Facebook sees big spike in small businesses paying to advertise
For almost a decade, small businesses have been asking people to "like" them on Facebook. That is a free way for them to connect with customers.
But in 2012, Facebook introduced a new feature: companies could pay to put their posts onto more peoples' news feeds. First on "CBS This Morning," the tech giant is revealing that 50 million small businesses now have pages on Facebook. Three million of them are paid advertisers, a 50 percent increase in just the past year.
Small businesses are paying to use social media, in hopes of boosting their bottom line.
At her Cupcakin' Bake Shop in Berkeley, California, Lila Owens is selling cupcakes like hotcakes, reports CBS News correspondent Ben Tracy. She said many of the faces that show up in her shop are because of her Facebook page.
"Any discounts, any new flavors, we're posting them on Facebook," Owens said. "And then I pay a couple dollars to boost beyond my current reach ... and so people who aren't even following us will get the information ... and that's what's helping us even gain more customers and exposure."
As we were talking, a college student walked in and proved Owens' point.
"What brought you into the store today?" Tracy asked her.
"The $2 cupcake deals," she responded.
"Two dollar Tuesday? How did you find out?" Tracey asked.
"I found out through Facebook," she said.
Sheryl Sandberg is Facebook's chief operating officer, and Mark Zuckerberg is her boss.
"Our mission is to connect people all over the world and a big part of that is connecting people to the small businesses," Sandberg said.
"What service are you providing for them that they would not be able to do?" Tracy asked her.
"The service we provide for small businesses is the ability to reach people in a really cost-effective way, particularly on mobile," Sandberg said.
Facebook said it has connected more than 1 billion people worldwide to at least one small business, including a store near the company's headquarters which employs single moms.
Facebook is helping small business but small businesses are also helping Facebook's bottom line. They account for the vast majority of the company's paid advertisers. However, Facebook has been criticized for making it increasingly hard for businesses to reach their own followers unless they pay to boost their posts. That can cost anywhere from $1 to several hundred dollars per day depending on how many people a business wants to reach.
"Some people do say the organic reach is not what it used to be, and these businesses have to pay a lot to actually reach the people they're trying to reach," Tracy pointed out.
"Anyone in the world can set up a page for any business for free ... and then if they want to, they can start paying for their messages to reach more people," Sandberg said.
A recent survey by Manta, a small business directory, found that Facebook is by far the top social network used by small businesses and delivers the most value. But 59 percent of small business owners say they don't see a return on their investment from their overall social media efforts including Facebook, Google+, Linkedin and Twitter.
Facebook's Dan Levy said 50 million businesses would not be on Facebook if it wasn't worthwhile.
"They're coming to Facebook not to build a social media presence, but they're coming to Facebook to grow their business," Levy said. "So we know and we feel like we are doing something to help them when they're continuing to return, whether just to invest their time or their money in Facebook."
Owens, the cupcake shop owner in Berkeley, agrees.
"I can go on my phone. Within five minutes I have reached 10,000 people. How else would I have done that without social media?" Owens said.
For Owens, those are some pretty sweet results.