Leveling the Facebook Advertising Playing Field

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Sept. 3 (Bloomberg) -- Spruce Mail Chief Executive Officer Rob Jewell discusses helping small businesses advertise on Facebook. He speaks with Betty Liu on Bloomberg Television's “In The Loop.” (Source: Bloomberg)

Businesses advertise on facebook and other social media platforms.

Rob, great to have you this morning.

How are businesses able to leverage social media to market and sell their products?

$6 billion stolen from advertisers.

That has to deter some of the small businesses.

That is always something that small businesses are worried about.

What we find is the big guys, google and facebook, have huge team dedicated to preventing that.

We have not actually heard of that much fraud happening on facebook advertising.

Lately, what has facebook been doing to cater to small businesses, small and medium businesses?

How are they generating more traffic from them?

They are focused on making their ad products work.

They are refining their ad units, the types of ads that appear on facebook.

We are finding they have come up with a formula that allows any business, even small businesses, to advertise on facebook possibly.

That is really what we see as a big area of entry for especially small businesses.

There are so many routes to take on facebook.

They do not really know how to, on and take a profitable advertising strategy out of the gate.

What is profitable, and what are some benchmarks?

If you get the right advertising formula -- and that is the formula that we built into our software.

We are seeing on average, our clients have what we call a return on ad spend around 5x. with the first $200 they spend on advertising, about $1000 in sales generated from it.

With the help of companies like yours, i'm sure.

Facebook, in the latest quarterly report, mentioned -- talking about their platform for small and medium-sized businesses -- mentioned the advertising inventory is getting tighter and tighter and that means prices have gone up over the last quarter by over 120%, i believe.

It is getting more and more expensive to do that.

In the meantime, ad impressions are coming down.

So why do you pay more if you are getting less?

That is true, the advertising rates in facebook are trending up, because more and more businesses are advertising, because it's working and response rates are really going up.

We are seeing that there is a different reason most small and medium businesses are sitting on the sidelines.

It is mainly because facebook advertising can be complex.

A lot of businesses have tried to go at it alone, taken the wrong strategy, and have not been able to measure the results from their investment.

Their only other option is to go higher and agency or an in-house facebook ad expert, and that can be prohibitively expensive for a small business.

$10,000 a month is a lot in advertising.

What about some of these new social media platforms, what about snapchat, or others?

Are they providing any kind of opportunity here for companies?

Not yet.

Just like facebook in the early days, they are just very focused -- companies like snapchat -- on growing their user base and have not even started down the road of advertising.

You are seeing instagram, which has been around for years, just starting its advertising program.

It tends to take four years for a company to mature to the point where they start to focus on advertising products.

Rob, thank you very much, founder and ceo of sprucemail.

Happening right now, president obama is delivering remarks at a concert hall in estonia.

He continues to address concerns

This text has been automatically generated. It may not be 100% accurate.

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