Will Facebook Ads Ever Rule the World?
Chad Kodary
Feb 5th, 2021 at 09:07 PM

Will Facebook Ads Ever Rule the World?

Before we answer this question, let’s do some SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis in the light of the data available to us. Undoubtedly, Facebook is the biggest social media platform with massive potential reach.

From 1.9 billion monthly users in 2017, Facebook swelled to nearly 3 billion users in 2020. But even with its tremendous potential, the road ahead for advertisers is not smooth. There are three major issues that have had a tremendous impact on the effectiveness of Facebook ads.

These issues are:

1. Boycotts by companies and people due to fake news, hate speech, and political advertisements
2. Facebook’s squandering reputation due to scandals and criticisms around data privacy and censorship policies
3. Economic uncertainty because of COVID-19

Still, Facebook ads are extremely effective and are likely to rule the world in the next few years because of its massive reach, engagement levels, constant evolution, and affordable rates the platform offers.

However, it is tough to say how the future will unfold for Facebook in the next decade.

There are a few factors that will decide whether Facebook will survive as a robust advertisement platform or not.

Challenges Faced by Facebook

1. Growing Public Dissent and Ad Boycott by Advertisers

In October 2019, more than 500 companies decided to boycott Facebook as an advertising platform urging it to take stern action against hate speech on the platform. The month-long boycott was crucial for Facebook as the big brand advertisers initiated it. It was a decisive step by the brands, which was more of a last resort to pinching the platform where it hurts. Still, fake news, abuse, hate, and misinformation reigns on the platform, and they haven’t taken any serious steps to curb all this. The companies which boycotted Facebook included big brands like Starbucks, Unilever, and Target. They joined the “Stop Hate for Profit” campaign. It was estimated that even if the boycott were extended indefinitely, it would not cause more than a 7% decline in Facebook shares. More than 70% of Facebook advertising revenue comes from small and mid-size businesses. According to JP Morgan, with more than 8 million advertisers on the platform, there is no apparent risk to the Facebook advertisement dollars in the near future.

Boycott Facebook Ads

2. Fading Stickiness and Hyper-Targeting Capabilities

What comes as bad news for Facebook is its decreasing hyper-targeting capabilities because more and more social platforms are moving towards contextual advertising. Hyper-targeting is a marketing strategy where marketers first identify their target customers, create detailed buyer personas and deliver customized messages in the places where they will most likely see it. Advertisers also value another major perk the platform offers, stickiness. Stickiness is a characteristic of a website that encourages a visitor to spend more time on it and return to it.

Facebook hyper-targeting capabilities

3. Declining Reach

Businesses are creating Facebook pages at a rapid pace. Therefore, your business’ reach is likely to decline as more and more businesses compete for attention.

Gen X and Y are moving away from Facebook primarily because they prefer a more private experience. Facebook has managed to counter the loss of demographics by acquiring new social platforms.

Regulators may soon prevent Facebook from its M&As (mergers and acquisitions) spree. Facebook has already hurt its reputation after Cambridge Analytica and other scandals. However, so far, Facebook has been able to overcome this by running direct and powerful PR campaigns.

Cambridge Analytica

4. Impact of COVID-19

If you are active on social media platforms, you must be familiar with the debates going on regarding the economic impact of COVID-19. Economic uncertainty has moved into 2021. Despite the increased use of social media during the pandemic by almost all generations, most businesses have hit the pause button on social media advertising.

Impact of Covid-19 on Facebook ads

How Will Facebook Survive?

Facebook has issued new advertising policies due to COVID-19 that you should comply with. Apart from that, you should also check local government guidelines on coronavirus before acting on any advertisement.

Despite all these measures and warnings, e-commerce is already up by 18%. When people are forced to stay indoors, online shopping is the only option. However, in spite of COVID-19, some businesses have seen a boom, such as those who supply work from home gadgets and equipment,  home cooking supplies, etc. However, the market for formal suits has taken a nosedive. Businesses must focus on the products in demand during the pandemic and cash in the opportunity by taking advantage of the lower ad costs.

Apart from all these challenges, Facebook is also taking steps to improve its advertising capabilities. Facebook is continually changing and adapting, so even though it’s tremendously big; it’s still agile and flexible.

Factors That Will Help Facebook Become a Powerful Ad Platform

Here are a few factors that will help Facebook emerge as a winner in the advertising space.

1.  More Apps

Facebook has launched various apps such as messenger, page manager, and groups; they are still adding to the list. According to Jordan Banks, the MD of Facebook Canada, Facebook is moving towards multiple apps.

