Facebook earnings potential - small business boom and bust
I'm in the marketing industry, so this post is coming directly from experience.
Facebook/Instagram marketing is severely underusesd in the sectors that would most benefit from it. Even if we account for recent problems in the market and the purchasing power of people, I see the demand at least doubling
in the next 2 years. In fact, from my accumulated basket of about 300 clients (we produce web shops and business web pages for them), about 120 have businesses that would, in my opinion, greatly benefit from Meta advertising.
Out of those 120 businesses, only 10 are using our services in the Meta department. About 20 more are using Google Ads services.
My opinion is that for many of these businesses, Meta advertising is becoming a better opportunity than Google Ads. When used correctly, Meta is significantly more successful in finding customers per $ invested. (About 2:1 compared to Google).
This doesn't mean that Meta will win over Google, because this only accounts for businesses I would call "eligible for Meta advertising".
But, what it does show is that less than 10% of businesses that could benefit from Meta, are using that opportunity. So why not 10x increase then?
At the moment, I'm taking into account the fact that this can't grow into infinity and that Meta platforms could get crowded with ads.
But, another factor that could (and probably will) fix this is competition among advertisers. From my experience, about 80% of my competition will be wiped out in the next 5 years. They are severely underusing Facebook potential, and
the only reason it still works for them is that there isn't much competition like my company. I am deriving this conclusion from a combination of the insight into our old clients who went to someone else for stupid reasons, and my estimate
on the quality of Pixel tracking from websites that are using Meta ads.
This conclusion could easily lead to more than 2x increase, by the following mechanism.
First, we will see a large inflow of small businesses into a low competitive market. This will already cause a massive infow of money, but will also make Meta more crowded.
This will increase the price of ads and small businesses with bad
marketing companies will slowly start to die off as advertising prices drive them out of the profitable zone.
Meanwhile, better advertisers will be increasing their ad spending by advertising fewer companies that are slowly growing larger over time. This will greatly compensate for the loss of retail customers.
So, after this, we will see another boom and bust in small retail sector, followed by the boom in emerging companies that grew larger and larger through the guidance of a few competent marketing companies.
Time periods for all of these events are unclear, the only time period that I'm 90% sure about is the retail boom during the next 2 years, driven by inflation, useless jobs, increase in small businesses, high
real estate prices, and lower costs of running online businesses.
80% of those small businesses will slowly start dying after this 2-year boom is over.
Facebook/Instagram marketing is severely underusesd in the sectors that would most benefit from it. Even if we account for recent problems in the market and the purchasing power of people, I see the demand at least doubling
in the next 2 years. In fact, from my accumulated basket of about 300 clients (we produce web shops and business web pages for them), about 120 have businesses that would, in my opinion, greatly benefit from Meta advertising.
Out of those 120 businesses, only 10 are using our services in the Meta department. About 20 more are using Google Ads services.
My opinion is that for many of these businesses, Meta advertising is becoming a better opportunity than Google Ads. When used correctly, Meta is significantly more successful in finding customers per $ invested. (About 2:1 compared to Google).
This doesn't mean that Meta will win over Google, because this only accounts for businesses I would call "eligible for Meta advertising".
But, what it does show is that less than 10% of businesses that could benefit from Meta, are using that opportunity. So why not 10x increase then?
At the moment, I'm taking into account the fact that this can't grow into infinity and that Meta platforms could get crowded with ads.
But, another factor that could (and probably will) fix this is competition among advertisers. From my experience, about 80% of my competition will be wiped out in the next 5 years. They are severely underusing Facebook potential, and
the only reason it still works for them is that there isn't much competition like my company. I am deriving this conclusion from a combination of the insight into our old clients who went to someone else for stupid reasons, and my estimate
on the quality of Pixel tracking from websites that are using Meta ads.
This conclusion could easily lead to more than 2x increase, by the following mechanism.
First, we will see a large inflow of small businesses into a low competitive market. This will already cause a massive infow of money, but will also make Meta more crowded.
This will increase the price of ads and small businesses with bad
marketing companies will slowly start to die off as advertising prices drive them out of the profitable zone.
Meanwhile, better advertisers will be increasing their ad spending by advertising fewer companies that are slowly growing larger over time. This will greatly compensate for the loss of retail customers.
So, after this, we will see another boom and bust in small retail sector, followed by the boom in emerging companies that grew larger and larger through the guidance of a few competent marketing companies.
Time periods for all of these events are unclear, the only time period that I'm 90% sure about is the retail boom during the next 2 years, driven by inflation, useless jobs, increase in small businesses, high
real estate prices, and lower costs of running online businesses.
80% of those small businesses will slowly start dying after this 2-year boom is over.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.