Facebook Advertising and its Efficiency on the Slovak Market

The main aim of this paper is to propose a measure of Facebook advertising efficiency. In general marketing role of Facebook is considered with special attention to the advertising. Advertising on Facebook is briefly introduced with possibilities of advertising targeting and its performance monitoring metrics. The current methods of efficiency measuring of online advertisement from the area of econometric modeling (specifically data envelopment analysis and stochastic frontier analysis) are mentioned and their suitability for use by small and medium enterprises is questioned. The composite efficiency index is proposed to measure online advertising efficiency and to give base for a comparison of online dvertising campaigns. It is based on simple measures like clickthrough rate and costs per click, to assure its simple usage and easy result comparison in conditions of small and medium enterprises.Proposed composite efficiency index is tested on sample data from the Slovak Facebook advertising market acquired by our own survey. The efficiency of Facebook advertising campaigns of Slovak companies, which supported our research and provided their data about particular advertising campaign, is measured by composite efficiency index and then compared with estimated data on other online forms of advertising in conditions of Slovak online advertising market. Results show higher Facebook advertising efficiency than efficiency of banner and contextual advertising in Slovakia. Also preferences and expectations about Facebook advertising are investigated by the survey. The highly positive attitude towards advertising on Facebook of Slovak companies was detected. Possible threats to the future of Facebook advertising and Facebook itself are indicated. In discussion are included topics for further research in this area. The main conclusion is the fact that Facebook can be powerful and effective marketing tool for reaching online population.