I was fortunate to speak at the AllFacebook Conference in San Francisco on June 28th. The event comprised of Facebook specialists and practitioners, who provided some pretty cool insight for marketers on how to effectively navigate through the increasingly complex world of Facebook in developing successful strategies.
My topic questioned Facebook’s development of a social commerce layer i.e. the ability to sell goods and services within Facebook. Is this a futile attempt or a sustainable feat?
The biggest question for many people who have seen Facebook evolve:
Can you develop a marketplace in a place where, inherently, people are not in a buying mindset?
Social networks existed to escape the very sites that have inundated them with advertising. They have become the safe haven of pure conversation. However, in order to sustain them, strategies for monetization have been essential, especially given the explosive funding opportunities in the social tech space.
Given its recent IPO, Facebook must prove to shareholders that it’s serious in its attempt to monetize the platform. While Zuckerberg has vowed to put the user experience first, the pressure to create a sustainable business model has been even more pressing.
E-Commerce is poised for explosive growth. Online sales are expected to rise by over $100 billion from 2010 to 2015. Social media has been a strong catalyst through discussion and online recommendations and will continue to fuel this growth over the next few years. Facebook is primed to lead to make this happen. Even some of the experts contend,“ F-Commerce transactions will exceed Amazon’s annual sales over the next 5 years.” Today, Amazon is the undisputed leader posting revenue in 2011 at $40 billion.
Facebook’s continues to test the waters when it comes to monetization
Here are some events that force me to question whether Facebook can really make F-Commerce work:
- The decommission of Facebook Checkin-Deals and Facebook deals less than 4 months after it launched. The rise of Groupon has forced Facebook to seriously think about playing in this space. However Facebook never really gave their Check-in deals a chance. I had thought the purchase of Gowalla would help shape and influence this product function.
- Brand abandonment of Facebook stores implies that companies have not yet figured out how to convert fans. Gap, Nordstrom, Gamestop, Banana Republic among others quickly shut down their FB Stores. Gamestop indicated: “It (FB Store) …was like trying to sell stuff to people while they’re hanging out with their friends at the bar”
- Facebook Credits has met with some success. Last year, Facebook posted a $3.7 billion revenue, 85% of which went to advertising. The remaining largely went to Zynga, the world’s largest social gaming service. But Facebook admitted in its S1 Filings, that if they failed to maintain good relations with Zynga, they may lose Zynga as a significant Platform developer, hence would adversely affect their financial results. Therefore, FB made it clear that it wanted to turn its virtual currency into a payment mechanism for all sorts of digital goods. But few are adopting it. Since its launch in 2010, companies like Warner have tested Facebook Credits as a payment vehicle within the Facebook ecosystem with the “Dark Knight” premiere. Unfortunately, no licensing or distribution deal resulted from this test. Slow adoption using Credits as payment for goods other than games continues.
- Others have also criticized Facebooks for instituting this FB Credit-only currency system. What Facebook wants to do is to wall off your money from the outside world — to turn it into a currency that can only be used inside Facebook. This seems pretty autocratic and strong hindrance to F-commerce adoption.
- The new timeline has also hampered marketers’ control and sizeable investment in custom tabs. Without default landing tabs, non-fans have to actively click through the little app tiles overshadowed by a Page’s cover. The change is a noble one that prioritizes the user experience and the site’s long-term health, but several marketers I’ve talked to are already grumbling.
Facebook is moving in the right direction!
- As of June 19th, Facebook signalled its ambitions to grow as a payment platform. What Facebook has said is that it hopes to provide users more flexibility to make it easier to reach a global audience who want to pay for your apps, products etc in their local currency, rather than credits. Great news for its investors and businesses still trying to sell within Facebook.
- And where big brands have failed, small businesses seem to be leading the way to successful sales online. With the help of companies like Payvment and Ecwid, who not only provide online storefronts but help business take advantage of Facebook’s own traffic to develop a successful strategies within the FB platform.
- Open Graph, in my opinion, is probably Facebook’s current killer app. This has gone beyond the “Like” and allows user behaviour: What you’re reading, what you’re buying, what you’re watching, what you’re listening to– to display on your timeline and friends’ newsfeeds. Companies like Vevo have seen so much success they’ve removed their music videos from Youtube and have opted for Open Graph to drive visibility, registrations and views.
- I’ve also read of rumblings about the introduction of the Facebook ‘Want’ and Purchase Button. This will allow you to add products to a virtual wish list. These functions will be added to Open Graph, allowing automatic sharing on friends’ newsfeed.
Photo source: http://www.flickr.com/photos/debaird/