Facebook’s New Zip Code Ad Targeting Could Boost Local Advertising Revenue

Facebook has made several improvements to ad targeting in its self-serve tool, including the ability for US advertisers to target specific zip codes through the self-serve tool, Ads Power Editor, and Ads API. Previously, advertisers could only geo-target ads to cities, states/provinces, and countries. This will be beneficial for small and local businesses who can now target potential customers within walking distance. The option could attract the long tail of small businesses to Facebook Ads, driving revenue growth.

Several other targeting options are also being tested, including suggestions of broad category targets based on selected precise interest keyword targets, and the ability to target a previously used strings of Liked Pages. These will make creating similar campaigns easier, and help advertisers expand their targeting to reach more users who will find their ads relevant.

Driving Local Advertising Revenue

Advertising is Facebook’s main revenue source. Early on in 2009, reports indicated that local advertising made up the majority of Facebook’s ad revenue. However, the launch of the Ads API later that year, and its recent official public launch, made it much easier for big brands to run larger and more sophisticated advertising campaigns. Nevertheless, city targeting has still been an invaluable tool for restaurants, night life establishments, retail, and professionals.

Local businesses owners don’t usually spend enough to be eligible for Facebook Ads API managed spend services. This forces them to use the self-serve tool, but some don’t have the expertise or resources necessary to develop social ad campaign strategies, test creative variants and targeting options, and understand analytics on the relatively young advertising channel. A June MerchantCircle report showed that 94% of local businesses are aware of Facebook Ads, though only 22% use them.

This indicates that Facebook has a lot of runway to increase local advertising spend if it can improve the self-serve tool with targeting options that appeal to small businesses, and educate them on how to use these options. With the addition of zip code targeting, local advertisers have more reason than ever to spend on Facebook.

Over the past few months Facebook has been showing sidebar modules asking users to confirm which of several zip codes they are closest to or live within. These may have been designed to establish a zip code for users that don’t list one so they could be accurately targeted by the new Facebook Ads feature.

Using Zip Code Targeting

A Facebook spokesperson has confirmed with us that “zip code targeting is now available in the US for advertisers through the Power Editor and the Ads Manager”. When advertisers create a Facebook ad campaign, they’ll see the zip code option under location targeting. They can then enter one or more zip codes to target users who live in any of those areas.

Zip code targeting will make Facebook Ads more useful to many verticals, including local politicians as Politico points out. Businesses with multiple franchises in a single city could advertise for specific branches. Businesses that have many competitors in big cities in which customers choose where to go based on what’s closest could use the tool to make sure those nearby know about them. It could also help event promoters increase attendance by drawing those that only have to travel a short distance.

Facebook should consider promoting the new targeting option with Page posts and perhaps even ads on other sites to raise awareness amongst local businesses. It should combine this outreach with education that increases the likelihood of new advertisers running a successful first campaign. This could lead local advertisers to stick with Facebook Ads and boost the site’s revenue for years to come.

For Facebook advertising strategies that can help you grow your Page, drive sales, and push traffic to your website, visit the Facebook Marketing Bible, Inside Network’s comprehensive guide to marketing and advertising through Facebook.

[Thanks to Amit Lavi for the tip]

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13 Responses to “Facebook’s New Zip Code Ad Targeting Could Boost Local Advertising Revenue”

  1. Facebook Advertisers Can Target Users by Zip Code says:

    [...] “Over the past few months Facebook has been showing sidebar modules asking users to confirm which of several zip codes they are closest to or live within,” Inside Facebook reports. [...]

  2. Facebook Ads Can Now Target Zip Codes | Sprout Social Insights says:

    [...] Inside Facebook, Image credit: [...]

  3. About Facebook’s New Zip-Level Targeting says:

    [...] Facebook pointed earlier to a new parameter in Facebook Ads: zip code-level targeting. It’s being discussed [...]

  4. Target zip codes with Facebook advertising « yvonneducasse says:

    [...] “Over the past few months Facebook has been showing sidebar modules asking users to confirm which of several zip codes they are closest to or live within,” Inside Facebook reports. [...]

  5. Small Business Owners Can Now Target By Zip Code With Facebook Advertising | The Small Business Playbook says:

    [...] “With the addition of zip code targeting, local advertisers have more reason than ever to spend on Facebook.,” Inside Facebook reports. [...]

  6. Facebook Advertisers Can Target Users by Zip Code « DigitalNina.com says:

    [...] “Over the past few months Facebook has been showing sidebar modules asking users to confirm which of several zip codes they are closest to or live within,” Inside Facebook reports. [...]

  7. Facebook Advertisers Can Target Users by Zip Code « Tarte Advertising Blog says:

    [...] “Over the past few months Facebook has been showing sidebar modules asking users to confirm which of several zip codes they are closest to or live within,” Inside Facebookreports. [...]

  8. SearchCap: The Day In Search, August 12, 2011 says:

    [...] Facebook’s New Zip Code Ad Targeting Could Boost Local Advertising Revenue, Inside Facebook [...]

  9. The Week in Social – The Top Stories (8th-12th August 2011) | The Latest in SEO and Social Media News | HelpfulGuy.com says:

    [...] Facebook’s New Zip Code Ad Targeting Could Boost Local Advertising … This will be beneficial for small and local businesses who can now target potential customers within walking distance. The option could attract the long tail of small businesses to Facebook Ads, driving revenue growth… [...]

  10. Facebook Launches Zip Code Targeted Advertising - D50 Media - D50 Media says:

    [...] Inside Facebook, a blog that tracks the social networking website, recently foundthat “94% of local businesses are aware of Facebook Ads, though only 22% use them.” The zip code targeting system could obtain more local advertisers who want to attract neighboring customers without launching a state-wide campaign. [...]

  11. Facebook’s New Zip Code Ad Targeting Nearly Doubles Click Through Rates Says Blinq Media | Andy Knott | Digital Business Advisor & Consultant says:

    [...] week, Facebook launched a new ad targeting option that allows advertisers to show their ads to users in specific zip codes. Blinq Media, a major [...]

  12. Facebook Off-Target with Zip Codes? says:

    [...] XA.net, used the cities of Fremont and Pleasanton in Northern California as examples. Leathern said Facebook gives the addressable audience in the Pleasanton Zip code of 94566 at about 808,000. The U.S. Census [...]

  13. Placing Facebook’s New Location Plans | Street Fight says:

    [...] another set of signals on which to continue building hyper targeted display advertising. Along with zip-code-level targeting, it’s also a step towards better reaching the local advertising market.As for other LBS services, [...]

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