Are online ads worth what companies are paying for them?

Popular search engines and social networking sites like Facebook derive most of their revenue from ads that show up in results or alongside content. But how much do these ads really affect consumer behavior? FGI Research surveyed SmartPanel and found that only 5% of the respondents actually click on ads when using a search engine, and only 7% click on ads when logged into Facebook.  This is most likely because respondents do not trust ads on either site: 42% report that they distrust ads on search engines, and 36% distrust ads on Facebook.

In response to consumers’ apparent skepticism of online advertisements, many companies have created brand pages on Facebook as a way to interact with consumers on a personal level.  Unfortunately for these brands, 31% of respondents still refuse to follow any brand pages on Facebook. Individuals aged 45 or older are especially reluctant to interact with brands on social networking sites –even though 95% of all respondents 45 or older have Facebook accounts. Those in this age bracket make up 67% of the respondents who have chosen not to “Like” any brand pages.

Companies with brand pages have additional reasons to worry. Of the people that follow brand pages, only 40% actually read their updates.  The pages that seem to be having more success are those related to food, restaurants and grocery stores.  Of those that “Like” brand pages on Facebook, 66% “Like” pages that fall into this category.  The following graph shows that the food, restaurant and grocery pages are the most popular and that the most popular interaction with brand pages is to “Like” them.

Q10 – Which of the following best describes your interaction with brand pages on Facebook? Select all that apply.
Q11 – For which of the following categories of consumer products do you “Like” any Facebook brand pages? Select all that apply.

Looking for something online?
Another type of communication between businesses and consumers occurs when consumers are curious about a product or business.  When people want answers about consumer products they typically take a few approaches to finding them, the most common being the use of search engines.  92% of respondents use search engines when shopping for or researching a consumer product, while only 27% use Facebook to accomplish the same task. In regards to users’ search interests, electronics account for 60% of the search volume.

In the past six months, which of the following types of consumer goods have you researched or shopped for using search engines? Select all that apply.

How much time are users really spending on popular sites like Facebook and Google and how do other sites match up?
FGI Research found that 69% of the respondents go to Google when searching for information online, leaving only 31% split between all other search engines.  The respondents are also extremely concentrated when measured on social media site usage.  90% of respondents claim to have and use a Facebook account, while 40% have a YouTube account, and 29% have a Twitter account.

Who are the people on these sites?  FGI found that on average, women spend more time on social media sites than men, and the people devoting the most time out of their week to these sites are those 18-24 years old.  This same age group also overwhelmingly (80%) prefers Google to other search engines.

The amount of time these consumers are spending online is limited, though.  38% claim to spend only 1-3 hours per week using search engines and 46% spend only 1-3 hours per week on social media sites.

Smartphone users tend to spend slightly more time online.  70% of all respondents own a smartphone, and these smartphone users account for the consumers with higher amounts of time spent on search engines and social media sites each week.  Of those spending 10+ hours on search engines each week, 57% have smartphones, and of consumers spending the same amount of time on social media sites, 63% own smartphones.

Actionable Insights
What can we gather from this information? The internet has vastly increased consumers’ access to information about businesses.  In addition to using search engines to find answers to their questions, people are researching businesses on social media sites like Facebook and Twitter.  This is a new concept for many companies and allows consumers and businesses to interact with each other in a new way.  Social media sites, the number of people using them and the hours per week spent surfing them thanks to smartphones are certainly growing, demonstrating the importance for businesses to make the most of these platforms.  If those reasons aren’t enough, users mistrust and disregard ads to a large degree, making it vital for businesses to invest and expand their social media platforms.

More specifically, this market research can be used by specific businesses to identify where their consumers are searching for them online or where ads would create the best returns.  This study could also be expanded to research the relevance of the ads to the user’s search or their recent activity.

Next Steps You Can Take

• Contact FGI Research: click here or call us at (919) 929-7759
• Explore FGI Research’s market research solutions, including custom panels, full service research, and our online sample (SmartPanel).
• Join FGI Research’s online panel to participate in future studies.

Survey Methods
Respondents: 377
Date of Survey: February 8-16, 2011
Sample Source: FGI SmartPanel

This nationally-representative sample consists of adults aged 18 and up and is balanced to the US population using recent census data. One can say with 95% confidence that the maximum margin of sampling error is ±4 percentage points.