Facebook to offer free ads to small businesses

Social networking giant to extend ad credits to thousands of Europe’s small firms

Facebook will offer £4.2m worth of free ads to start-ups and small businesses in Europe, the social network announced today.

Speaking at the DLD conference in Munich, Facebook’s chief operating officer Sheryl Sandberg announced that 50,000 European small businesses will be able to claim credits worth $100 (around £80) each to use on the site, in a bid to help start-ups reach a wider audience through social media. The credits will be available to small businesses in the UK, France, Spain, Germany and Italy.

Facebook has also teamed up with the British Chambers of Commerce (BCC) to run a series of events in the UK this year, to educate small businesses on how to create a business page and engage with customers through the site, Sandberg revealed.

Social impact

The announcements coincided with the publication of a new report by Deloitte, released today, which examined the impact that the social network has had on the UK and Europe.

According to the report, Facebook supported the creation of 35,200 jobs in the UK last year (including 7,500 from the Facebook app market), while boosting the UK economy to the tune of £2.2bn.

“Today’s report shows Facebook is about a lot more than sharing pictures or keeping up with friends,” said Sandberg.

“As the Deloitte study highlights, social media is proving particularly valuable for small and medium-sized businesses, which form the backbone of the European economy.”

The social network, which is expected to hit one billion users by August this year, has increasingly courted the small business audience in recent months – with the launch of Facebook Places and Sponsored Stories adding to its Business Pages – with businesses’ ad spend representing its primary revenue stream.

Mixed success

Startups’ readers reported mixed experiences of Facebook advertising. Ryan O’Rorke, founder of search and comparison site for local daily deals LoveOnlineDeals.com, said:

“We have used [Facebook advertising] a lot in the past and it returned a much better return on investment (ROI) compared to Google Adwords. It may not be applicable for all businesses but, as we are web-based, we were able to geo-target our consumers with offers relevant to their local area.”

However, Adam Baker, Startups’ columnist and founder of citizen journalism website Blottr.com, was disappointed with the results from Facebook advertisements.

Baker said the cost per click was “very expensive”; that the ads generated a low click-through rate (despite changing the message four times) and that the clicks that were generated had a bounce rate of 70% (the number of visitors who left the site immediately after arriving).

“Compared to other pay-per-click (PPC) options, like Google, Facebook simply doesn’t compete – both in terms of quality/relevance of user or cost,” said Baker.

O’Rorke added that while the £80 credit would certainly help start-ups, by attracting new social fans and more visitors, it could also tempt them into spending more money once the credits had been used up, which they might not have otherwise accounted for.

However, he added: “Overall, as long as Facebook advertising is providing a good ROI for the start-up business, it’s a viable means of advertising.”

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UPDATE:A spokesperson for Facebook told Startups that they will be announcing details of how businesses can apply for the Facebook Ad Boost programme over the coming weeks, and will keep us posted. We will update this piece as soon as we have more details…

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UPDATE 29/05/12:Facebook has today launched the Business Boost scheme in the UK. 

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