according to age, gender and interests. As Rebecca Ray, head of social at multi-media agency Photolink explains, the targeting can be extremely precise: “We work for a hairdressing chain and have used Facebook advertising to target people who are fans of other hairdressers.”

Advertising also provides a means to reach new fans. Jacob Hill used Facebook advertising to push up the numbers liking his page from 1,200 to the current level of 1,744 and found it effective. However, he doesn’t see it as a sales driver. “I would probably use Google ads to drive sales and Facebook ads to push up the number of fans,” he reasons.

Inevitably, businesses want data to back up their actions and much like Google Analytics, there’s solution the social network too. “Facebook Insights lets small businesses see fans by different demographics,” says Levy. “It lets people see how they are interacting with ads. We have a long way to go to make it a better product, but it’s quite powerful.”

And latterly Facebook has introduced the aforementioned new raft of services – Promoted Posts, Sponsored Stories, Nearby – all designed to help you get your message across to the maximum number of people in a ‘friendlier’ way than straight ads.

Used with Pages, these can provide you with a potent way to promote your business. So the question is, can you afford not to?


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