Facebook targets SMEs for advertising growth

Facebook now has 3m advertisers, 2.5m of whom are small businesses actively advertising on the popular social networking site, according to the company CEO. In its campaign to increase the number of paid advertisers around the world, Facebook revealed that over 1bn people are now connected to at least one small business on its platform, supporting a 50% increase in advertisers during 2015 and contributing to the company’s 52% rise in sales to $5.84bn in Q4 2015. Facebook has identified small business advertising as a potential future growth area; as mobile continues to accelerate its adoption, the company is looking to make itself indispensable to small businesses, by providing free pages and services to the third of US enterprises currently lacking an online presence.

Jessica Guynn

USA TODAY

SAN FRANCISCO — Facebook now has 3 million advertisers, the majority of which are small businesses.

"Our mission is to connect the world, and connecting people to small businesses that provide their local business services is really an important part of that mission," Facebook Chief Operating Officer Sheryl Sandberg told USA TODAY.

The sharp increase in advertisers — up 50% in one year — is an impressive milestone that escalates competition with Google, analysts say.

"Three million active advertisers is pretty huge," said eMarketer analyst Debra Aho Williamson.

By way of comparison, Facebook rival Twitter has 130,000 advertisers. Instagram, the photo-sharing service owned by Facebook which recently began to build its advertising business, has 200,000.

Increasingly, advertisers say Facebook is a "very important part of their advertising arsenal," Williamson said. "That is supported by the fact that the number of advertisers on Facebook is increasingly rapidly."

Advertisers range from major brands such as L'Occitane and the Golden State Warriors to mom-and-pop operations such as catering companies or clothing boutiques.

The giant social network is aggressively campaigning to grow the number of paid advertisers around the globe. In the fourth quarter, Facebook had 2.5 million businesses actively advertising on the social media service.

Facebook has identified small businesses as one of its biggest opportunities. Mobile has accelerated adoption among small businesses especially overseas, says Dan Levy, Facebook's vice president of small business. More than 1 million advertisers created an ad directly from a mobile device. And, Levy says, more than 70% of all its advertisers are outside of the United States.

"Mobile has really enabled so much of this growth, especially outside of the United States, where so many people just start on a mobile device," he said.

Facebook fourth-quarter sales rose 52% to $5.84 billion, buoyed by its growing success in selling advertising on mobile devices. It's stepping up competition with Google, which rules the lucrative search advertising market and is also popular with small and midsize businesses.

Facebook is working to make itself more useful to small businesses, providing them with free pages and services to manage their digital presence. Currently, more than 50 million small businesses use Facebook's free Pages product, and more than 20 million use Pages Manager App.

Follow USA TODAY senior technology writer Jessica Guynn @jguynn