According to a study by Borrell Associates, Facebook will receive over $500 million this year in advertising revenue with over 74% of that revenue derived from local businesses using Facebook to target users geographically.  Click here for more information but Borrell is quick to note that despite the striking focus on local advertising on Facebook that the overall numbers still represent only a a tiny fraction of the overall dollars spent on local advertising.  However what interests me is not the overall percentage of local advertising budgets that is going to social networks but rather the speed with which any percentage at all has gone to them and the fact the Facebook is the preferred choice.

Facebook’s CPC ad network presents businesses with a relatively precise form of geo-targeting, a large enough audience to suggest a good opportunity scope, and an engaged audience.  For instance other forms of local online advertising might include:

• PPC search which is less precise in how it geo-targets and forces the advertiser to understand the complex arena of search keywords to play it right
• Local news sites which pull the local audience but in a less engaged way and often without the benefit of CPC models
• Other social networking sites like MySpace that may not generate a large enough or suitably engaged audience to make a difference

Granted Facebook’s click-through rates are  often lower than search because the ads are interruption ads as opposed to finding users when they are actively engageed in looking  for your service.  However, it is interesting to see how local advertisers have been willing to leap into this site whereas they typically would be much slower movers into other new areas of online marketing. Stay tuned.  Please share your facebook advertising stories, positive or otherwise.  It’s a new world and inquiring minds want to know.