The Advertiser's Dilemma: AdWords or Facebook?

In January, Google disclosed that they earned $37.9 billion in revenues in 2011 (Kim, 2012). (Yes, that is a single year’s income and billion with a “b.”) Ninety-six percent of those earnings were from advertising (ibid., 2012)  Facebook, on the other hand, earned $3.7 billion and 85% of it came from selling advertising (Tsukayama, 2012). They are staggering numbers for two platforms that offer the same service, or do they?

What They Have in Common

With either platform there is no minimum budget. You can spend as little or as much as you like. Both offer cost-per-click (CPC) and cost-per-thousand impressions (CPM) ad structures. You can also easily target audiences geographically, focusing on local consumers, people across the US or audiences across the globe. Both allow you to create your own ads and both give you analytics to measure your campaign results quickly. And either option makes it easy to stop and start any advertisement.

How They Are Different

What is more interesting is how these two ad platforms vary. It is their differences which will help the marketer decide when to use each platform.

The biggest distinction between the two is how each delivers the audience. Google Ad Words allows advertisers to target their ads according to specific key words that they choose. Anyone who performs a search for that keyword will see their advertisement. (Note, this is the wide theory. In practice, this is dependent upon how much you have bid for that keyword, how much others have bid, etc.) In Facebook, ads are selectively shown to audiences with the specific demographic and psychographic parameters chosen by the advertiser.

In the former, the consumer is actively seeking specific information related to a product or service, but this can be any consumer within the advertiser’s delineated geographic parameters. In the latter, the only consumers who will see the ad have already been determined to have the right demographic and psychographic distinctions, but they are most likely not actively searching for information about a product or service.

This is a notable distinction because in the Google environment the ads create options for which the consumer is looking. In the Facebook platform, the consumer is more often looking to engage with friends, not advertisers.

Which is more effective?

Well, that depends. Facebook allows advertisers to message an audience over time and build mailing lists (Mielach, 2012). Facebook also tells a consumer who of their friends is already a fan of an advertiser (ibid., 2012). If the marketer is looking to build a relationship, Facebook is a better choice than Google Adwords. When the advertiser is looking to compete directly with other providers and be included in the consideration phase of the sales funnel, Google Ad Words, is more suitable.

It is no wonder Google and Facebook are neck and neck in revenues in the ad biz. They function from two theories of advertising. Google’s success is built upon offering the right solution at the right time. Facebook’s success is based on influence and long term relationships. Both theories of advertising have proven to be valuable. There is a time and a place for both.

References

Kim, L. (2012, January 23) What [sic] industries contributed to Google's $37.9 billion in 2011 revenues? Wordstream.com. Retrieved from http://www.wordstream.com/blog/ws/2012/01/23/google-revenues

Mielach, D. (2012, June 29) Should your small business advertise on Facebook? Business News Daily Retrieved from http://www.businessnewsdaily.com/2771-facebook-ads-effectiveness.html

Tsukayama, H. (2012, February 1) Facebook IPO: How does Facebook make its money? The Washington Post. Retrieved from http://www.washingtonpost.com/business/technology/facebook-ipo-how-does-facebook-make-its-money/2012/02/01/gIQAL03yiQ_story.html