Facebook relaunches search ads to offset slowing revenue

Facebook relaunches search ads to offset slowing revenue

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Facebook starts testing ads in search results

Facebook announced Tuesday that it is testing ads in its search results. The test will run in the platform’s primary search results as well as in Marketplace search results.

Search is one of the few untapped inventory sources remaining on the social platform, which has seen many advertisers directing more budget to Instagram this year.

 

Facebook product manager Zoheb Hajiyani explained that:

“We’re running a small test to place ads in Facebook search results, and we’ll be evaluating whether these ads are beneficial for people and businesses before deciding whether to expand it,”

 

  • The test is available for static image and carousel ads. It does not support video ads at this time.
  • Ads placed in search results during this beta run will only appear in the U.S. and Canada. If they ads get a larger roll-out, Facebook may open the ads to more countries.

 

The reintroduction of search ads could open an important new revenue stream at a time when Facebook’s revenue growth is quickly decelerating as it runs out of News Feed ad space, the Stories format that advertisers are still adapting is poised to overtake feed sharing on social apps and users shift their time elsewhere.

 

With the relaunch, advertisers with access will be able to simply extend their existing News Feed ads to the new “Search” placement through the Facebook Ads Manager, similar to how they’d pick Facebook Audience Network or Instagram.

No video ads will be allowed, and search ads won’t appear on desktop. Marketplace search ads will appear on iOS and Android, while Facebook search ads are only testing on Android. For now, advertisers won’t pick specific keywords to advertise against, and instead may appear in search terms related to auto or retail topics. Still, the placement will let advertisers dive deeper down the conversion funnel to reach people who might already have intent to buy something and fulfill that demand.

Facebook’s News Feed ads (other than those retargeted based on web browsing) are better for demand generation, and sit higher in the funnel reaching users who don’t know what they want yet.

Ads will feature a “Sponsored” tag, and are subject to the same transparency controls around “Why Am I Seeing This?” Facebook plans to evaluate the benefits for users and advertisers in order to determine whether to roll out the ads to more countries and categories. Users will not be able to opt out of seeing search ads. They can “hide” ads using the drop-down arrow as with News Feed ads, but that won’t prevent different ones from showing up in search later.

Facebook’s share of the $279.56 billion total worldwide digital ad market will grow to 19.5 percent this year, trailing No. 1 Google, which has 31.5 percent. After gaining multiple percentage points of share the last few years, eMarketer estimated Facebook’s cut of total digital ad spend would fall to around 1 percent the next two years. Unlocking search ad inventory could perk up those projections. Facebook would only need to hit 3.3 percent of total search ad share to surpass Microsoft for the No. 3 spot, or 6.5 percent to top Chinese search engine Baidu.

One major concern is that Facebook already collects as much information as possible about people and their behavior to target its ads. With the reintroduction of search ads, it’s even more incentivized to gather what we do online, what we buy offline and who we are.

Facebook will have to balance the injection of the ads with remaining an easy way to search for friends, content, businesses and more. Search is far from the core of Facebook’s offering, where users typically browse the News Feed for serendipitous content discovery rather than go looking for something specific. The most common searches are likely for friends’ names which won’t be great ad candidates. But given how accustomed users are to search ads on Google, this new revenue stream could help Facebook boost its numbers without too much disruption to its service.

 

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