What's a small business to make of Facebook, Google, and HopStop offering up ad space free of charge?
Facebook made a splash last week when it announced a plan to offer $10 million in free advertising to small businesses starting in January. The company says the move allows small entrepreneurs test the waters of social media advertising—and simultaneously helps Facebook usher in a new wave of loyal advertisers it hopes will stick around for the long haul.
But the world's largest social networking site isn't the only one hitting the "like" button for small businesses. Entrepreneurs have been finding a friendly welcome mat on the Internet lately as sites try to court local ads to run along search results, while also cementing relationships that could be the key to their financial future.
This month, transit-direction site HopStop is announcing a similar free-ad program. In it, small businesses can advertise on HopStop for free for 30 days, for an up to $250 value. And professional networking site LinkedIn occasionally makes offers to select small-business owners of $50-to-$100 vouchers for free advertising.
Even the king of search is getting in on the free ad game: Not only does Google Ads offer free credits to non-profits through its AdWords program, it also runs special promotions for new AdWords customers. They include coupons for online advertising campaigns, spokeswoman Crystal Dahlen says.
The free publicity offers might be coming at an ideal time for small businesses owners, many of whom were taking out loans to keep the doors open just two years ago, says Joe Zetecki, deputy assistant administrator for communications of the U.S. Small Business Administration. Now that the recession has crested, businesses are looking to recover and grow again.
"Any of these provide an opportunity to find new customers," he says. "There's tremendous values in that. The beauty of some of these search engines and online tools is it sort of levels the playing field."
On HopStop, the ads will show up in coordination with search results, so that when someone is getting directions for, say, a theater, they'll get an ad for restaurants or stores near the theater.
"We know the whereabouts of all of our users," says Joe Meyer, HopStop's CEO. "So we know any time one of our users is going to come in close proximity to any storefront or any event or any venue. What better way to serve local ads than in close proximity."
The ads will appear right in the stream of search results, keeping them as near to the address as possible without being any more intrusive than existing ads, he says.
Meyer says the timing of the program coming on the heels of Facebook's announcement is coincidental: The site has been looking at a scalable local ads module for months now.
What does a business have to do to get the free space? They must place a link to Hopstop directions on their site and then they can enjoy the 30-days of free advertising, which can yield up to 12,500 impressions.
Right now, the site's ads are geographically targeted campaigns sold directly through ad agencies for mostly large national or regional advertisers.
Facebook's program will give businesses $50 worth of ads they can run to a targeted list of users, which could result in hundreds of thousands of impressions, says Grady Burnett, Facebook's vice president of global sales and operations.
"There's an opportunity with those ads to acquire and grow new customers," he says. "It's an opportunity for them to share the message to the friends of theirs. Small businesses have always grown through the strength of relationships."
But the free advertising money is just the first part of the campaign to make permanent friends with the small business community. For the second part, Facebook takes the show on the road, going from city to city holding tutorials, seminars and workshops to help businesses understand and make the most of their Facebook advertising.
"That will be a really core and critical part of the process," Burnett says.
The final part will be a contest that awards even more free advertising to successful small businesses that demonstrate best practices through the advertising: driving the most check-ins, creating a community around the business and otherwise growing through use of social media.
Both HopStop and Facebook said they will soon make applications for the advertising credits available directly on their sites. Facebook is still working with the United States Chamber of Commerce and the National Federation of Independent Businesses to determine what will qualify as "small" business, but Burnett says companies will have to have a "brick-and-mortar" location to participate.
HopStop says it will judge advertisers on a case-by-case basis.
"We're looking for merchants that you would come across if you walked down the street," Meyer says. "We want it to be as open as possible."
So if the big websites are banking on small businesses as the future of advertising, why would they give away space—a lot of space—for free?
The sites are betting that targeted, local ads will be more attractive to small businesses that are hesitant to spend money on a print ad or a billboard, where impact is much more difficult to gauge. They're also betting that with some metrics—evidence targeted ads work—small businesses will be hooked, and will come back and pay for more.
"We are interested in showing our value to the small business and local advertising community," Meyer says. "We want to get them to try it, we want them to get to realize how unique and valuable it is before we ask them for any money."
Facebook's 800 million users already make it the world's largest social media site. With the recently announced changes to its timeline and sharing functions, it is clear Facebook is aiming to become a hub for daily interactions of every kind. Ensuring a steady revenue base for the future means tying local businesses into the overall ecosystem. Facebook is expected to post $4 billion in advertising this year, according to a study by Webtrends.
"This initiative is really tied toward driving as much success and growth that we can," Burnett says. A business, hopefully, "sees an increased loyalty, a deeper ability to engage with the customers. There is tremendous value in that. We would hope advertisers would see tremendous growth and continue with us."
Zetecki says some small and new business owners during the recession may have been hesitant to try Web advertising because they are worried about committing limited resources to new ventures.
"There are a lot of competing demands for time and attention and dollars when you're a small business," he says. "When offers like this come along, it's a great opportunity for them to try this."
Pile that on to other free resources available—from Facebook pages, Twitter accounts, blogs, Tumblr and more—and small businesses now have a wealth of free options that might just, taken together, have a higher value than traditional advertising.
"There's a lot of tools out there for small businesses to use right now," he says. Anyone looking to grow, complete and add more jobs should be taking advantage of as many of them as possible."