Facebook Heads Straight for SMBs

In two weeks Facebook's Phillip Rather will be standing in front of 400 local media executives at the Grand Hyatt in New York, doing his best not to give them the heebie-jeebies. But his message will be clear: Facebook is intent on becoming the primary marketing vehicle for local businesses.

Rather will be one of the opening speakers for #LOAC2017, a two-day conference that highlights the biggest trends and the brightest strategies in local digital media. Many of the sessions will undoubtedly reference Facebook's foray into the local marketing landscape.

And with good reason. Last year, Facebook's trajectory quietly slipped past the mothership of all advertising disruptors, Google. True, Google has three times more revenue today than Facebook. But comparing the two from the same starting point of when they reached their first $1 billion in U.S. ad revenue, Facebook recorded 22% more revenue than Google in its seventh year and is on track to be 29% ahead of Google in its ninth year. (See chart atop this column.)

What's more scary/impressive is that, as Rather pointed out to me on phone call this week, 65 million businesses have a page on Facebook, yet only about 5 million of them are actively advertising. "That's 60 million to go," he said. (To be fair, there are only 22 million businesses in the U.S., so this must include foreign businesses.)

You can bet Team Facebook is working hard on making that happen. They've got a 600-person staff in Austin, where Rather is based, working diligently on things like co-op advertising, minimizing churn, and advertiser training, particularly for SMBs.

How much is Facebook taking from each market? In the next few days we'll publish research that gauges the level of spending by local establishments in each U.S. market. What we found is that in 2016 Facebook tapped anywhere from $132,000 in Matador, Tex., to $592 million in New York City.  The numbers quickly ran into the millions even in small markets such as Paducah, Ky., Watertown, N.Y., and Wichita Falls, Tex., where the figure was roughly $4 million for each market.

Who's the big loser? That's the big surprise, which I'll reveal when I open #LOAC2017 the morning of March 6. You might logically guess newspapers, TV, or even yellow pages budgets. Or maybe radio. You'll have to wait for the answer, but here's a hint: Roughly half of Facebook's revenue is being peeled away from one type of media buy.

Hope you can attend #LOAC2017 and hear the answer in person. (Even if you can't, we're offering a live-streaming version so you can listen in at your desk.) Conference details can be found here, and info on the live-streaming option here.