Earlier this month Facebook (NASDAQ:FB) rolled out a new feature to brick-and-mortar businesses, providing them with information about who's passing by their stores and when. For those who pay to advertise with the social network, there will be additional data, including information about whether those potential customers have seen ads for their stores recently.
The effort should dovetail with the year-old ad initiative that lets Facebook advertisers target ads at customers currently within a given radius of a store.
The more recent effort aims to both help businesses make decisions on their advertising and also to get a better handle on who's passing by their stores at any given time of day.
The reports will examine trends over time, giving businesses a look at which groups of people are near their stores on different days and at different times, and also what days and times are busiest by foot traffic overall.
Businesses that pay for ads with Facebook will be able to see more detailed information, including breakdowns by age and gender.
Right now, Facebook does not plan on telling businesses which particular users have passed by their stores. But it hasn't shut the door on expanding the information it provides. When asked by AdAge if the company will provide statistics showing how many people are actually entering their stores at different times, Matt Idema, Facebook's VP of monetization product marketing, said only that the company is "not announcing that at this time."
Both of these recent offerings to businesses are part of Facebook's nascent push into local advertising, a still somewhat untapped market in the digital world. Local advertising has long been dominated by traditional outlets: newspapers and other local print publications, radio, billboards, phone books, and small-market television.
The push also follows related moves by wireless providers who are looking to make their user data available to marketers for similar purposes, in an effort to supplement slowing subscriber growth with additional revenue streams.
With new tech comes new ad opportunities
As technology advances, it's allowing companies operating on the digital side tremendous tools to enable local advertisers to better reach their target audiences.
Search results from Alphabet's (NASDAQ:GOOG) (NASDAQ:GOOGL) Google can account for a person's location, serving up appropriate ads for, say, a local Indian restaurant when someone searches the term "chicken vindaloo."
Geographic targeting technology is also allowing companies like Pandora to steal away advertising revenue from local radio stations.
Earlier this year, Borrell Associates surveyed more than 7,000 local businesses about their advertising spending for 2015 and beyond.
"More have told us they're planning to increase digital budgets than we saw in our 2011 and 2013 surveys, and more have told us they're planning to abandon traditional media," the firm wrote in its June report.
For the first time ever, digital advertising claimed the largest share of the local ad market, the firm reported.
"It was a position held by newspapers since 1704," Borrell said. "Over the next 12 months, the gap will almost certainly widen."
In the pole position
Perhaps more than any other company, Facebook is on top of this trend moving forward. The single biggest reason is that it owns a huge share of the time we spend on our smartphones.
More than 2.5 million businesses advertise on Facebook, the company says. That sounds like a huge number, but it's actually only a small fraction of the market it envisions long term.
That's because more than 45 million small and medium-sized businesses, or SMBs, maintain pages on the social network, according to Chief Operating Officer Sheryl Sandberg. And Facebook believes it can convert many of those SMBs to paying advertisers by giving them the tools to reach customers and demonstrating that the ads they are running are delivering paying customers to their stores and restaurants.
"One of the most compelling opportunities"
Sandberg expanded on the local advertising opportunity during the company's third-quarter conference call Nov. 4:
I think it's one of the most compelling opportunities we have for Facebook. That's because I think we solve a really big problem for SMBs, which is how are they going to reach customers. In the United States, which is usually the most advanced market, 35% of small businesses have no web presence at all.
The move to provide more information about people passing by stores, combined with efforts already under way, should encourage more small businesses to advertise with Facebook, rather than just maintain a page, and also allow advertisers to better target potential shoppers. We should expect to see more technology aim at doing just that roll out as Facebook looks to grow its share of the local ad market.
John-Erik Koslosky owns shares of Facebook. The Motley Fool owns shares of and recommends Alphabet (C shares) and Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.