Facebook Expands Local Reach

Facebook has added an unspecified number of locations — think: many — to its geotargeting capability. According to a blog post today:

We’ve been listening to your feedback and have recently expanded the number of cities available for you to target when creating an ad! There are now many more cities available in a number of countries.

Facebook offers location and demographic targeting around the globe:

IP address and information provided in the profile (which is going to be more accurate) is what the company uses to determine location: 

Separately a recent study by Rice University’s grad school of business, sought to assess the marketing impact of a Facebook fan page on a Houston area local cafe chain, Dessert Gallery:

Facebook changed customer behavior for the better. People who had replied to both surveys and had become fans ended up being DG’s best customers: Though they spent about the same amount of money per visit, they increased their store visits per month after becoming Facebook fans and generated more positive word of mouth than nonfans. They went to DG 20% more often than nonfans and gave the store the highest share of their overall dining-out dollars. They were the most likely to recommend DG to friends and had the highest average Net Promoter Score—75, compared with 53 for Facebook users who were not fans and 66 for customers not on Facebook. DG fans also reported significantly greater emotional attachment to DG—3.4 on a four-point scale, compared with 3.0 for other customers. Additionally, fans were the most likely to say they chose DG over other establishments whenever possible.

To summarize, Dessert Gallery Facebook fans:

  • Were more frequent customers and, in the aggregate, spent more than non-fans
  • Had a greater emotional attachment to the business and were more likely to recommend it to friends

Caveats:

  • Correlation doesn’t equal causation: did these people become fans because they were already more loyal to begin with?
  • This is a single case study.
  • The Rice biz school researchers coached the Dessert Gallery in some best practices and provided some general assistance around updates: 

We launched the Facebook page and invited everyone on the mailing list to become a fan. DG updated its page several times a week with pictures of goodies, news about contests and promotions, links to favorable reviews, and introductions to DG employees. 

To be sure Facebook is a powerful marketing tool and platform for SMBs. Most, however, don’t know how to “work it,” in the way that Dessert Gallery did. That learning will come over time. 

And to remind everyone there are 1.5 million “active” SMBs with Facebook pages. Despite the impressive targeting options, most of them aren’t going to really understand how to use Facebook Ads in an optimal way. 

But just imagine a suite of SMB services that Facebook might offer at, say, $25 per month. If 500K adopted that would translate into $150 million. Right now Facebook is on target to hit $1 billion in revenue soon. That hypothetical $150M number would thus represent 15% of total revenues.

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4 Responses to “Facebook Expands Local Reach”

  1. Will Scott Says:

    Greg,

    If our customers are any indication $25.00 / mo isn’t even 10% of the average spend.

    Obviously the value proposition is less attractive with more advertiser saturation but if the ROI is anything like what we see this is a killer opportunity for SMBs.

  2. Greg Sterling Says:

    Yes, there’s a lot more money to be made

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