You may have noticed that a few weeks back Facebook posted some extremely impressive profits. Wall Street rejoiced and the "Facebook Effect" lifted tech stocks across the board.
The reason for Facebook's success wasn't a secret: they are successfully selling valuable advertising space with an emphasis on mobile ads. But this only tells half the story. 
Companies like Yahoo! have been trying to crack the web advertising code with disastrous results. Why is Facebook so different?
The reason is two-fold. One, with over a billion users, Facebook simply has access to more customers. Two – and most importantly – is Facebook's retargeting approach, which allows advertisers to show users the right ad at precisely the right time.
We will explain. In today’s post we'd like to take a closer look at social media retargeting and how small businesses can benefit from it.
Search and Site Retargeting - A Breakdown
Search and site retargeting is neither complicated nor is it new. Pioneered by Amazon and Google, retargeting simply pushes ads to users based on information gleaned from previous web searches ("search retargeting") and searches within a site ("site retargeting.") It's the reason why, after Googling "Bruno Mars" during the Super Bowl half-time show, you got an ad for his album the next time you signed into Gmail. We can all attest from first-hand experience that it’s an effective approach.
How Social Media Retargeting is a Game-Changer
Retargeting technology has been around for a while now and it's no longer ground-breaking technology. So why has Facebook, in particular, been so successful? Two factors – both of which can be adopted by other social media platforms – come to mind.
1. It's all about the (accurate) data. Social media networks can mine mountains of voluntarily-published user data to create highly targeted ads. When we talk about Facebook, everything you enter – information on your ‘About’ page, Likes, Comments, Shares, favorite movies, music, books – is all fair game. Facebook's retargeting platform, known as the Exchange, takes this data and provides advertisers with uniquely tailored ads.
Furthermore, this data is generally quite accurate. Think about it: the information you enter on your Facebook profile is, more or less, the "real you." However, your search terms and web browsing behavior is a far less accurate representation of your tastes and preferences. (This is why you'll occasionally get those weird ads on Gmail for lawnmowers or vacations to Tibet.)
2. Location, location, location. The best data in the world is useless without proper placement. Facebook places these targeted ads in users’ News Feeds, forcing them to at least acknowledge them. Contrast this with Google's display ads, which appear on the right-hand side of your screen and can easily be ignored. Facebook's approach makes the ad seem like a natural part of their experience and as a result, people are more likely to engage with them.
In fact, according to a previously cited study by AdRoll — who, it must be noted, is a Facebook Exchange partner — users click Facebook News Feed ads 21 times more than standard web retargeting ads like those seen on Google Search.
Again, it's worth noting that these two factors – the ability to access accurate user data and effective ad placement – aren't just applicable to Facebook. Any social media network can emulate this model, which is why no one was surprised last December when Twitter announced its new retargeting platform, called "Tailored Audience."
And while Twitter’s offering isn't fully live yet, early results are encouraging. HubSpot says it saw a “45 percent improvement in engagement over their historical averages, sports video analytics company Krossover says it saw a 74 percent in cost per customer acquisition, and app management company New Relic says it saw 195 percent improvement in conversion rates.”
So what does it mean for a small business with a limited digital marketing budget? It means you owe it to yourself to experiment with Facebook and Twitter's retargeting offerings to see if they deliver a higher return than your existing ad campaigns, whether paid ads or traditional search retargeting. If they do outperform your current strategy, make the transition to a greater emphasis on social media retargeting. The numbers will speak for themselves, and numbers don't lie.
Looking for more tips to optimize your digital marketing efforts? Sign up for our newsletter.
