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Ad Campaign Smackdown: Facebook vs. Google

If you're still betting on display ads, here's where to go for more bang for your buck.
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Trying to decide between Facebook and Google display advertising campaigns? Some information compiled by WordStream from a variety of sources suggests that if you're looking for cost effectiveness, Google offers more bang for your buck—for now.

Some of the differences in reported performance are enormous. A caveat: WordStream has an interest in the outcome, as it sells services and tools specifically for use with Google AdWords. Another caveat is that some of the data is old. That said, let's look at some of the numbers.

Click-through rate

This number comes from a study by social marketing tool vendor Webtrends and is based on data from more than 11,000 ads that ran in 2009 and 2010. The click-through rate, a critical number for display advertisers, dropped from 0.063% in 2009 to 0.051% in 2010.

According to WordStream, that compares with an average banner ad click-through rate of 0.1% in the U.S. and a 0.4% rate for Google's display ad network between the end of 2010 and first half of 2011, according to pay-per-click marketing consultancy Periscopix. Google rates are almost eight times higher than Facebook's.

Of course, Google's rates may have dropped and Facebook's might have climbed. But that is one hefty difference to overcome.

Prices

TBG Technology, which offers Facebook ad campaign management, noted in April that Facebook click-through rates dropped in the U.S. (and more than half of Facebook's revenue comes from North America) even as the cost per thousand impressions rates jumped sharply to 23%.

Combined with the click-through rates, Facebook's ads get more costly while becoming less effective in key markets.

Reach

According to comScore numbers from October 2011 that WordStream quotes, Facebook reaches an estimated 51% of all Internet users. Google reaches 90%.

That said, although Google seems a better bet at the moment, there's a question of why that might be. Are Facebook users so turned off by marketing that they simply won't ever respond, or is it a matter of advertisers still needing to learn how to use the medium? Perhaps Facebook needs to investigate new ad formats, or maybe marketers have to learn how to entice a social audience rather than simply trying to sell it.

If you shift toward Google, it still makes sense to experiment and find ways to use this new type of medium. Even if it doesn't offer a practical increase in business today, eventually you will have to make peace with the concept.

IMAGE: Extra®Ordinary/Flickr
Last updated: May 24, 2012

ERIK SHERMAN | Columnist

Erik Sherman's work has appeared in such publications as The Wall Street Journal, The New York Times Magazine, and Fortune. He also blogs for CBS MoneyWatch.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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