Facebook currently has many apps such as Facebook and Facebook Lite, Messenger and Messenger Lite, Facebook Gaming, Facebook Ads Manager, Pages Manager, Facebook Analytics, Free Basics by Facebook, Local by Facebook, Study from Facebook, Workplace by Facebook, Instagram, WhatsApp and Creator Studio, etc. These apps are created for different interest groups. In the future, Facebook can launch even more apps targeting emerging customer segments.

2. Consistent Algorithm Changes

The feed algorithm decides who is going to see what in their Facebook feed. Marketers need to understand the complex functioning of Facebook algorithms to achieve maximum traction from their ads. Facebook claims that its algorithms are designed to fight spam and bring better content in front of its users. However, things are far more complicated than that. Every month Facebook launches four to five major algorithm updates.

3. More Virtual Reality

Facebook is already utilizing virtual reality; however, in the future, it will increase exponentially as consumers want to experience how a particular product will look and how it will work for them. You can access the virtual reality platform on Facebook through mobile apps.

4. Omni Channel Marketing

When we perform omnichannel marketing, we use all of the channels available to create one unified experience for our customers. It includes traditional and online channels and combines point-of-sale, in-store, and online experiences.

Facebook quotation by COHN.

Facebook offline conversions is a Facebook feature that uses offline events to measure the contribution of Facebook Ads to bring real-world outcomes.

By integrating in-store data to Facebook offline conversions, you can measure the ROI of your ad spend efforts, target people more accurately, and fully optimize your ad performance.

Facebook offers many advertising features on this platform and many businesses use these ads in different ways to boost their products and increase their visibility. In the future, most such features will be introduced by the social network, and brands will be quick to seize the opportunity.

5. Evolution of Facebook as a Search Engine

Facebook is trying hard to emerge as a search engine people can use to find businesses and jobs, essentially replacing Google. After the acquisition of wit.ai, it is already on its way to improving its voice search.

6. Targeting Through Different Types of Ads

With more than 7 million active advertisers, Facebook is not only thriving; it is also preparing itself for the future.

Types of Facebook Ads

These ads are available for companies that have a business page on Facebook. Awareness, consideration, and conversion are three primary Facebook ad objectives. To meet those objectives, marketers use different Facebook ad formats. Each ad format has different specs and uses which can be used creatively to engage the audiences.

7. Increasing Ad Costs

Facebook is planning to launch different ads to experiment with for more savvy businesses and marketers. You might have to pay extra to tap the extensive reach of Facebook in the future. Ad prices will likely go up, making Facebook advertising an expensive medium in the future.

8. Facebook as Your E-commerce Site

Facebook is trying to integrate various E-commerce features into the platform to directly sell your products from Facebook rather than your eE-commerce site. You can augment your E-commerce store by setting up a shop section on your Facebook page so customers can purchase your products directly from the platform.

9. Facebook as Your Wallet

Facebook is also planning to add an e-wallet type feature for its users. It will make shopping and sending gift cards to your friend easier on Facebook.

10. Facebook as a Video Site

Apart from video ads, Facebook can also introduce more and more video-friendly features as people love to watch videos in their Facebook feed. Facebook is rolling out several updates to video publishing. It also includes the one that allows you to upload up to 50 videos simultaneously to one page.

11. Speech Recognition

Facebook is already collaborating with technology companies like wit.ai to improve its speech recognition and voice search. Soon, it will be able to compete with Google speech recognition and Amazon’s Alexa. It will help the platform grab the audience that loves using voice commands.

How do Facebook Ads work?

With Facebook’s laser-sharp customer targeting, Facebook Ads are quite effective and yield good results if utilized properly. They leverage artificial intelligence that helps you target your audience with great precision. It allows you to target specific user segments that are more likely to be interested in your products and services.

Facebook Ads allow you to tweak your ads, optimize them, and perform A/B testing to maximize their reach and impact. New advertisers may doubt the power of Facebook Ads. People familiar with the social networking platform understand that it is continually evolving to overcome new challenges and beat its previous performance.

Facebook in the Future

We can safely say that given the tremendous upheaval and activism Facebook has seen, people will likely take charge and wield more power in the future. However, the tremendous “reach” Facebook commands, its hyper-targeting capabilities and its ability to continually evolve will help it retain its position in the advertising space.

Facebook has been adding numerous advertising features. It’ll be interesting to see how these features will be integrated into it to drive more sales and traffic to businesses as compared to any other paid channel.

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