Social Media Platforms and Targeted Advertising

Social media platforms use Big Data to analyze their users’ behavior. With this information, they offer up advertisement space to businesses both big and small. This advertisement space is unique as the ad will be directed towards an audience who would be more likely to show interest, this is known as targeted advertising.

Facebook

Facebook uses its monitoring tools to record everything. And I mean everything, from what websites their users visit outside of Facebook, to how long they hold their cursor over certain parts of the page. Facebook have declared that this information is being used in their algorithms for targeted advertising.

I can confidently say that I do not know one person who has never had a Facebook profile. Facebook is one of the biggest social media platforms in the world with it’s users posting 136,000 photos, 510, 000 comments and 293, 000 status updates every 60 seconds. We all know that Facebook is no stranger to showing their users targeted ads. Facebook will automatically show ads to people who will find those ads relevant by using information from their massive database.

5 Facebook facts (Maryam Mohsin, 2021)

1. 2.8 billion monthly active users on Facebook.

2. Brought in $27.2 billion in ad revenue in Q4 2020.

3. More than 200 million small businesses around the world use Facebook’s tools.

4. 86% of US marketers are using Facebook for advertising.

5. 78% of American consumers have discovered retail products to buy via Facebook.

How does Facebook have access to so much additional data?

Facebook uses a massive installation of Hadoop which is an open source software framework for storing data and running applications. They are one of the many Big Data technologies employed at Facebook. In 2013 Facebook established partnerships with data brokers which include, Epsilon, Acxiom and Datalogix. These brokers have access to trillions of data transactions each year. Acxiom executives have stated that possess information about 500 million active consumers globally.

Facebook for Business

Facebook for Business is a webpage where businesses buy ads to run on Facebook. Facebook limits the number of advertisements that each user sees so, businesses purchase ads through the ad management tool, (Ads Manager), where they create an ad and submit it to the ad auction. Here, advertisers bid against each other to claim an advertising placement. The ad auction then determines which ads should be shown to which people.

Targeting strategies used by Facebook

· Recent purchasing behavior

· Life event targeting

· Lookalike audience

· Layered targeting options

How much do Facebook ads cost?

Facebook advertising is one of the most cost-effective ways for businesses to advertise. The cost of Facebook advertisements fluctuate every day. However, the average cost across all industries is expected to be around $0.50 to $2.00 per click. There are six key factors that influence the cost of Facebook ads:

  1. Target Audience
  2. Marketing objective
  3. Ad placement (the size and where eg. stories or newsfeed)
  4. When you advertise
  5. Relevance score
  6. Competition

Instagram

Instagram is the sixth most visited website on the internet with over 1 billion users every month. Facebook bought the social media platform in 2012 for $1 billion therefore, Instagram uses Facebook’s efficient advertising system.

5 Instagram facts

  1. Instagram earned $18.16 billion in ad revenue in 2020
  2. 130 million Instagram users tap on shopping posts every month
  3. 200 million Instagram users visit at least one business profile daily
  4. 81% of people use Instagram to help research products and services
  5. 50% of people have visited a website to make a purchase after seeing an advertisement in stories

How businesses use Instagram to advertise

Instagram has access to and uses the same demographic data that Facebook possesses. Instagram is known for its high engagement rates. Images on Instagram receive an average of 23% more engagement than when shared on Facebook.

There are many ways businesses can advertise on Instagram. They can use main page posts, stories, IGTV, collection ads and can also pay influencers to advertise on their page where they can reach their followers.

How much do Instagram ads cost?

With Instagram ads, there is a destination URL and the cost per clicks (CPC) range from $0.50-$0.95. Since January 1, 2021 the cost of CPM (Cost per 1,000 impressions) have been ranging between $2.50-$3.50.

YouTube

YouTube is the second most popular website in the world with 2.3 billion users. It is used by 55% of marketers and has generated over $5 billion in advertising revenue in Q3 2020. Google bought YouTube in 2006 and therefore, YouTube has access to all of the data Google has accumulated. YouTube utilizes this data to deliver targeted ads to consumers who would show interest in said ads.

Businesses using YouTube to advertise

Types of YouTube ads

  1. Skippable in-stream ads — these ads play before or during a video and the user can choose to skip the ad after 5 seconds.
  2. Non-skippable in-stream ads — these ads also play before or during a video but do not give an option for the user to skip and they play for 15 seconds
  3. Video discovery ads — these ads show up alongside search results. They include three lines of text with a thumbnail. When users click on the ad, they are sent to the business’ video page or YouTube channel.
  4. Non-video ads — there are two types of non-video ads available on YouTube. Display ads appear on the right hand sidebar on the YouTube homepage. In-video overlay ads appear floating on top of video content from monetized YouTube channels.

How much do YouTube ads cost?

On average YouTube ads cost between $0.10 and $0.30 per view or action. The factors that determine the cost of YouTube ads include ad type, the bid, bidding selection and the selected targeting options.

Well that’s all from me ! I hope I was able to provide some insight into how social media sites provide businesses with the ability to target advertise on their platforms.

Sarah :)

References

  1. Facebook.com. 2021. Facebook for Business. [online] Available at: https://www.facebook.com/business/ads/pricing
  2. oberlo.com.2020. How much does Facebook advertising cost in 2021? [online] Available at: https://ie.oberlo.com/blog/facebook-advertising-cost
  3. Maryam Mohsin-oberlo.com.2021. 10 Facebook Statistics Every Marketer Should Know 2021. [online] Available at: https://ie.oberlo.com/blog/facebook-statistics
  4. medium.com.2020. What is Big Data and How Facebook is Using Big Data? [online] Available at: https://sahithreddy639.medium.com/what-is-big-data-and-how-facebook-is-using-big-data-d044fcd52948#:~:text=Big%20Data%20Analytics%20At%20Facebook&text=Its%20latest%20monitoring%20tools%20record,which%20adverts%20to%20show%20us.
  5. Hootsuite.com.2021. 44 Instagram Stats that matter to Marketers in 2021. [online] Available at: https://blog.hootsuite.com/instagram-statistics/#:~:text=4%20million%20businesses%20use%20Instagram%20Stories%20ads%20monthly
  6. Instagram.com.2021. Instagram for Business. [online] Available at: https://business.instagram.com/advertising/
  7. Hootsuite.com.2020. The complete guide to YouTube ads for marketers. [online] Available at: https://blog.hootsuite.com/youtube-advertising/
  8. sproutsocial.com.2021. 25 YouTube stats and facts to power your 2021 marketing strategy. [online] Available at: https://sproutsocial.com/insights/youtube-stats/
  9. wordstream.com.2021. How much do Instagram ads cost in 2021? [online] Available at: https://www.wordstream.com/blog/ws/2021/02/08/instagram-ads-cost#:~:text=In%20terms%20of%20CPM%20(Cost,and%20their%20respective%20ad%20sets.
  10. webfx.com.2021. How much does YouTube advertising cost? [online] Available at: https://www.webfx.com/internet-marketing/how-much-does-youtube-advertising-cost.html#:~:text=On%20average%2C%20businesses'%20YouTube%20ad,you%20pay%20%240.10%20to%20%240.30.

A series of blogs to delve into the topic of marketing information systems.

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