Facebook Courts Small Business: 'We Don't Want to Take a Ton of Money'

Facebook Has 30 Million Active Business Pages, But Little Traction On Paying Clients

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If you run a small business, Facebook wants some face time with you. And maybe just a few of your ad dollars.

"We don't want to take a ton of money," Dan Levy, Facebook's director of small business, told a crowd of around 350 small business owners assembled in Manhattan on Tuesday morning. "We want to take the money that helps you grow your business."

The New York event, the first of a five-city tour, is part of the social media powerhouse's plan to turn 25 million small businesses on its site into paying clients. In April, Facebook announced an ad council and roadmap for small business clients, like its offering tailored to big brand advertisers, in a bid to pull the long-tail and local advertising dollars being seized by competitors.

With its tour, Facebook is trying to actively court small and mid-sized businesses, and perhaps undo some of the damage after recent newsfeed changes have diminished the reach of organic posts. Mr. Levy called the effort "putting a face to Facebook."

At the tail of end of video played for the audience, Mark Zuckerberg appears onscreen, very briefly. "Our business wouldn't be here without your business," the Facebook CEO says.

Facebook is partnering with the Intuit, LegalZoom and the mobile payments startup Square for the events.

Another shift to mobile
On Tuesday, Mr. Levy announced that 30 million small business owners how have active Facebook pages, updated at least once a month, an increase of 5 million from the fourth quarter of last year. Nineteen million of those owners are active on mobile.

In the fourth quarter, Facebook said one million small businesses had become paying customers.

In following consumers to smaller screens, Mr. Levy said, businesses are mirroring Facebook's move to mobile, which now provides a majority of the company's ad revenues.

"If you have a mobile phone and you have a Facebook page," he told the attendees, "you have a mobile marketing strategy."

Mr. Levy highlighted Facebook's tools to format posts automatically across all devices. He also promoted the fleet of ad tools -- Conversion Measurement, Custom Audiences, and Lookalike Audiences -- that business owners can deploy.

Withering organic reach
And he also downplayed perhaps the most significant concern for businesses using Facebook: the plummet in organic reach.

Starting last fall, the reach of brand pages without advertising dollars began a precipitous drop. Companies that had poured time, effort and budgets into building fans and likes found that they could only reach this audience through advertising.

"There's a lot of power to having your customers like your business, beyond organic reach," Mr. Levy told Ad Age in an interview. He mentioned the ability to serve targeted ads to users who like a particular page or post. And he stressed that Facebook was still developing these solutions, adding, "I think there are things we haven't figured out yet."

One particular strategy he suggested is that businesses experiment with social posts, find the ones that have some success, then pay for wider reach -- using Facebook's "Boost Post" promotion tool.

Brands of all sizes can't simply throw budgets into social media and expect returns, said Jacqueline Donovan, VP-Marketing at Fairway Group, a New York-based grocer. "Now, you have to up your game," she said.

One way to do that, she advised, is to be judicious in where ad dollars go and spend on content that scores favorable reception. "We don't put money on the horse on the get," she said. "We see who has the prettiest gait; that's where we put our money."

That can be taxing for small businesses, she admitted, particularly those with limited experience cutting checks over to Facebook.

"It's not for the masses anymore," she said. "It requires a little more talent."

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