24 August 2019
Facebook's Arrow Guo said an increasing number of small and medium-sized enterprises are advertising on the social networking site. Photo: HKEJ
Facebook's Arrow Guo said an increasing number of small and medium-sized enterprises are advertising on the social networking site. Photo: HKEJ

Is it worth it to advertise on Facebook?

Facebook is seeing a surge in the number of small and medium-scale enterprises advertising on its social network.

From just about a million firms a year and a half ago, SME advertisers on Facebook rose to 1.5 million six months ago and now number about 2 million worldwide, according to Arrow Guo, head of Facebook’s SME businesses for Greater China and Southeast Asia.

“We see a trend in Hong Kong where many SMEs are moving online to promote their businesses,” Guo told EJ Insight in an interview.

Most of them are from the retail and catering sectors, in line with the fact that most of the SMEs in the city are from these two segments, while there is also a significant number of startup application software developers using Facebook as a marketing platform, he said.

Liam Wong, co-founder of online skincare store HereWeSeoul, said it’s worth it to advertise online.

He estimates that for every HK$100 advertising expense on its Facebook page, the company, which sells skincare and beauty products from South Korea, generates “thousands of dollars” in sales.

The company was established in late 2012 with an initial capital of HK$3,000. But after only two years of operation, it can now afford to invest “several hundred thousand dollars” a month in promoting its products on Facebook.

Its company website has over 200,000 “likes” and over 80 percent of the traffic comes from Facebook.

Globally, Facebook’s mobile ad sales accounted for about two-thirds of its total revenue in the fourth quarter last year, and contributed 98 percent of its revenue growth, according to its most recent regulatory filing.

The company said advertisers cited easy-to-use features and good mobile compatibility as major reasons for using its ad tools.

However, many consumers are still wary of firms selling their products and services online. “Can I trust the firm?” is the question that still lurks in their minds when they see an ad on Facebook.

Cases of counterfeit or defective products sold through social networking sites like Facebook and Instagram jumped 2.4 times in January-November 2014 from a year earlier, according to media reports, citing data from the Hong Kong Customs and Excise Department.

While that’s a sharp increase, the number of cases actually rose to only 47 from 14 during the period.

Although the scale is not big, Guo said his company is quite concerned about advertisers who resort in unethical, even illegal, practices to boost eyeballs and sales.

Facebook has been optimizing its ads page policy to tackle this issue and advertisers that have been the subject of frequent complaints will be dealt with appropriately, he added.

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EJ Insight reporter

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