Facebook forms small business councilFebruary 10, 2014: 8:52 AM ET
How the biggest social network has won over more than 1 million of the smallest companies.
FORTUNE -- On Wednesday morning, Kay Martinovic advertised a sale at her Ormond Beach, Fla. consignment store, aptly named Kay's Designer Consignment. She paid $40 for a "boost" on Facebook (FB), which caused her store's ad to appear in fans' newsfeeds. She targeted women in the more affluent nearby communities including the town of Smyrna Beach, 40 minutes away. Shortly after the store opened, four women from Smyrna Beach showed up, and by lunch she'd sold $700 worth of merchandise.
Not bad for a store that normally pulls in about $2,000 in sales a day.
Martinovic is one of Facebook's most successful small business advertisers. She once paid thousands of dollars to put ads in local papers and have her business featured on the tourists maps the town produced. But in the past year, she's quit all that. Instead, she budgets $5 a day on Facebook, and a couple times a week she invests $40-60 on a boost.
The results are impressive: Martinovic says she makes $23 for every $1 she spends on the site. She has seen a 30% jump in sales since she started using Facebook, and her mail-order business in particular has started to pick up. "After 12 years in business, what Facebook has allowed me to do is reach people wherever I want," she says. "People are now contacting us from everywhere."
Facebook now boasts more than a million advertisers who spend money on the platform each month, and only a very number of them are the big brands like Coca-Cola or Ford. (All of the AdAge 100 brands may advertise on Facebook ... but hey, that's only 100.) The company saw revenues rise to $7.9 billion in 2013, up 55% from 2012, and a good deal of its financial momentum came from folks like Martinovic. Most are small and medium-size businesses using Facebook's self-service platform to promote posts in their fans' newsfeeds or to invite fans to like their business pages.
While the company doesn't break out the percentage of its revenues coming from these advertisers, it's redoubling its efforts to help them get more from the platform -- and spend more on it. In March, Martinovic will join eleven other small and medium business representatives at Facebook's Menlo Park headquarters for its first Small and Medium Business Council. The council is modeled after the 12-member client council Facebook launched in 2011, which includes agency leaders as well as representatives from Facebook's largest clients. The dozen inaugural members include people like Martinovic who have had great success with Facebook as well as people who are frustrated with it or have stopped spending money on it. Like with the client council, Facebook's SMB Council will serve terms of six months to a year and advise the company on the development of their tools. In return, Facebook will provide extra ongoing support.
This move follows a year in which Facebook simplified and improved its tools for advertisers, making it easier for them to target customers, and to see the results. "Up until last year, Facebook didn't have good ways to show advertisers, large or small, whether the advertising worked," says eMarketer principal analyst Debra Aho Williamson. "They've launched several products that enable advertisers to measure the business."
The ease of these tools has brought businesses to Facebook that haven't used self-service online tools in the past. "Historically, small businesses don't do self-service," says Opus Research senior analyst Greg Sterling. "Facebook has had more success than Google or anyone else." He credits the company's consumer focus, which has made advertisers familiar with it before they try to advertise on it. "The challenge for them is to bring more and more people over to spend money."
Indeed, Facebook boasts 25 million active business pages on the site. That suggests that the lion's share of the business community is not spending ad dollars on Facebook. Yet.