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Facebook relaunches search ads to offset slowing revenue

It’s an ad duoply battle. Facebook is starting to test search ads in its search bar and Marketplace, directly competing with Google’s AdWords. Facebook first tried Sponsored Results back in 2012 but eventually shut down the product. Now it’s going to let a small set of automotive, retail, and ecommerce industry advertisers show users in the US and Canada. Facebook may expand search ads to more countries based on the test’s performance.
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 advertisers are still adapting to gains popularity, and users shift their time to other apps. In Q3 2018, revenue grew 33 percent year-over-year, but that’s far slower than the 49 percent YOY gain it had a year ago, and the 59 percent from Q3 2016. Opening up new ad inventory for search could reinvigorate the revenue growth rate that, combined with Facebook’s privacy and security scandals, has applied intense pressure to leaders Mark Zuckerberg and Sheryl Sandberg.
“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” Facebook product manager Zoheb Hajiyani to TechCrunch in a statement. Facebook will have to balance the injection of the ads with remaining an easy way to search for friends, content, businesses and more.
Advertisers with access will be able to simply extend their existing Newss Feed ads to the new “Search” placement through the Facebook Ads Manager. For now, advertisers won’t pick specific keywords to advertise agains, and instead may appear in search terms related to auto or retail topics. Ads will featured 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.
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