Facebook tests search ads in results pages, Marketplace

Dive Brief:

Facebook is testing search ads in its search results and Marketplace, according to a report from TechCrunch citing a statement from a company executive. Facebook previously launched Sponsored Results in 2012, but closed the program in 2013. The current test could expand based on results.
The social media giant is allowing a small group of automotive, retail and e-commerce advertisers to serve ads on the search results page for mobileusers in the U.S. and Canada. The ads will be repurposed News Feed ads in the image or carousel format — video isn't part of the test — that direct users to external websites with a link.
Advertisers can use the Facebook Ads Manager to extend their existing news Feed ads to the new “Search” placement. Search ads will not appear on desktop. Advertisers will not be able to choose specific keywords and ads may appear in results for search terms related to auto or retail topics. The ads will include a “Sponsored” tag and transparency controls, but users will not be able to opt out of seeing search ads. The ads can be hidden, however, but hiding them won’t keep different ads from showing up later.

Dive Insight:

Facebook’s new search ads format could open up a new revenue stream for the company, which has seen its growth decelerate. The social platform is also looking to more traditional ad formats as it continues to invest in more new ad features for Stories, which Facebook says is growing, but has yet to monetize. Stories is set to take over feed sharing on social apps, reducing News Feed ad space, according to TechCrunch.

The new search ads will give advertisers the chance to reach consumers further along the conversion funnel when they are already planning a purchase. Consumers may be more likely to search for products on social media than they were five years ago, for Facebook’s first go around with search ads, now that social commerce shopping is more widely available. However, shopping on social is still a small portion of overall e-commerce, which isn't likely to change as trust erodes in social media.

Since that initial push into search failed, the competition between Facebook, Google and Amazon has grown more fierce. Google’s paid search business is accelerating, with the volume of paid clicks on Google properties increasing 62% in Q3 2018 from a year ago and up 10% from Q2. But, cost-per-click continues to decline and is down 28% from a year ago and 7% over the previous quarter. Amazon is snapping up more of marketers’ search budgets, with some moving 50% to 60% of their search budgets usually allocated to Google to Amazon.

Data privacy is one issue Facebook will face with search ads. The company already collects significant information about users and their behaviors to target ads. With the search ads, Facebook may be encouraged to collect information about what users do online and what they buy offline, per TechCrunch. Consumers are already distrusting of how companies collect and use their personal information, following Facebook’s Cambridge Analytica scandal.